A perfect storm of ARS:UYU currency weakness, recently imposed dollar conversion controls and looming fears Uruguay may soon be much less of a tax haven has many Punta del Este developers and hoteliers envisioning an uncertain future with fewer Argentines.
“Several Punta del Este real estate projects have hit the brakes and sales are practically frozen,” writes La Nacion’s Nelson Fernandez blaming the weaker Argentine peso, the Argentina-imposed currency controls and the prospect the Mujica administration will yield to OECD pressure and sign a tax information sharing agreement with Argentina. With uncertainty beyond the upcoming summer season, we offer three predictions for the Punta del Este real estate market.
1.) Argentina Staycations. With a weaker peso making Punta del Este vacations and properties less affordable, more Argentines will opt to vacation at home. While Argentina’s beaches don’t compare with Uruguay’s, there will be more “staycation” activity in attractive parts of the interior like Bariloche, Cordoba, Mendoza, Rosario and Salta.
2.) Punta del Norte: If the stalled real estate projects in and around Punta del Este are going to get back on track, they need to market aggressively to foreign buyers to the north, namely Brazilians and North Americans. Despite the global slowdown, they have the greatest purchasing power and are not hampered by currency controls or weakness.
3.) Marketing Makeover: Several new projects launched this year in Punta del Este, Manantiales, La Barra and Jose Ignacio will need to refocus their sales and marketing efforts, especially if a.) their success hinged entirely on high net worth Argentines or b.) they were targeting a more middle class Argentine buyer. The buyers of high-end properties in Punta del Este will have a new category designation, OTA (Other than Argentine), while the middle class developments will need to be rethought or refocused toward neighboring Brazilians. (Full Story in Spanish)
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