Paraguay: Keys to invest in the new fashionable country for Argentineans

In the last months, the interest of the Argentineans in the Paraguayan real estate market was boosted by the macroeconomic stability of that country, which has been growing for 15 years. In this scenario, the annual profitability in dollars that is obtained can reach double digits, when in Argentina it is in a historical floor of 2%, since the properties do not lower their price in dollars and the rents are charged in pesos that lose purchasing power.

“Since the devaluations of 2018 and 2019 the number of consultations has increased and, although with the pandemic there are no visits, people are asking and investigating. When the borders are enabled and travel is allowed, transactions will take place,” assured Ernesto Figueredo Coronel, president of Raíces Real Estate, a Paraguayan firm that specializes in closed and open neighborhoods. They have several Argentinean clients, from investors to professionals who live in suburban areas because they moved for work or to expand their business.

Meanwhile, José Rozados, head of Reporte Inmobiliario, also sees a renewed interest from Argentines in Paraguay, since they had many inquiries in that sense on their website and for that reason, they organized a webinar that had more than 800 registered.

One of the exhibitors was Humberto Foresti, partner and director of HF Proyectos & Inversiones, who has a 10-year trajectory in the Paraguayan market.

“In 2011 Paraguay began to awaken interest in Cristina Kirchner’s dollar trap and because it is well positioned, since it has little tax pressure: 10% tax on profits and 10% on personal income which would be what is known here as earnings. Besides, it is a very safe country from a legal point of view: the same Civil Code is valid for rental and purchase contracts and there is free entrance and exit of foreign currency, always through the legal ways. That is, the banks ask for the origin of those funds,” he explained.

According to Foresti, in 2010 in Paraguay many apartment towers were built with services in Asuncion, since building was almost 50% cheaper than in Buenos Aires. In any case, the habits of Paraguayans used to live in houses of 600 square meters with gardens of 2000 M2- meant that demand did not appear quickly and profitability was lower than initially expected (5% instead of 9%).

“During this time, prices were refined and the supply is becoming more efficient in search of the Paraguayan consumer. Now, instead of tickets of US$300,000 to US$600,000 for which the consumer is not present or does not appear quickly, we are thinking of units of US$50,000 to US$100,000 for those who enter Asunción every day to work. There are two million people who enter Asunción every day from the Greater Asunción and there is a mortgage loan with a 9% interest rate,” he said. According to his calculations, for a single room of US$50,000, a monthly rent of US$200 can be charged.

Meanwhile, Figueredo Coronel, from Raíces Real Estate, said that the profitability for renting a house in a neighborhood goes from 5% to 12%, before taxes and expenses, depending on when it was purchased. “We have had neighborhoods that started out at US$50 or US$60 per square meter and after a few years they were marketed at US$200. If you leave the capital for five or seven years it can be a very profitable shelter, whether you decide to sell or generate income by building a house. And there’s nothing like the security that land provides, especially in these times of pandemic,” he closed.