Real estate: why is the argentine real estate market practically stagnated?

17 Sep '19

The cost per square meter is almost the same as those in countries with more access to credit and higher purchasing power. What is the experts’ advice? The real estate market is practically stagnated in Argentina. And there are reasons for this. One of such reasons is overpricing, as informed by Real Estate specialists. The construction of 1 square meter in the country is at the same level as Spain or the United States.

How is it possible that you pay in Argentina the same amount for a square meter as in the USA or Europe? Considering that such countries provide mortgage loans facilities and where their purchasing power is twice than ours? Says Mariano Capellino, founding partner of INMSA, a company which provides advising on real estate investments abroad.

Capellino illustrates the current situation of the real estate market with some data: firstly, in Argentina only 10% of the population has access to the acquisition of properties.

Secondly, the number of wages that people need to be able to buy a property. The savings capacity required to buy, according to statistics, is the highest in the history of this country, he says.

After devaluation, the cost per square meter is almost one thousand dollars, the same as in the USA and Europe. To do business in the real estate market, you need to know that when huge devaluation processes take place, you can experience higher profits and losses.

Someone who sold a property in 2002 lost between 30% and 40%. Someone who bought in the same year and exited in 2007 earned 15% annually in dollars, says Capellino. Property is a natural safe resource for savers and investors. But, in order to be profitable, one of the parameters considered is the value of treasury bonds of the United States. This bond has 1.5 percent yield in dollars annually. More than that is expected from a property as it is a non-liquid asset and because of the construction cost involved, explains Capellino.

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As published by PERFIL, a very bad year is estimated for the real estate market, having recently achieved a very low number of operations. Until the beginning of September about 18,000 transactions had been recorded and if this tendency goes on, no more than 30.000 transactions would be expected to take place by the end of December.

Source: Perfil

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