It is a nation in South America that embodies greater capacity than any other – and yet its potential is untrue by so many investors, as the legal environment does not strongly support the buying process.
Those who are confident about their legal team and willing to work diligently have the world’s most lucrative real estate markets on their feet: one where the potential returns can be limitless.
Because Paraguay has been a true practicing democracy for only 21 years and has been caught doing so. In terms of economic growth and fiscal growth, bridging the gap between rich and weak and potential materiality and enabling them to form a strong legal and administrative base.
Paraguay is appealing to migrants because it is a stunning and under-explored and exploited country and where the pace of life is incredibly back and family-centric. What’s more, a foreign national can purchase and rent real estate independently, get a residency visa, and another passport can be obtained naturally.
Investors looking for the best approach to Paraguay’s potential may consider asynchronous where the real estate environment is best regulated and therefore the safest. Alternatively, others are looking for Paraguay’s incredible fertile agricultural area.
- There is no restriction on foreign buyers owning real estate in Paraguay.
- Paraguay has been the sole practice of democracy for 21 years, which means that it is still compatible with this new ideal. This presents risks and constraints for an investor – but also provides significant potential.
- GDP has grown by an average of 5 – 6% over the last 10 years and Paraguay’s foreign debt-GDP ratio is ~ 10%. This becomes negative given foreign reserves. Therefore the financial system at the local level is sound and presents some systemic risk.
- The public sector is undergoing an intensive and necessary reorganization of the existing leadership. This required the nation to build a solid foundation for long-term development, removing dependence from climatic conditions, and international demand for soy and meat, on which Paraguay’s current economy rests heavily.
- This region is the most unrestricted in the capacity of economic development of the nation.
- The nation has yet to fully explore its mineral and energy resources; Paraguay offers foreign investors an attractive tax regime and a low-cost manufacturing base; Geographically, the nations at the center of South America are its neighbors Brazil and Argentina and beyond.
- Since Paraguay is also protected from natural disasters such as tornadoes, hurricanes, and earthquakes, it is considered by many to be a safe nation to invest in.
- Although Paraguay is currently in a state of transition, investors looking for emerging prospects who are oblivious to risk exposure can potentially gain considerable potential from a long-term commitment to the market.
Paraguay Real Estate Market
The majority of international buyers are concentrated in the capital Asichon where property rights are considered more secure.
- Although rental yields in the unorganized sector are meaningless, Paraguay is considered an emerging market for potential.
- Money inequality in Paraguay, and the fact that the country’s leadership says it is committed to closing the gap between rich and destructive poor, means that the middle class can grow as a result of long-term economic diversification. This can cause an inflationary impact on property prices.
- 60% of Paraguay’s population is under 35: it is considered positive for the future of the real estate. Demand is increasing, and because Paraguay is building a well-educated and civilized community determined to achieve economic success, it will positively drive the property economy in the future.
- The fact that Paraguay is a young nation also means that there is a growing market with a large tax base. Again, these are positive fundamentals for Paraguay’s financial future – important indicators for an investor.
- Paraguay has the most stable currency in the Latin American region, providing the second-highest return-on-investment for the private sector and the lowest tax burden in the region. All of these support an investment commitment.
Paraguay Property Investment, Tax, and Trade in Paraguay
- Round-trip Paraguay real estate prices range between 6.75 to 8.25%, with fewer buyers having a 5.75% burden.
- The process of purchasing and registering real estate takes an average of 40 – 50 days, and buyers are strongly advised to obtain independent legal representation.
- Because the property registration process is structured at the national level, it is important to conduct intensive labor, particularly related to title deeds and limitations.
- Buyers should consider conducting a site survey, especially for buyers purchasing agricultural land, to ensure that risks such as flooding are understood.
- Buyers should be aware that there are some limitations to the acquisition of land near national borders, in line with local agricultural and livestock production health control and care.
- Real estate prices in Paraguay are low, even in Asincon where demand is strong. Land prices are also incomprehensible about their potential. Lower prices reflect risk, but also represent an opportunity.
- The cost of living in Paraguay is also very low, with Esconic consistently ranking as one of the cheapest capital cities in the world.
- Rental income earned by illegal investors from Paraguay real estate is subject to 50% of gross rent.
- The leased property is liable to 5% VAT.
- 50% of the capital gain derived from the sale of real estate is subject to personal income tax: the personal income tax is flat at 10% and is applicable when the taxable income is more than 10 times the minimum monthly wage.
- There are no wealth, inheritance, or gift taxes in Paraguay.
- For this reason, the legal system supporting landlords is inefficient, investors should consider the need to run the property carefully. The rent, increase, and duration of the contract can be negotiated independently, and there is no maximum security deposit that allows landlords to build additional security into the contract.
Live in Paraguay
Migratory life in Paraguay is very short and relatively inexpensive, being inhabited by Paraguayans who are ready to integrate international citizens. The predominantly local language is Spanish, and the quality of life achievable may be high.
There is a national disparity between the rich and the growing middle class versus the extremely poor, however, and petty crime is not uncommon on the streets of Asuncion.
The pace of life is quite slow, and cannot be compared to any of Argentina’s or Brazil’s biggest and perhaps more exciting neighbors!
Life for Paraguayan centers around family and extended family and national religions.