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Comparing Property Prices In Latin America’s Top Markets

25 Feb
Beach property in Latin America

Comparing Property Prices In Latin America’s Top Markets

Revealed: Latin America’s Top Property Markets, According To New LIOS Survey

Each year my parent publishing house, Live and Invest Overseas, takes a snapshot of property costs in key markets across top Latin American markets.

For each of the cities included in the survey, Live and Invest Overseas editors look at current pricing for two-bedroom, two-bath apartments of 75 to 100 square meters of living space or as close to that as the local inventory allows, all in neighborhoods suitable for and favored by expats and foreign retirees.

Prices in countries that use something other than the U.S. dollar are converted to U.S. dollars. Prices are then broken down to per-square-meter averages for the purposes of apple-to-apple comparisons.

This year’s survey, just published, shows big price drops thanks to the strong U.S. dollar. Values in many markets in the survey have appreciated, in some cases significantly. However, the U.S. dollar’s rally this past year against currencies throughout Latin America means that U.S. dollar holders are able to buy at a discount, market appreciation notwithstanding.

Biggest Price Drops In U.S. Dollar Terms

The beach resort of Santa Marta, Colombia, wins the prize for biggest price drop in 2015. Properties in this popular seaside getaway fell from US$2,091 per square meter last year to US$1,032 at the start of 2016… a drop of more than 50%.

Values in Santa Marta actually increased in Colombian peso terms, but the U.S.  dollar’s gain on the Colombian peso of 61% kept prices in check in U.S. dollar terms.

In Santiago, Chile, properties in this city’s best neighborhoods fell slightly this year in Chilean peso terms. This comes with a 20% strengthening of the U.S. dollar versus the Chilean peso, meaning a 24% price reduction in Santiago, which offers one of the best lifestyle options in Latin America for U.S. dollar holders.

Prices in Medellín, Colombia, fell by 13.4% in U.S. dollar terms, which is a good discount for this great-weather-year-round destination. However, this is after accounting for the U.S. dollar’s 61.3% gain against the Colombian peso last year. Prices in Medellín have gone up smartly in Colombian peso terms. This is because Medellín is in increasing demand by a broad spectrum of expat retirees, part-year residents, and investors.

When the U.S. dollar turns around on its next downward cycle, these local price increases will result in super returns for today’s buyers.

Following is a list of the surveyed markets whose prices fell in 2015. The “FX Change” column shows how much the U.S. dollar gained on the local currency in places where real estate trades in a local currency.

CountryCity20152016Price ChangeFX Change
ColombiaSanta MartaUS$2,091US$1,032-50.6%61.3%
ChileSantiagoUS$3,057US$2,323-24.0%20.0%
UruguayMontevideo CarreterasUS$2,679US$2,210-17.5%
ColombiaMedellín (El Poblado)US$1,330US$1,153-13.4%61.3%
PeruArequipaUS$1,136US$1,047-7.9%
BoliviaSanta CruzUS$1,068US$998-6.6%

Least Expensive Markets In Latin America

Santa Cruz, Bolivia, takes top honors for the least expensive market in the survey. The center of Bolivia’s wealth, Santa Cruz, is not the most colorful or most “Andean” city in Bolivia, but it’s a sophisticated city where a retiree could live well.

Another Andean venue made the “least expensive” list this year—Arequipa, Peru. With 12 months of brilliant sunshine and near-perfect weather, this 16th-century colonial city is a top retirement choice in Peru. Thanks to its altitude of 7,650 feet, Arequipa averages temperatures of 71 degrees all year.

Cuenca, Ecuador, a perennially affordable property market in the region, remains on the list this year despite the fact that Ecuador uses the U.S. dollar, meaning no currency advantage. With a modest gain in real estate prices of less than 2%, Cuenca is still a great value for the lifestyle. It’s been the top retirement choice for North Americans for almost 10 years now and is still holding its own in popularity.

Here are the five least expensive property markets in Latin America:

CountryCity20152016Price ChangeFX Change
BoliviaSanta CruzUS$1,068US$998-6.6%
ColombiaSanta MartaUS$2,091US$1,032-50.6%61.3%
PeruArequipaUS$1,136US$1,047-7.9%
ColombiaMedellín (El Poblado)US$1,330US$1,153-13.4%61.3%
EcuadorCuencaUS$1,199US$1,2221.9%

High-End Markets Offer Great Lifestyle Buys

Punta del Este, Uruguay, tops the charts among high-end Latin American markets, followed closely by nearby Buenos Aires.

Premium properties in Panama City, Panama, appreciated at a healthy rate of 11.2% in 2015. This includes properties on Balboa Avenue, Punta Pacifica, and Buena Vista. Panama City is one of the world’s most business-friendly, tax-friendly, and convenient locations, with many years of economic health in its future thanks to the Panama Canal expansion.

Here are the five most expensive markets in Latin America:

CountryCity20152016Price ChangeFX Change
UruguayPunta del EsteUS$3,350US$3,5475.9%
ArgentinaBuenos AiresUS$2,660US$2,7583.7%
PanamaPanama CityUS$2,300US$2,55811.2%
ChileSantiagoUS$3,057US$2,323-24%20%
UruguayMontevideo CarreterasUS$2,679US$2,210-17.5%

Where To Take Action In 2016

Exchange rates are still extremely favorable in Colombia, and Medellín is a top market for investment, lifestyle, and retirement. Prices continue to appreciate nicely in local-currency terms. When the U.S. dollar enters its next cycle, property owners in this city could see dramatic gains.

Santiago, Chile, has long been a top choice for an elegant, First-World environment. What’s kept many people away has been the price. Over the past few years, however, this city has become more affordable.

If you like Santiago, this is the time to be shopping, for two reasons. One is that the U.S. dollar may turn around at any time, causing prices to rise. The other is that properties in Chile may start trading in U.S. dollars, as they have in the past, if the U.S. dollar stays as strong as it has been.

Arequipa, Peru, is a good choice if you want spring-like weather year-round, lots of sunshine, and reasonable prices in a beautiful, historic colonial city.

Santa Marta, Colombia, is a real bargain right now. If you’re interested in a Caribbean vacation getaway, this is a top option.

Following are current U.S. dollar-per-square-meter values for all property markets considered in this year’s survey:

MarketUSD/m2Trades In
Mendoza, ArgentinaUS$945USD
Santa Cruz, BoliviaUS$998USD
Santa Marta, ColombiaUS$1,032COP
Arequipa, PeruUS$1,047USD
Granada, NicaraguaUS$1,107USD
Medellín, ColombiaUS$1,153COP
Cuenca, EcuadorUS$1,222USD
San Miguel de Allende, MexicoUS$1,307MXN
Fortaleza, BrazilUS$1,535BRL
Asuncion, ParaguayUS$1,649USD
Montevideo, UruguayUS$1,716USD
Puerto Vallarta, MexicoUS$1,746MXN
San Jose, Costa RicaUS$1,769USD
Santiago, ChileUS$2,323CLP
Panama City, PanamaUS$2,558USD
Buenos Aires, ArgentinaUS$2,758USD
Punta del Este, UruguayUS$3,547USD

Lief Simon

P.S. Key to pulling together the data for this annual Latin America Property Survey is our Overseas Property Alert Editor Lee Harrison. If you aren’t yet reading Lee’s weekly e-letter on global property markets and current opportunities, you should be.

Mailbag

“Lief, I and my friend plan to come to your seminar in Panama in March. We want to invest in Panama and buy real estate and know that you moved from Paris to live in Panama and know greatly about its attributes. I have read your articles and am interested in further knowing what we can do to pursue a lifestyle in Panama. I want to establish residency and also perhaps form a Panama foundation.

“Would we, my friend and I, be able to start the process and get most of it done while we are at the conference? I understand it doesn’t take long. I have most of the forms. Please advise.”

J.S.

Yes, you should be able to get everything started while you’re in Panama at the event. We’ll have a Panama attorney at the conference who will be able to help you with both the residency process and forming a foundation. A number of Panama property professionals will be participating, as well, so you should be able to explore many different options for buying or renting property in this country.

Bottom line, you should be able to accomplish all your objectives. I look forward to meeting you next month.