Traditional or short-term rentals in Asunción: which option is right for you?

If you own an apartment in Asunción, you can rent it out under a traditional lease or offer it as a furnished short-term rental. Both options can work well, but they require different approaches to management.

("deepens its fall, reaching 5,725 guaraníes on the interbank market"). And 780 AM / Mega TV published: "Baja del dólar desafía al sector inmobiliario" ("Falling dollar challenges the real estate sector"). In that piece, Raúl Constantino, president of the Paraguayan Chamber of Real Estate Developers (CAPADEI), explains that about 90% of construction costs are in guaraníes. According to him, building costs have risen by around 20% in dollar terms compared with last year.

As a real estate agency and as developers (Kalypso), we see this every day. Here is what we observe.

The official figures

According to the reference exchange rate of the Central Bank of Paraguay (BCP):

Between January 2 and October 7, one dollar came to be worth 13.2% fewer guaraníes. Put the other way round, the guaraní gained 15.2% against the dollar.

Developers: costs in guaraníes, prices in dollars

In Paraguay, homes are almost always sold in dollars, but cement, steel, wages and social security contributions are paid in guaraníes. The exchange rate alone, before any local inflation, makes construction more expensive.

Example: a construction phase costing 1,000 million guaraníes was worth USD 150,884 in January. Today it costs USD 173,853, i.e. +15.2%, purely because of the exchange rate.

Add the rise in local costs in guaraníes, and the +20% mentioned by CAPADEI is consistent with these numbers.

This is why new projects are coming to market with higher dollar prices. And off-plan contracts signed at a fixed dollar price remain under pressure throughout construction.

Buyers earning in guaraníes: a favorable window

For anyone paid in guaraníes, a property priced in dollars is cheaper today.

Example: a USD 100,000 apartment cost 662.8 million guaraníes on January 2 and 575.2 million on October 7, i.e. 87.6 million less, from the exchange rate alone.

The effect is strongest on projects already launched or completed, whose dollar price was set before costs went up. New launches, on the other hand, already reflect higher prices.

Landlords renting in dollars

Rent collected in dollars now brings in fewer guaraníes to pay building fees, maintenance and taxes, which are in local currency. It is worth reviewing the figures for each property, not just the dollar income.

Our view at CALISTA

Run the numbers in both currencies. A decision to buy, sell or rent should be analyzed in guaraníes and in dollars, depending on the currency of your income and your debts.
Read off-plan contracts carefully. Fixed or adjustable price, payment schedule, currency of each installment: these clauses matter more than ever.
Don't bet on the exchange rate. No one can guarantee whether the dollar will keep falling or bounce back. A good real estate investment rests on location, quality and rental yield, not on a currency bet.

Want to know what your property is worth today, in guaraníes and in dollars? Ask our team for a valuation (tasación).

This article is for information only and does not constitute financial advice.

General information: not a substitute for advice from a notary (escribano) or a lawyer.