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Market Update - December 2016

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Last Modified: Tue Jan 03 2017

Germán Gómez Picasso, director of the Real Estate Report consultancy firm from Argentina, spoke with FM Gente about the state of the real estate market in Punta del Este - here is what he had to say.

Low inventory

Edificio Mouette in Punta del Este
Edificio Mouette, Punta del Este

The architect Germán Gómez Picasso, director of the Real Estate Report consultancy firm from Argentina, told FM Gente that what is notable in the Punta del Este real estate market currently is the lack of sellers. Despite that, he points out, the prices have stayed relatively stable. He predicts that supply and demand will start to balance out in the first half of 2017. "The number of projects currently under construction is relatively low which is affecting the supply of new apartments", he notes.

Stable Prices

Nevertheless it is notable, observes Picasso, that "prices are relatively stable. Almost always when there is a lack of supply prices tend to rise, something that hasn't happened this year in Punta del Este. We've seen an increase measured in US dollars of only 1.95% on average. This after two years of price correction. It is a market that is not easy for the developer."

The Real Estate Report has been produced now for twelve years. "In 2006, the first year, there were 34 buildings under construction. From then on there was noticeable growth reaching 81 buildings in 2013. When Argentina introduced laws restricting capital flows, the number of new projects fell and today we have 29."

"In 2012 the values per square meter were $4,080. Today, on average, it is $3,813, lower than in 2012 in dollar terms. And we all know that the costs in dollars have been increasing since that time."

Price Variance

Currently, Picasso informs us, the highest prices are in the order of almost $7,000 dollars per square meter on floors five and six in the building "Mouette" located in front of the port; following is the Trump Tower with $6,600 per square meter. There is a large variance in prices with the cheapest new apartments being offered at $2,389 and the most expensive $6,912. "Obviously, some buildings are better than others, but not such that the difference in prices would suggest."

He also points out, in one case, an apartment was for sale with an asking price of $595,000, "but they tell you that it for sure sells at $500,000 so buyers are offering $440,000... I don't know if this happens with all properties, but this is a reality that has occurred various times." In preparing this survey, Picasso says, they acted the part of buyers.

He believes that in the first half of this year more projects will be announced due to the "blanqueo" in Argentina (the repatriation of undeclared capital). "We don't expect a 'boom', but the supply and demand should begin to balance out."

Rentals

Regarding rentals, he notes that for the money Punta del Este is cheaper than the coast of Argentina although prices are fairly comparable. For that reason, he believes this summer season should be a good one. "I believe that Punta del Este is very competitive and that demand will firm."

(Translated from http://www.fmgente.com.uy/noticias/punta-este-fuerte-ca%C3%ADda-oferta-38109.html)