How easy is it for a foreigner to invest in real estate in Venezuela? The fact is, there are obvious opportunities for investment because of the significant economic crisis that Venezuela is experiencing; hyperinflation and the devaluation of its own currency, the bolívar, have recently reached historic highs.
In December 2021, the country decided to devalue the currency by 73% against the US dollar, although the currency’s problems actually began back in 2007. The devaluation of the bolívar from that year until 2021 has meant removing fourteen zeros from its denomination; that is, its value was divided by one hundred trillion.
With this, the possibility for foreigners to find a good investment in the property sector in Venezuela have multiplied: in the troubled Venezuelan market, the investor can take advantage of low prices, driven down by property owners’ need to sell their properties and release capital.
Continuous monetary devaluation
Although the first devaluations of the bolivar originated in 1983, it is from 2007 onwards that the currency began its absolute decline. It is true that 40 years ago marked the beginning of the end of the ‘Saudi Venezuela,’ as the country was known—a nation rich in oil that generated significant benefits and opportunities for nationals and foreigners alike.
However, nothing compares to what the country has experienced in the last 16 years. The significant international sanctions, combined with the inherent errors in an economic plan almost exclusively reliant on oil production, have left a desolate economic landscape. The currency has been one of the assets most affected by this collapse. Thus, the bolívar has shed zeros at a rapid pace, practically losing all its value despite government maneuvers to prevent it.
With each devaluation, new versions of banknotes have been printed, and a different adjective has been added to the currency, which has been modifying its name from the original bolivar (until 2007), to the strong bolívar (2007-2018), with a reduction of three zeros, to the sovereign bolívar (2018-2021), eliminating five zeros, to the current bolívar, a currency that has lost fourteen zeros compared to the original currency.
Opportunities for foreigners, with conditions
According to sources from the Venezuelan embassy in Bogota, referring to guidelines from the Ministry of People’s Power for Foreign Affairs of Venezuela, the purchase of properties in the country can only be made by foreigners with a transit visa. The embassy, which only resumed its activities in Colombia two months ago, relations between the two countries having broken down during the presidency of Ivan Duque (2018-2022), states that holding such a visa is “an essential requirement to legalize a purchase”.
“This is an essential process to legalize the purchase,” embassy members state. It is therefore not possible for a foreigner without a transit visa to buy properties in Venezuela, regardless of whether they reside in the country or not. The prohibition aims to protect the national heritage, considering the low prices that, for any foreigner, currently characterize buying Venezuelan real estate.
According to real estate market data echoed on social media, houses of over 400 square meters can be found in Caracas, the capital, with sales values below 265 million Colombian pesos, around 65,000 dollars.
It is worth noting that transit visas are temporary visas, not permanent residency. There are four types of visas for foreigners seeking temporary residence: business and investor transit visas, transit visas for being a family member of a Venezuelan, re-entry transit visas (for those who previously had residency), and labor transit visas.
Finally, it’s essential to highlight that the foreigner who decides to buy property in Venezuela must have the registration from the Superintendence of Foreign Investment (SIEX), which must be issued and delivered at the Venezuelan consular office. This document must be accredited before the purchase and entry into the country.
A bureaucratic and complex process
In light of these circumstances, consulate authorities recommend hiring a local attorney who is authorized to carry out the necessary legal procedures, possessing full knowledge of the relevant laws. It is also advisable to conduct real estate transactions in US dollars, which provides a certain stability considering the volatility of the bolívar.
However, obtaining a mortgage as a foreigner is not an easy task, so having the total amount ready for purchase is recommended. This isn’t complicated for the international investor, given the current low market prices. It’s most common to obtain an investor transit visa and register with the Foreign Investors Registry.
It’s also preferable to decide which property to acquire after consulting with a real estate agency, which professionally advises on the legal status of the property to be purchased, formalizes the promise of sale detailing the transaction, and finally completes the notarial process and subsequent public registration.
Exceptions exist for foreigners
It’s important to note that certain areas within the national territory have specific restrictions on property acquisition due to security considerations. The Organic Law of National Security (LOSN) establishes this.
This legislation defines security zones as “those spaces within the national territory, which due to their strategic importance, characteristics, and elements therein, are subject to special regulation regarding individuals, assets, and activities present there, with the aim of guaranteeing the protection of these areas against internal or external dangers or threats.”
Hence, it will not be possible to acquire real estate in areas adjacent to rivers, border areas, gas pipeline transmission corridors, oil pipelines, aqueducts, or power lines, near military areas, or industries considered essential for national security.
Is it worthwhile to invest in Venezuelan property?
It’s true that the instability of the Venezuelan economy and politics can pose a problem or even deter foreign investors. However, it is precisely due to this exceptional situation that the Venezuelan real estate market today presents a great opportunity for investors seeking to acquire real estate at an attractive price.
Taking these factors into account, a future return on investment in Venezuela, due to acquisitions at low cost, appears to be more secure compared to other countries in the region with more stable economies.
The most important aspect is to obtain sound legal and market advice from local professionals who can guide the purchasing process, from property selection to public registration. Likewise, ensuring that the acquired property is free from encumbrances and is completely legal will be crucial to guarantee the success of the sales transaction.