“I’ve been in Paraguay for about 12 months. I own a couple of units in Asunción (or CDE), but they’re not quite finished. The developer went broke, but I’m not too worried—the people who introduced me to the deal told me the developer has a solution in mind”
“We didn’t really want this much land. The thing is, when we came to Paraguay we met a great agent who spoke our language. He found us this property and assured us we could make a killing by subdividing it later. By the time we carve up the land into lotes, we’ll probably end up getting the buildings and land for free”
I’ve heard statements like these countless times over the past two years in Paraguay. Hopefully, everything will end well and these investors will profit. Unfortunately, too often I’ve seen these situations drag on endlessly without resolution. So what’s going on? Are these really the deals of the century? Is Paraguay just one big real estate cake waiting to be carved up and devoured?
Where is the Data?
At this point, we would normally reach for the data. In many of the countries that foreigners in Paraguay come from, there are all kinds of data-driven resources that can be mined to drill down into the pay dirt of metrics. But not so in Paraguay. Paraguay is still recovering from a long period of commercial inertia under dictatorship. Not long ago, the fortunes of those in the upper echelons of society depended almost entirely on who they knew.
Out of this vacuum, a country is slowly emerging, coming to grips with the long sleep it endured while the rest of the world kept turning. As the global economy reels, Paraguay sits as a curious anomaly—an apparent building boom in a time of worldwide bust. In this heady climate, developers and real estate agents who speak the right languages are having a field day. Believe what they say, hand over your money, and look forward to “certain” returns.
But what is this optimism in a data void really based on? Paraguay is on many people’s lips. The so-called “expat experts” are scrambling to present it as the irresistible destination to plant your flag and stash your cash. The good times, they insist, will always roll. It sounds great. But if you’ve paid attention to the real estate space in just about any developing market, you’ve seen situations like this play out—too often ending in tears.
Oversupply, over-promising, and overestimating returns on land investments are the recurring ingredients that precede periods of investor losses.
Is Paraguay Worth Considering for Real Estate?
Absolutely. But the same fundamentals that apply everywhere else apply here too: location, location, location. Don’t bank on renters who haven’t arrived yet. Don’t expect a steady stream of foreigners from one part of the world to keep coming. Migration is never constant—things always change.
Paraguay has a real estate market that presents opportunity and risk, just like any other. A real estate market does not exist in a vacuum. In order for a market to be viable it needs to be conducted in a stable country.
Paraguay is on the rise in many respects. A young population, regular influx of foreigners and foreign investment, and a comparatively stable government, there’s a lot to like about the prospect of investing here. The greatest challenge for incoming foreigners who are looking to invest in real estate is not anything to do with Paraguay; the greatest risk is themselves.
Like any country, Paraguay’s real estate economy fluctuates and evolves, however, it essentially remains constant. Like a coral reef in a mapped part of the sea, if a Ship’s Captain makes the mistake of scuttling his ship and sinking, it’s not the reefs fault.
Be smart, don’t sail full throttle into waters you’ve never navigated, listen to other Captains who have been there before, anchor outside of the shallows and watch for a while.
Your success or failure is in your hands.