Caldeyro Victorica Real Estate was present in the conference “State Politics – The agriculture in the future times”. This conference was organized by El Pais newspaper, the IICA (Inter American Institute of Cooperation for Agriculture) and Seragro. The central topic of the conference was the land. The speakers were Andrés Berterreche, Javier de Haedo, Fernando López, Fernando Matos and Joaquín Secco.
Seragro Consulting presented a report which describes the factors that have affected the land through the history and its current situation. For our readers, we created a summary of the main points in this report.
After decades of stagnation, the land in Uruguay multiplied its value in the last years. This was a quick process and of great impact, caused by the profound change the economy experienced.
There were many factors which affected this change. The most significant is the increase in value of agriculture products. The growth of the emerging economies such as China, Russia, Brazil, allowed millions of people to access better consume.
Land prices have multiplied more than 6 times in the late nineties and years 2010 and 2011. After the financial crisis in Argentina (2001) and Uruguay (2002), land became a refuge for investors who got out of the financial system to invest safely into assets.
Other causes that explain the increase in the value of land are:
- The reduction of government subsidies in rural production in developed countries.
- The global promotion of bio fuels, to which growing quantities of grains are being destined. This constitutes a new demand of great impact.
- The fall of international interest rates. This brings an increase in liquidity and investments in assets.
- The “opportunity costs” of investing in land have become very low and has turned into an incentive to invest.
- The uncertainty generated by the recent financial crisis which has made that investors began placing capital in low risk assets. Investing in land is the safest investment.
- After the 9/11 attacks in United States, a low interest rate was sustained for a long period of time. This caused a rise in international prices in dollars and assets.
- The real estate bubble that exploded in 2008 brought the American financial system to an unprecedented crisis. The dollar fell and this resulted in increases in international prices and assets (stocks, real estate, etc). Uruguay was no exception.