Uruguay may be sandwiched between two South American all-stars, Brazil and Argentina, but is blessed with wide Atlantic beaches, towns stuffed with colonial architecture and a temperate climate. The stable political and economic climate plus chic beach resorts make it both an excellent travel destination and a safe investment for second-home buyers from Europe and around South and North America.

What is it known for?
Uruguay is considered a very stable country socially, politically and economically. Along with Bolivia, it avoided going into a recession in the recent global downturn -- one of the few South American countries to do so. It has a democratically elected government and president, and has made many social and educational advances. The country provides, for example, every primary school student with a laptop, and was the first Latin American nation to legalize same-sex civil unions.

Most travellers and tourists focus on the cities and resorts along the Rio de la Plata and Atlantic coastlines, including the capital, Montevideo. The country’s interior, stretching north to the Brazil border, is overwhelmingly rural, while Montevideo  is the cultural and commercial centre of the country, home to more than a third of the country’s population. Colonia del Sacramento (often referred to as just Colonia), the oldest town in Uruguay and a well-preserved Unesco World Heritage site, is directly across the estuary from BA, just an hour from the Argentine capital by boat. Farther east along the Atlantic coast near woods of eucalyptus and pine, the glitz and glamour of the summer resort town Punta del Este attracts a Côte d’Azur and South Beach-like crowd, while chic sophisticates who want a quieter piece of beach keep going east to the town of Jose Ignacio.

Where do you want to live?
Montevideo may not have the sultry allure of Buenos Aires, but there are many pleasant cafes you can settle in with a cortado (espresso with milk) and medialuna (croissant) and watch the world go by. Many of the desirable neighbourhoods are on the waterfront. Near the Cuidad Vieja (Old City), Punta Carretas has shopping malls and a golf course; Pocitos has the Playa Pocitos, a curving strip of white sand beach, and the upscale Rambla boardwalk that lies alongside it; and farthest east, expensive Carrasco has beautiful architecture and a number of international schools. “The coastal districts have seen strong growth, particularly in residential condominiums,” said Paul Reynolds, managing director of Reynolds Propiedades estate agents.

The draw in historic Colonia  are the 17th- and 18th-century Portuguese and Spanish colonial homes. “Be aware that certain buildings have restrictions and your renovation plans will likely require a review by the historical society,” said Reynolds. “But Colonia has not escaped modernisation of its port, opening of new hotels and real estate development on its waterfront.”

Punta del Este, an hour and a half from Montevideo, has condominiums and high rises lining the beaches that reach out into the water, with the Rio de la Plata on one side and the Atlantic Ocean on the other. “Luxury vacation properties are the norm here, with a number of both detached houses and apartments available,” said Reynolds. “Many condos have fantastic ocean views for a fraction of what they would cost in the US or elsewhere.” In areas by the ocean, demand buyers from Europe, Brazil, Argentina and the US are driving a record number of construction permits for condo buildings and estates on subdivisions.

Half an hour from Punta del Este, the beach town of Jose Ignacio attracts American movie stars, supermodels, European industrialists and others seeking privacy. The town government eschewed high-rise development, but allowed a few boutique properties such as Playa Vik to open. As a result of limited options, the demand for lots and houses increased, but there is still a finite number of properties available. Further up the coast, the province of Rocha still has miles of undeveloped beachfront. “There has been unprecedented development in seaside towns such as Punta del Diablo and La Pedrara, and a number of subdivision projects are underway,” said Reynolds.

Side trips
Carmelo is a less-expensive beach town on the Rio de la Plata west of Colonia, close to the country’s wine regions but with sandy beaches and luxury hotels like the Four Seasons Resort, Carmelo.. Inland, there are many working estancias (ranches) where tourists can live out the gaucho (cowboy) lifestyle. Salto, 300 miles north of Montevideo, is known for its hot springs.

Buenos Aires is only a 45-minute flight or a two and a half hour ferry ride from Montevideo. Rio de Janeiro is about a three-hour flight away and Miami takes 10 hours, nonstop.

Practical info
The real estate market is considered a safe investment with attractive yields by Argentineans and Brazilians, so it has grown steadily until recently, due to the global economic downturn. “The number of transactions has dropped 10% from six months ago, but prices have not,” explained Reynolds. “With only 7% of buyers receiving financing, we expect the market to remain flat.”

In Montevideo, a one-bed flat in a top neighbourhood costs $90,000 (prices are typically quoted in US currency) and rents for around $800 a month. A two- or three-bed rental in Punta del Este in high season will cost around $10,000 a month, while beachfront houses go for around $100 per sq foot in Punta down to $10 per sq foot in some of the northerly beach resorts. In Punta, waterfront condos range from $300 to $500 per sq foot. An empty lot starts at $30,000 for 7,000 sq feet and construction costs are $110 to $170 per sq foot.

Uruguay has no restrictions on foreigners buying land or houses but there are legal and estate agent fees of 3.66% (each) of the purchase price, plus VAT (value-added tax), stamp duty and a 2% transfer tax.

Further information
Total Uruguay: ex-pat info, links and meet-ups
Mercopress: English-language news about Mercosur union countries, including Uruguay
El Pais: leading daily newspaper of Uruguay