In recent years, Paraguay has experienced a boom in real estate, being the Argentine investors great protagonists. It is estimated that 7 out of 10 properties are purchased by Argentines.
Paraguay 0% 2.2% 4.2%
Argentina has 114% annual inflation, a lack of mortgage loans and a rental law, which discourages the owner from renting. Therefore, according to the last census, Buenos Aires It has 138,000 empty homes, they are not for sale or rent.
Tenants allocate almost 40% of their income to pay rent and expenses. These in turn represent 25% of the rental cost
Delinquency in expenses in Bs. As. on average is 35%, which leads to an increase in them by 20% more.
Owners and investors do not see a change in the country’s situation in the medium term on the horizon. They are tired of paying taxes and improvising. In this context, the investor seeks to obtain profitability in other markets. And Paraguay is a great option.
Why invest in Paraguay
Paraguay is a growing economy, which favors the investments of foreign developers and investors, particularly Argentines, Uruguayans and Brazilians.
Investing in Paraguay is simple, since its economy is open, it does not have particular requirements, where you only have to justify the income of the capital.
Main reasons to invest
Economic stability: Paraguay has maintained a stable economy in recent years, with steady GDP growth and low inflation. This has generated investor confidence and boosted demand for properties. The guaraní is a strong currency. Annual inflation is one of the lowest in Latin America.
Low tax burden: The tax burden in Paraguay is the lowest in the region. The total tax burden is 10%: it includes VAT, Earnings and Personal Income.
Legal security: Since 2014 it has a law that protects investments with tax invariance for ten years.
Investment incentive: The country has laws that promote the arrival of foreign investment in the real estate sector, especially from neighboring countries such as Brazil and Argentina. It offers tax incentives and facilities for investors.
Return of investment: Paraguay offers rents of up to 8% on rentals. It is one of the countries with the highest return on investment.
Business Climate: Paraguay continues to lead the list of countries in the region with the best business climate.
Population growth: For the next two decades they estimate that more than 2,750,000 people will add to the demand for housing. 50,000 people join each year looking for their first home.
Argentine investor profile
The profile of the Argentine buyer is ideal for a market like Asunción. They are professionals and businessmen, middle class, whose objective is to obtain a fixed income in dollars. And it acquires, due to values, more than one unit. They buy in the pool, to achieve lower prices and take advantage of financing. By selling the completed unit, they get a 25% capital gain. They quickly define the purchase, in just 3 or 4 days. They emphasize that no commission or occupancy expenses are paid.
Assumption real estate
The capital of Paraguay is positioned as an increasingly attractive place for developers looking to invest their dollars in projects real estate abroad.
It has experienced significant growth in recent years, with the construction of new residential neighborhoods and shopping centers.
Much has been built for the upper middle class. Today the demand is in the middle segment, who are looking for properties to buy and rent, due to the growth in purchasing power.
The cost per m2 in Asunción is around US$1,300. The most consulted and sold properties are 2 rooms, which already include a garage. The annual profitability is between 6 and 8%, in dollars.
Investors buy properties to rent: “the rent is high and in dollars”
The latest projects are sustainable, intelligent and with universal access. It is what investors and also the young generation of tenants are requesting. The advantage, in addition to taking care of the quality of construction and the decrease in expenses, is the valuation of the units when renting and selling them.
The technology applied to buildings (domotics) allows, among other options, to turn on electrical appliances, open doors, reserve amenities and pay expenses.
conclusions
The outlook for the coming years of the Paraguayan real estate market is very good.
The Paraguayan real estate industry, due to its economic stability, can guarantee high profitability, it has very good investment opportunities for consumers: investors and end users, always thinking in the medium and long term.
* By Gonzalo Martínez Vargas, CEO Moebius Real Estate Consultant
Source: Ambito
