Uruguay is not expensive, ‘it has become extremely expensive” with construction costs that are double those of Argentina, claimed Eduardo Constantini, an Argentine business man with strong investments in Uruguay, the latest of which building 500 summer houses along the eastern coast.
“The problem in Uruguay is that the dollar is defenceless against domestic inflation, which means construction costs are more than 100% higher than in Argentina”, said Constantini who pointed to the exchange rate and inflation as the main reasons for such a situation.
“Fuel, labour is dearer in Uruguay than in Argentina or even the US and that is because the dollar is so cheap in Uruguay. The Uruguayan agriculture sector is so efficient that the country is flooded with dollars and naturally pushes the value of the dollar in Pesos down”, argued the Argentine businessman.
As to the second factor Constantini recalled that only four years ago the US dollar was 24 Uruguayan Pesos, now it stands at 21 Pesos but for most of that period it was below 20 Pesos, “but with annual inflation of 8% to 10% during that time, so that is why Uruguay has become so expensive in dollar terms”.
The Laguna Garzon project in which Constantini’s company is involved includes building a bridge across a coastal lagoon that must keep to strict environmental terms and on the other side to the east build the 500 houses, hopefully to be sold mostly to the over-stressed Argentines who adore the Uruguayan coast and the easy-going attitude of Uruguayans.
Constantini also revealed that the cost of the bridge has more than trebled because of the dollar situation and the environmental demands from the Uruguayan government.
“We work long term, but nevertheless the Uruguayan cost and the Argentine situation, with no dollars to go around, will obviously make it more difficult; our costs have more than doubled original estimates, but we don’t run away from problems and we keep our word”, said Constantini, who added that his company has similar investments in Miami and Argentina.
“We face a weak demand and soaring construction costs, the equation is not easy. And what is evident is that no further real estate developments can be planned until this situation is corrected”.
However Constantini underlined that the problem is of one branch of the economy since “I am aware that investing in agriculture and forestry in Uruguay continues to be very efficient and profitable”.
Finally Constantini anticipated that the coming summer season in Uruguay, particularly in the Punta del Este Atlantic resort “unfortunately is not going to be good, for what I have said, Uruguayan costs and the Argentine situation. I see nothing in the short or mid term indicating that a drastic change can be expected”.