Uruguay & Argentina – Your Chance to Profit?

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I have been to Uruguay so many times in recent years that I feel like I probably deserve a passport from the country. I’m headed back again in March for our latest Offshore Investment Summit. So, when I heard about the recent political changes in Argentina, I immediately thought about the country’s tiny next-door neighbor, Uruguay.

There is a truism I’ve heard quite a number of times while in Uruguay talking to bankers, lawyers and real-estate experts: When times are bad, Argentines pour money in Uruguay to protect their future; and when times are good, Argentines pour money in to Uruguay because they know times will soon enough be bad in Argentina once again.

Times look to be improving in Argentina now that the country has what appears to be a more rational president leading the country and the economy. Which means that times look to be improving for Uruguay, particularly in real estate and farmland.

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There was a point in the early part of the last century where Argentina battled America for hemispheric supremacy. Had fate not brought the birth of Juan Domingo Perón, Argentina today might be the U.S. of South America.

But where America followed the path of a liberal, free-market economy and general democracy, Argentina followed the path of “Peronism.” Named for Perón, who served three terms as Argentina’s president, Peronism is an authoritarian, fascist-hybrid political philosophy that strangles the economy through government control of industry and militant suppression of dissent.

Argentina’s new president, Mauricio Macri, is the first non-radical, non-Peronist president in 100 years.

He has stepped into that role with the aim of righting a country that has so much great promise, but which has been a political and economic joke/disaster/basket case for decades. His first moves: repealing currency controls implemented by former President Cristina Kirchner, devaluing the Argentine peso as a way to jump-start a moribund economy, slashing taxes on exports and altering import rules so that foreign companies will again find Argentina a compelling investment opportunity.

In doing so, he’s following a capitalist model necessary to rebuild an economy devastated by years of Kirchner’s economic policies that fueled 25% annual inflation, cut off Argentina from international financial markets and nationalized companies, a move that rightly scared away foreign companies from investing in Argentina.

But now all of that appears to be on the mend under Macri.

And Uruguay is already seeing the benefit…

A New Investment Opportunity

I reached out to my Uruguayan buddy, Juan Federico Fischer, one of Uruguay’s most prominent lawyers, to ask him about the goings on with the country’s neighbor.

“From what I know about Uruguay/Argentina,” I asked Juan, “the new president’s plans to free the economy from what Kirchner was doing should be good for Uruguay … removing currency controls should see Argentines moving cash to Uruguay for property and land now, just in case it gets bad in Argentina yet again. Is that an accurate reading? What is the thinking in Uruguay right now? And is there any early indication that this kind of move is happening?”

“Yes, indeed,” Juan replied. “With the new president in Argentina, Uruguay only stands to benefit. Tourism in Punta del Este is up, port restrictions that Argentina had imposed were lifted, etc. Macri’s first state visit was to Uruguay, last week, a BBQ and working day with our president at the presidential ranch.”

Pretty much as I expected.

It tells me that Argentine money is going to begin flowing heavily into Uruguayan real estate: apartments, condos and houses in Punta and along the riverfront Rambla in Montevideo. Money will flow into real estate farther up the coast toward Brazil, where cute villages such as La Paloma, Cabo Polonio and Punta del Diablo are beginning to gentrify and could well become a smaller version of Punta del Este (honestly, this is where I would be a buyer. The coastline is spectacular and the land/housing prices are substantially cheaper than Punta del Este, but have great promise to escalate).

And money will certainly flow into agricultural land. Argentina and Uruguay share in agricultural abundance, and agriculture could very well be the industry that propels both countries to greatness. Argentines who already have agriculture in their blood (or portfolio) in their home country will be looking to add to their agriculture exposure in Uruguay.

Get in Before the Next Investment Wave

To me, now is a great time to be an investor in Uruguayan real estate. I know that’s a big jump for a lot of people, particularly if you don’t know the country and you have traditional visions of “Latin America” in your brain. But Uruguay is not the Latin America you know. It’s basically a misplaced European state that feels as close to home as, say, San Diego circa the 1950s.

If you’re up for a little adventure and investigating a new investment opportunity in March, I encourage you to consider our Offshore Investment Summit in Punta del Este from March 14 through 17. It’s a wonderful opportunity to see the country for yourself, and to explore the kinds of investment opportunities that exist. We’ve taken hundreds of Sovereign readers to Uruguay in recent years and after seeing the place and the investment opportunities, they have, combined, invested millions of dollars in homes, condos and farmland.

This is your opportunity to get in before Argentines begin pushing prices even higher. If you want to know more about the conference, click here.

Until next time, stay Sovereign…

Jeff D. Opdyke
Editor, Profit Seeker

The post Your Chance to Profit appeared first on The Sovereign Investor.

Chart via S&P Capital IQ
Chart via S&P Capital IQ

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