Buying a property in Montevideo: a complete guide

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

Yes, the analysis of Montevideo's property market is included in our pack

Thinking of buying a property in Montevideo? You're not alone!

Many people are captivated by Montevideo's coastal allure and dream of owning a beachfront property or a stylish condominium in this city.

Is it financially viable, though? Are property prices increasing in Montevideo? How much does it cost? Is it better to invest in Pocitos or Ciudad Vieja? What about the taxes? Where can you get a rental yield above 7%?

We've figured it out for you.

At TheLatinvestor, we know this market inside and out. Actually, we've gathered all our findings in a pack. Get it now.

In this article, we're happy to share useful information with you.

How's the property market in Montevideo?

Is the property market going up or down? Let's look at fresh data and statistics.

Types of properties

In Montevideo, there are various types of properties available for sale to suit different preferences and needs.

These include apartments ranging from cozy studios to spacious multi-bedroom units, charming houses with different layouts and sizes, commercial properties like shops and offices for business ventures, and potentially land for those looking to build their dream home.

Whether you're seeking a comfortable living space, a business opportunity, or a blank canvas to create your own space, Montevideo offers a diverse range of properties for sale.

Better to buy or rent?

(If you plan to use it yourself and not as a rental)

If Montevideo, the capital of Uruguay, has caught your interest as a place to settle, you might be thinking about the pros and cons of buying versus renting a property.

Without a doubt, it's better to buy if you want to build long-term wealth and have more control over the property you live in.

One data can help you make a decision - the property price-to-rent ratio. You can think of it as the time it takes for rental income to equal the property's current purchase price.

According to Numbeo, the property price-to-rent ratio in Montevideo is around 19.39, which is around the world average.

In simple terms, it would typically require 19 years of rental payments, on average, to buy a property in Montevideo.

Property prices in Montevideo

On average, according to the last data from Central Bank of Uruguay, purchasing a property in Montevideo would cost you around $2,420 per square meter.

It's just an average. The value of a square meter for an apartment in Pocitos might differ from a house in Carrasco. We actually offer a more in-depth analysis in our pack for buying property in Montevideo and in Uruguay.

To give you a sense of scale, it means that, instead of buying an apartment in New York, you can get 6 properties in Montevideo.

Also, housing prices in Montevideo are 40% cheaper than in Punta Del Este.

The most expensive neighbourhoods in Montevideo are probably Pocitos, Carrasco, and Punta Carretas, while the cheapest neighbourhoods are likely La Teja, Parque Rodo, and Cerrito.

Trends

First and foremost, we have to acknowledge that Uruguay is, today, a very stable country. The last Fragile State Index that has been reported for this place is 35.2.

This is important to remember when wondering if it's a good investment to buy a property in Montevideo.

Besides that, if we look at the IMF's GDP forecasts, Uruguay's economy is expected to soar by 11.3% in the coming 5 years, resulting in an average GDP growth rate of 2.3%.

If you want to invest in real estate in Montevideo it's a good thing because, when people experience an increase in wealth, it typically translates to a surge in housing costs.

Also, in Uruguay, the average GDP per capita has changed by 4.4% over the last 5 years. Despite being minimal, there is still some observable growth.

This data is a positive signal - housing prices in Montevideo might soar in 2024 and after that.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Uruguay right now.

Buying property in Montevideo

Buying real estate in Montevideo can be difficult due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property in Montevideo and in Uruguay.

Buying process

In the pack of documents we have built, we've covered everything about buying a property, from the contacts you'll need to the taxes that need to be paid, and even where to look for available properties.

Now, we're presenting a simpler version to make it easier for you to understand and follow along.

This is the step-by-step process to purchase a property in Montevideo:

1. Research the Montevideo real estate market and specific neighborhoods.
2. Engage a licensed Montevideo real estate agent.
3. Choose your desired property and negotiate the price.
4. Hire a Montevideo attorney to conduct a "Titulo de Propiedad" (property title) review.
5. Sign a "Contrato de Reserva" (reservation contract) and pay a deposit.
6. Conduct a property inspection and obtain a "Certificado de Habitabilidad" (habitability certificate).
7. Secure financing through a local bank or mortgage lender.
8. Sign the "Contrato de Compraventa" (purchase agreement) and pay a down payment.
9. Complete all necessary paperwork, including the "Certificado Notarial de Firma" (notarial certification).
10. Transfer the property title through the "Escritura de Compraventa" (deed).
11. Register the property at the "Registro de Propiedad" (Property Registry).
12. Celebrate the successful purchase of your Montevideo property.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Uruguay.

Make a profitable investment in Montevideo

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Where to find a property

Discover properties in Montevideo with these websites:

• Luxury Punta - Offers a wide range of exceptional villas and homes in desirable locations.
• Sotheby's International Realty - Luxury agency offering high-end properties for sale in Uruguay, including vacation homes, apartments, and penthouses.
• Team Haverkate - Provides a wide range of properties including apartments, estancias, beach properties, land, countryside, and commercial properties.
• Century21 - Offers a variety of residential properties for sale in Uruguay, connecting users with real estate agents.
• Vanbevern Propiedades - Provides coastal houses in Uruguay, helping you find your year-round or winter home near the beach.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Uruguay.

What you can get

As mentioned before, the average price per sqm in Montevideo is $2,420. If you're considering a one-bedroom property covering 60 square meters, it would be around $145,000, while a two-bedroom with 85 square meters would be approximately $206,000.

However, as you can guess, property prices will differ based on the attributes of the property and its specific location.

Expect property prices to be on the higher side in the premium areas of Montevideo. Think about an apartment in Carrasco, which might have a price around $280,000, whereas a residence in Pocitos could be valued at $540,000.

But, there are cheaper places. You can find a condominium in Casavalle for $80,000 or a condominium in Cerro that's priced at $70,000.

We give a more detailed breakdown in our full pack for buying property in Uruguay.

Common mistakes

Here are the main pitfalls specific to buying a property in Montevideo, Uruguay:

• Complex land tenure system: Unclear ownership claims and historic land titles can lead to legal disputes and delays in property transactions.
• Asbesto usage: Some older properties may contain asbestos, which poses health risks and requires costly removal.
• Flooding risks: Certain areas in Montevideo are prone to flooding during heavy rains, affecting property value and insurance costs.
• Heritage site restrictions: Historic preservation laws may limit renovations or alterations to protected properties.
• "PH" property complexities: Shared ownership arrangements (PH) can lead to disagreements among co-owners regarding property management and expenses.
• Eviction regulations: Tenants have strong legal protections, making it challenging to evict them if necessary.
• Currency controls: Government policies on currency exchange can impact property values and repatriation of funds for foreign buyers.
• Cultural nuances: Understanding local customs and language barriers when negotiating with sellers and agents is crucial for a successful purchase.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Uruguay Property Pack

Living in Montevideo

Living in Montevideo is a great experience, offering a relaxed lifestyle with access to beautiful beaches, vibrant cultural attractions, and a low cost of living.

Cost of living

The cost of living in Montevideo is generally considered to be quite affordable. Prices for basic necessities such as groceries, transportation, and housing are usually lower than in other major cities in the region.

Here are some examples to better understand the cost of living in Montevideo, Uruguay:

• Rent for a one-bedroom apartment in the trendy neighborhood of Pocitos: $900 per month.
• A meal at a local restaurant with "Chivito," a traditional Uruguayan sandwich: $15.
• Monthly STM bus card for convenient city transportation: $30.
• Utilities (electricity, water, heating) for a small apartment in Ciudad Vieja: $120 per month.
• A bottle of "Medio y Medio," a traditional Uruguayan sparkling wine: $10.
• Entrance fee to the Solis Theatre, a historical landmark: $8.
• Monthly membership at a popular gym chain like "Anytime Fitness": $50.
• A cup of "Mate," a traditional herbal tea, at a local cafe: $2.

Neighbourhoods

We want to show information in an easy-to-understand way. So, we made a summary table that describes the different neighborhoods in Montevideo. For yields, prices and rents, check our property pack.

Life in Montevideo

Montevideo is the economic hub of Uruguay, with a strong focus on services, trade, and finance. The city is also home to many large industries, such as food processing, chemicals, and textiles.

Referring to the IMF's data, the GDP of Montevideo constitutes almost 77% of Uruguay's GDP. That's nice because a city with a strong GDP makes a good ground for property investment due to its economic vibrancy, indicating potential for job growth, increased demand for real estate, and overall stability in property values.

What expats usually like the most in Montevideo is the laid-back atmosphere and the vibrant nightlife. They also enjoy the stunning beaches, cultural attractions, and the wide variety of cuisine.

However, the crime rate index of Panama City remains high (with a value of 56). The most common crimes in Montevideo are theft, robbery, and assault.

A good point for a property investor - Montevideo has a mass rapid transit system known as the Montevideo Metro.

Access to healthcare in Montevideo is very good, with a Healthcare Index of 68. You probably know that when there's a solid healthcare setup, it makes a location more appealing, which benefits real estate.

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Renting out in Montevideo

This part is for you if you want to buy a property with the goal of renting it out and making money from it, rather than living there.

Long-term

Tenant Profiles in Montevideo

If you decide to buy and rent out to long-term tenants, you should target young professionals, students, and retirees who are looking for affordable housing close to the city centre. For short-term tenants, you should target tourists and business travellers who are looking for accommodation in the city.

Here is a little summary table we've made for you.

Rental yields

Nowadays, the rental yields you get in Montevideo are between 5% and 7%. There are some opportunities. So you know, a "good" rental yield is above 7%.

The best rental yields in Montevideo are typically found in properties located in the city center, close to public transportation, universities, and other amenities. This is because such properties benefit from a high demand from students and other city-dwellers looking for convenient access to the city's attractions.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Montevideo are taxed at 11%, which is very advantageous.

Short-term

You could also decide to rent short-term to travelers and business people looking to explore Montevideo for a few days or weeks. Additionally, you may be able to attract students or interns coming to the city for a short-term stay.

If you decide to go with that option, look for properties in the Ciudad Vieja neighborhood, particularly near the Plaza Independencia, or in the Pocitos area near the Rambla.

Currently, there are approximately 2,335 active Airbnb listings in Montevideo, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $58.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Montevideo can make around $600 per month. Also, the average occupancy rate is estimated at 59%.

Is it worth buying real estate in Montevideo then?

Buying a property in Montevideo, Uruguay, is a fantastic idea if you're planning to make this charming coastal city your long-term home, retire in a safe and culturally rich environment, or invest in a stable and steadily growing real estate market.

Montevideo offers a relaxed lifestyle, beautiful beaches, and a lower cost of living compared to many international cities. Owning a property here provides stability and a sense of belonging.

Investors looking to build wealth through real estate should seriously consider Montevideo. The city's property market has shown consistent growth, and with the expectation of property values continuing to rise, it's an opportune time to invest. Additionally, generating rental income is a viable option, with rental yields ranging from 5% to 7%, especially in central areas near universities and amenities. Building equity over time by owning a property can also be a smart financial move.

However, if you're planning a short-term stay, have financial constraints, or prefer flexibility in your housing situation, renting might be a more practical choice. Real estate transactions involve significant upfront costs, and the market's uncertainty could pose risks. Also, if your focus is solely on short-term rentals, be prepared for competition from Airbnb listings and potential higher operating costs.

In summary, buying property in Montevideo is an excellent idea for long-term residents, retirees, and investors seeking stability and potential wealth accumulation.

Renting is a better fit for those with short-term plans, financial limitations, or a desire for housing flexibility.

Make sure you understand the real estate market in Montevideo

Don't rush into buying the wrong property in Uruguay. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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