Front Elevation: Untapped Utopia

Modestly priced acreage is leading world investors into the Patagonian wilds.

text by: Bob Morris

July 1, 2005

It was four years ago that Joe Luter flew to Buenos Aires, hopped a plane southwest to the city of San Carlos de Bariloche, then took a drive through Argentina’s Lake District.

Anfiteatro and the world-famous Limay River in the Argentinian province of Neuquén (Click image to enlarge)
 
“I was just swept away by it all; spectacular mountains, gorgeous rivers and so much wide-open land. It just kept going and going and going,” says Luter, the chairman and CEO of Smithfield Foods. “I told myself I’d be a fool not to buy something here.”

Shortly after that trip, Luter became the owner of a 25,000-acre estancia, or ranch, that featured four miles of frontage on the Rio Limay, which flows east from Lago Nahuel Huapi through the dry steppe of northern Patagonia. It is an internationally renowned fly-fishing haven and home to monstrous brown, rainbow and brook trout. Luter says neighbor and media titan Ted Turner owns a 55,000-acre spread nearby. “When people ask me what Patagonia is like, I tell them to think of Colorado 150 years ago,” says Luter, who has since bought a second property, a 50,000-acre working ranch and fly-fishing lodge near Esquel, a few hundred miles to the south. “It’s the most beautiful place I’ve ever seen.”Stretching nearly a thousand miles, from the Rio Colorado in central Argentina, south to Tierra del Fuego, and enveloping parts of neighboring Chile, Patagonia is fabled for its remote and rugged splendor. Adventurers have long traveled here to experience some of the world’s best mountain climbing, skiing, trekking and river rafting.  And in recent years, the unspoiled region has been a big draw for affluent North Americans and Europeans looking to buy something that is in short supply elsewhere—vast tracts of ranchland at prices that are a fraction of those found in prime locations such as Wyoming, Montana or Colorado.

Lanin Volcano looms over the hay fields of an estancia in Junin de los Andes in the province of Neuquen, Argentina. (Click image to enlarge)

“You can come down here and, for a million dollars, buy something that would cost five or six times that back in the States. I’m talking thousands of acres, a working ranch, with a great river running through it and recreational opportunities galore,” says Jeff Wells, a broker with Denver-based Fuller Western Real Estate, which specializes in Patagonian properties. “These are trophy properties that you cannot find, much less afford, anywhere in the U.S. these days.”

Wells first ventured to Argentina more than 20 years ago as a 19-year-old Mormon missionary and fell in love with the land, the people and the relaxed pace of life. He recently partnered with Ken Mirr, another Fuller Western broker, to launch Argentina-based Austral Realty, which seeks out large ranch and recreational properties for North American buyers. While the collapse of Argentina’s economy four years ago drew many foreign investors looking to cash in on the devaluation of the Argentine peso, that crisis did not have a profound impact on real estate prices for big tracts of land, according to Mirr. “Real estate has long been the gold standard in Argentina, so prices didn’t bottom out with the rough economic times,” says Mirr. “But then they really weren’t that expensive to begin with.”Foreign buyers, according to Wells, are typically looking to buy a minimum of 3,000 acres, with most settling in the 10,000- to 30,000-acre range. “That gives them something with unbroken vistas of the horizon and a sense of owning, say, their own national park with ecosystems of mountains, valleys, range and water features,” he says. “For land like this they would typically spend about $300 to $500 an acre for property that, in most cases, will include a river or spring-fed stream with fly-fishing potential.” And their investment can often turn a profit on the business side.

What to Watch Out For

Legal descriptions can be vague. Says realtor Ken Mirr: “While there are attempts to get a more sound system in place, sometimes an owner might just provide photographs of where he thinks his land begins and ends, or point and say, ‘My land runs from there to there.’ ”

The deeds are different there. Since the Argentine government owns much land in Patagonia, purchases of large tracts might involve a “fiscal deed” over portions of it—particularly those that might be heavily timbered or have mineral rights—guaranteeing the buyer a long-term right of occupancy. Also, foreign investors must go through an approval process to buy land that is within 100 kilometers of Argentina’s borders with Chile.
Forget financing. No bank financing is available, so virtually every large real estate transaction involving foreign investors is a cash deal.

Honor long-standing local agreements. “If a guy down the road is accustomed to fishing in a river that runs through your property, it’s a good idea to let him continue doing so,” says Mirr. “Being a good neighbor counts for a lot.”
“Unlike most big properties that people are buying in the western U.S., you can actually cash-flow your operation in Patagonia,” says Mirr. “You can run a few hundred head of cattle, plus some sheep, along with forestry and the recreational aspects.  And the wages are low. The standard wage for a gaucho is about $200 a month, maybe a bit more for a ranch manager, and that buys a lot of work.” (Click image to enlarge)

There is a distinct difference between the Chilean and Argentine versions of Patagonia. In Chile, where the climate is more like that of  the Pacific Northwest, the terrain tends to be greener and more heavily forested. The parcels are smaller and, with more snow falling on the western slopes of the Andes, the skiing is better.  Still, most North American investors gravitate to Argentina, where the drier landscape is more reminiscent of the American West. The most popular regions are the Lake District in northern Patagonia, which is within an hour or so of the resort cities of Bariloche and San Martin de los Andes, and the region around Esquel, in the province of Chubut, an area settled by immigrants from Wales in the 19th century. Patagonia’s cities often surprise first-time visitors with their amenities and sophistication. “Bariloche is best described as Jackson Hole meets Lake Tahoe surrounded by the Swiss Alps,” says Mirr. “As for San Martin de los Andes, well, it’s got a Jack Nicklaus golf course, so that speaks for itself.”The region’s low prices and natural beauty make it an easy sell, but a pressing question for North American buyers remains: Will the region’s political instability put their investment at risk? “Investing in a foreign country is never totally without risk. As for fears that the government is going to come along and confiscate foreign-owned property: No way, that’s just not going to happen in Argentina or Chile,” says Wells. “A lot of foreigners also express fears about kidnapping and riots. That’s something confined to Colombia and Venezuela. Down here it’s safe, peaceful and quiet. To tell you the truth, it’s like the 1920s.”

For expatriates like Mike Morehart, a California native who owned a small ranch along Roaring Fork River near Aspen before moving to San Martin de los Andes several years ago, Patagonia’s serenity was reason enough to invest. “The future looks good here,” he says. “In many ways there are more freedoms than in the U.S., particularly when it comes to government controls over what you do with your land. In Colorado, I was always feeling pressure from a county planner or a government agency. Here, you pretty much do what you want to do. It’s a great way to live.”