Investment in Venezuela’s Real Estate Market
Investment in Venezuela's Real Estate Market

Investment in Venezuela’s Real Estate Market

Venezuela is a country on the northern coast of South America with various natural charms. To the northwest are the Andes Mountains and the colonial towns of Merida, which is a base for a visit to the Sierra Nevada National Park. Caracas, the capital, is on the north side.

With long duration and great interest, I looked for possibilities, looked for information from various sources, concluded about Venezuela’s real estate market, and figured out how to shape them.

After contacting dozens of real estate companies with independent network consultants, an extensive network of analysis of local and international forums, blogs, photographs, country maps in Russian, English, and Spanish – many questions remain unanswered. 

It was suspected that the websites of Venezuela’s real estate agencies were not frequently updated, not keeping pace with exchange rate changes, and villas and hotels offered foreigners investment with an old-fashioned 90s luxury loop were. Was. Were. The posture was nervous and lacked understanding.

On one hand, we have the richest country in the world in terms of oil resources, but Venezuela has been stuck in a wandering crisis for many years. 

Two factors influenced the ongoing interest in the topic: a desire to understand what can be done to address the crisis in the country, and a request from a European client who wants to invest some capital in Venezuela’s real estate And wants to wait.

The invested fund should have a ten-year harmonization with potential losses, but at the same time make maximum effort to calculate the high risk and accuracy of the investment.

At the moment, an investor has a good opportunity to enter this market if his strategy is long-term: changes in the country may or may not happen very soon. Everything depends on the political situation, which is extremely difficult in the long run.

At the same time, Venezuela has many sources of oil reserves, beautiful nature, and income-generating potential.

Real estate investment chances in Venezuela come into two parts:

Properties of the middle class. For example, twenty years ago the cost of the apartment was $ 100 – 120 thousand. Currently, the market value is 15–20 thousand respectively.

  1. The moment to invest is now successful, however, it will take longer to return the money invested because the middle class will have to take a loan to buy their apartments.

  2. Luxury real estate segment. Price is likely to increase at such a faster pace than the previous option, however, buyers of such properties do not need bank loans.

At the moment, it is a depressive type of real estate and is not helpful to investment despite attractive photographs and stories about the potential of tourists. If the property is not located in the city, there is a risk that the state may seize the property. Investment in the hotel sector is not suitable for an obvious reason.

Often you can find tips for investing in cities with tourist attractions (such as Merida), but now it is best to consider only Caracas. There is a problem with the electricity problem throughout the country: the government redistributes it to maintain the capital city.

  • People from other cities and towns migrate to Caracas for this reason.

  • It will take years to restore the power supply to Venezuela.

  • At first, I felt that the legal process would be very complicated, but there is a whole department to deal with the paperwork, where all the processes are terminated.

  • The investor himself can select the desired asset or invest in a special fund related to Venezuela in which a portfolio is already built and to receive a fixed dividend.

  • Transformation in Venezuela is reliable sources of hours and information that cause no harm from food, medicine, and electricity. 

Property Purchase Process in Venezuela

Any foreigner can purchase a property in Venezuela with a valid passport, a tourist visa, and a Registered Information Fiscal (RIF). The RIF is a fiscal identity for all individuals and can be obtained free of charge at any tax administration office or through the General National Production Day Administration or an attorney. Foreigners can also buy indirectly through local companies or foreign companies.

When you have selected a property, notify your real estate agent and formally apply with a written document. The real estate agent needs to be present to assist in negotiating and closing the deal, including the mode of payment. The real estate agent should mediate all negotiations between you and the seller of the property.

It is best to negotiate with a seller via an option to buy, which legally locks both the seller and the buyer. It also locks the price. The purchase option usually requires a deposit of 10% to 30% of the agreed selling price.

The buyer pays all registration fees and legal expenses in advance and the seller is obliged to release the property from the lien. A buyer is expected to pay 1% to 3% cash in advance in a local currency, which allows for everything to be closed and included.

After the final document is signed, it is notarized by the notary public, and the buyer is now the legal owner, and the title or deed is handed over by the seller.

Encumbrance certificates are not required by law but are generally practiced and requested by the buyer.

The fundamental guidelines when purchasing a property in Venezuela by the Real Estate Chamber of Venezuela:

  • Financial Commission – If the transaction is paid through credit, the buyer should see that the commission to the bank or other financial institution has been canceled.
  • Insurance – In the case of property acquired through a mortgage, insurance against fire and earthquake is required. Insurance agencies usually charge a year in advance.

Margarita Island

Margarita Island, a piece of paradise in the Caribbean related to Venezuela, is very popular with foreigners. It is located on the northern coast of Venezuela and is the highest of all Caribbean islands.

Its location means that it is out of the storm belt and provides lower humidity and less rainfall. The entire process of registering a property in Venezuela can be completed in about 38 days.

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