Real estate outlook 2025

The year 2024 left us with changes in regulations and indicators that, together with the upcoming government changes at the national and departmental level, project a year full of challenges and opportunities – and some uncertainties – in Real Estate.

Below, we briefly analyze the 10 main aspects to consider.

1. Increase in real estate operations

According to the Real Estate Activity Indicators published periodically by the National Institute of Statistics and information obtained from the competent public registries (General Directorate of Registries) -until last November-, the Uruguayan market ends 2024 with a slight increase in real estate transactions with respect to 2023 and it is expected, for the current year, that the trend will continue.

Despite a period of certain slowdown, the results also showed an increase in the average prices of operations, both in the capital and in the interior of the country, with a higher activity index in Montevideo, supported by the departments of Maldonado and Cannelloni.

2. Credit growth

According to information published by the Central Bank of Uruguay, as of November 2024, a new growth in credit was verified in our country, reaching US$ 23.8 billion, considering the grants made by public and private banks (more than 90%) and non-banking financial entities.

55% concerns credit to companies and the remaining 45% to family debt. Within this stock of personal loans, mortgage loans for the acquisition of real estate, loans for the purchase of motor vehicles and traditional consumer loans (personal cash loans, credit cards, etc.) are considered. .

Particularly, mortgage credit stands out with an increase of approximately 12% year-on-year, with a lot of push from the banks, which allows for notable dynamism in the Uruguayan real estate sector.

3. Urbanizations

In Uruguay there are almost a hundred horizontal property developments – also called “private neighborhoods” or “countries” -, regulated by Law No. 17,292 of 01/25/2001, located mainly in Maldonado (proximities of Punta del Este), Canelones (axis of Camino de los Horneros) and Montevideo (Carrasco Norte, although in our capital they are not allowed and are developed as “semi-private” neighborhoods, without perimeter or access closed).

The development of urbanizations and related works (road infrastructure, shopping centers, health and education services, etc.), booming despite some business setbacks the previous year, presents opportunities for growth, due to the high existing demand from of the interested parties who seek, in times of virtuality, greater security and green spaces.

The department of Canelones promoted the urbanizations and it is expected that the new departmental government will maintain the policies used. Likewise, Maldonado, which has practically half of this type of condominiums, due to the notable influence of foreigners in the area. For its part, in Montevideo, as in Salto, there are reticent positions on the matter, which generates a certain irresolution and stimulates a deep debate on the applicable departmental regulations.

4. Regulation of payments and control of money laundering

The Urgent Consideration Law (LUC) No. 19,889 of 07/09/2020, modified some provisions of the Financial Inclusion Law No. 19,210 of 04/29/2014, eliminating restrictions on payment in cash, establishing that any operation or legal business may be carried out in cash until the sum of one million indexed units (approximately $6,000,000 or US$ 140,000 to date), and the balance to be paid by means of payment other than cash (checks, drafts, transfers, etc.).

In line with the above, the LUC incorporated an important modification to the Comprehensive Law Against Money Laundering No. 19,574 of 12/20/2017, considering simplified due diligence measures applicable when an operation is carried out with payment instruments related to money or other securities deposited in financial institutions supervised by the Central Bank of Uruguay, issued or accredited in the name of the party proposing the payment instrument.

Thus, certain controls by non-financial obligated subjects (notaries, real estate agencies, construction companies and real estate developers) were eliminated when the controlled person (buyer of a house, for example) pays the price of the business with some “banked” instrument (letter exchange rate, e.g.), and increasing the level of surveillance when there are cash payments.

The economic team of the next national government is analyzing the issue and must determine whether to maintain the regulations on the matter or propose modifications, which will have an impact on key aspects such as financial freedom and the fight against money laundering and the financing of terrorism.

5. Social interest housing

Law No. 18,795 of 08/17/2011 declared of national interest the improvement of the conditions of access to social housing, seeking that the population of low and medium socioeconomic level can more easily access housing, in addition to promoting construction in the country.

Each housing project promoted is analyzed and approved by the National Housing Agency, offering tax benefits and promoting the construction, renovation, expansion or recycling of properties for social housing. Every year the volume of projects under this modality increases, reaching more than 1,400 to date (approximately 40,000 homes throughout Uruguay).

Promoted housing is a key tool for construction in the country for this segment and the notable growth of construction responds largely to its existence, being very attractive in economic terms, as it grants tax exemptions to developers and purchasers (Property Tax). Property Transfers in the first sale, Income Tax for 10 years -in the case of leasing-, Wealth Tax for 10 years, deduction of the cost of acquisition of the property to determine the developer’s income and VAT on income derived from disposal, construction, repair and recycling activities).

6. Projects of great economic dimension

On December 31, 2024, the deadline to present projects of great economic dimension to the Commission for the Application of the Investment Law (COMAP), which studies and recommends the approval of construction activities for the sale or lease of properties for offices or housing, and private initiative developments. Projects of great economic dimension are considered those that have a minimum investment (value of civil works and movable property destined for common use areas) of 30 million indexed units (approximately US$ 4,500,000).

Applying to this regime is a necessary condition for many investors and the viability of their projects, as they include significant tax benefits (exemptions from Income and Wealth Tax, recovery of Value Added Tax for purchases of materials and services, and exemption from taxes. to the importation of movable fixed assets that are not competitive with the national industry).

It is understandable and healthy that the Executive Branch considers extending the deadline to continue promoting real estate investment, especially foreign investment.

7. Tourist accommodation in private homes

By Law No. 20,352 of 09/19/2024, temporary accommodation was generically regulated, which attempts to provide a solution to the coexistence between the traditional hotel industry and accommodations offered through digital platforms (Airbnb, Booking, etc.).

For these purposes, properties for tourist use are defined as those offered by their owners, administrators or operators, under conditions of immediate occupation, for consideration, including complementary services (cleaning, transfers, gastronomy, etc.).

Accommodation in this type of property is considered a tourist service, creating a Registry of Tour Operators under the orbit of the Ministry of Tourism.

The challenge for 2025 is the issuance of appropriate regulations that contribute to compliance with the law (controls, inspections, information on guests, etc.).

8. Real Estate Operators

Law No. 20,380 of 09/11/2024 declared the professional real estate activity of national interest, with the objective of regulating the free exercise of the activity carried out by commission agents, agents, brokers, operators, real estate franchises and real estate service providers.

One of the requirements to operate is that the persons, natural or legal, who carry out the real estate activity can prove the effective exercise of the same without interruption during the year prior to the law or the approval of the real estate operator courses recognized by the Ministry of Education and Culture, which are already being dictated to comply with the regulations. The law created a National Registry of Real Estate Operators in order to register them and issue license plates.

A more professional exercise is expected, within the framework of the defense of free competition, which will have a favorable impact on real estate activity throughout the country.

9. Heritage Promotion of the Old City of Montevideo

In November 2024, the Departmental Board of Montevideo authorized the Municipality to carry out a building reactivation plan for the Old City, granting a series of facilities to those who carry out new constructions and rehabilitation works in the area, among which stand out 100% exemptions from the payment of Real Estate Tax and the General Departmental Rate, for 10 years.

In addition, the plan includes other incentives such as temporary exemption from the Commercial Additional for commercial ventures, exemption from payment of construction permit fees, exemption from payment of the compensatory price for greater use, increases in permitted heights and the non-obligation of building new plazas. of parking.

This policy aims to safeguard the heritage heritage of the historic center of our capital, promoting urban dynamics and the enjoyment of this area through the establishment of new activities and implementation of works.

10. UR debtors

Pursuant to the provisions of Law No. 20,237 of 12.22.2023 and Decree No. 89/024 of 04.2.2024, the Banco Hipotecario del Uruguay (BHU) and the National Housing Agency (ANV) constituted a financial trust (Fideicomiso Solution of Debtors in UR), in order to restructure and manage credits documented through mortgage loans or promises of purchase and sale in adjustable units, whose creditor is the BHU.

The ANV, in its capacity as trustee of the trust, has the challenge of gradually completing the task that involves thousands of families, who will benefit from reductions in interest rates, cancellations of credits and granting of deeds of sale in compliance of the promises signed in a timely manner, as appropriate

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