Argentina Property Sets the Property World Alight

Country:  Argentina

Thanks to a recession in 2001 that floored the country’s economy, Argentina’s property market was devalued by 70 per cent and the currency dropped against the dollar and sterling like a stone. The only people to benefit were tourists, who suddenly found everything five times cheaper than before, and any investors who were quick enough to snap up Argentina property at unbelievably low prices. Those people are now sitting pretty as the country makes its way back into the limelight.

“Argentina is a great country,” says Mike Holwill of Someplace Else, an investment company that specialises in new markets. “We’ve had property in Buenos Aires for two years and it’s gone really well, so we are now branching out into other regions.”

Holwill claims that with the country slowly making its way back up the prosperity ladder, and having remained politically stable over the past ten years, investors are looking to snap up a slice of Argentine real estate. The majority of buyers are from the UK and Ireland, purchasing for investment rather than wanting a second home.

“Now is a good time to buy,” he says, “with the intention of selling in around three to four years as the country comes up.” Many serious investors would expect to lock their money away for five to ten years but Holwill wants people to think shorter-term than that for their own good. “I hesitate to advise investors to consider Argentina for the long-term, as you never know for sure what’s going to happen.”

What he actually believes will occur is that prices will rise steadily as the economy picks up, reaching a decent level by around 2011 and giving those who buy now a good enough return to sell. That wouldn’t be hard to imagine: prices of property in all areas of the country are still not back to levels they had reached during the boom of the late 1990s, despite annual capital appreciation of around eight to ten per cent.

What might hamper growth is the country’s high inflation, which is currently running at 11 per cent. However, with average costs of around US$2,000 to $2,500 (£1,006 to £1,258) per square metre for centrally situated property, Buenos Aires is still one of the cheapest developed capital cities in the world.

Within any city there are areas that will always hold their value and appeal; in the case of Buenos Aires this district is Recoleta, the equivalent of Knightsbridge. During the downturn this remained an island of desirability while other central locations became washed up and dilapidated. Prices are still the highest in the city, averaging around $3,000 to $3,500 per square metre (£1,509 to £1,760); however, now this posh district, with its classical buildings, opera house and wide avenues, is having to compete with younger, more funky neighbourhoods that are coming back to life.

Firstly there is Puerto Madero, the capital’s very own Docklands, with sleek, shimmering office and apartment blocks towering over the surrounding restaurants and canal-like waterways. Most property here offers fabulous views across the city or towards the nature reserve of Ribera Norte and the River Plate.

For a long time this was the most coveted address in town and prices now start at around £100,000 for a small one-bedroom property to around £350,000 for something with space and views. The sheer amount of property now available here makes this area less desirable from a buy-to-let viewpoint; though, in the long term it could remain good for resale due to its popularity with overseas workers and urban professionals.

“Foreigners choose Puerto Madero mostly if they are not planning to rent their property out, since there is a lot on offer and not so much demand for rental properties, ” says Maria Reynolds of local agent Reynolds Propiedades.”  If they want to combine personal use with rental return, they still choose Recoleta, Plaza San Martin and most of the different Palermo areas.”

According to several agents, Palermo is now where the clever money is going. The district is split into several smaller areas known as Hollywood, Chico and Viejo, widely regarded as the Soho of the city. The once-tatty houses and run-down shops have recently been getting a new lease of life as bijou boutiques and quality restaurants. On a warm evening the whole area comes alive with market traders, bustling crowds and pavement cafes.

If you’re lucky you’ll be able to find nice apartments and traditional houses, which are now becoming increasingly sought after. Reynolds has small, contemporary apartments from as little as £35,000 to £60,000. It’s harder to find houses than it was a few years ago but if you do come across one expect it to cost from around £300,000 for two to three bedrooms.

Someplace Else also has availability in several attractive new property in Palermo with prices starting at £40,000 for something with one bedroom. Holwill says owners can expect to get an average net yield of eight to ten per cent annually.

Another bohemian area that offers attractive options is San Telmo, the tango heart of the city. This district of narrow cobbled streets, antique shops and café-lined squares offers apartments in character buildings for around $1,300 to $1,500 per square metre (£653-£754). According to Maria Reynolds these are in “locations and a property type that attract the foreign buyer as well as the middle and high-class local.”

Other good areas include the northern suburbs where families prefer to live and large homes with pools cost from around £200,000. Also targeting middle-income Argentines is Ready2Invest, which specialises in finding investment property in emerging markets. The company recently launched Torres de Caballito Nuevo, in the residential district of Caballito, a couple of kilometres from the city centre.

Ready2Invest’s Tom Bromby claims the area is in demand from locals who can’t afford the centre but need to be within easy commuting distance. “There is currently upwards pressure on prices in Buenos Aires,” he explains, “and definite room for growth.” Bromby suggests investors are well placed right now to ride this growth and not only make the most of long-term, buy-to-let prospects but eventual sales to local purchasers as well.

Prices in the development start low enough to make it seem like a small risk if you have some cash to take a punt. Studios cost from $58,000 (£29,000), with one-bedroom units from $87,000 (£43,750) and two-bedroom apartments from $108,000 (£54,300).

Ready2Invest has also negotiated a 20 per cent discount on advertised prices, which Bromby says will offer buyers a good deal if the market recovers as they expect, but will equally cushion them from any drop in values. “But we only invest in markets that are going to show positive growth,” Bromby adds, “Buenos Aires is a first-world city though one that’s still a little rough around the edges. If it wasn’t it wouldn’t be worth investing in.”

For those who want a straightforward buy-to-let, those offered by Someplace Else and Ready2Invest are possibly a good option. Bromby is advising investors to expect to get around eight per cent net yield from their rental property, which he claims is “conservative”.

Maria Reynolds is of the same opinion, though more cautious in outlook. “I would say the easy route is holiday lets to foreigners, or long-term lets to corporate transferees. Owners could expect to have a four to seven per cent rental return.”

Though the majority of investment money is pouring into Buenos Aires, it isn’t the whole story. Argentina is a vast and beautiful country and there are several regions that have been attracting overseas buyers. Vast tracts of Patagonian land are coming under the hammer as city dwellers look for a rural hideaway. On a smaller scale there are numerous golf developments springing up and ski areas are also coming under the spotlight, with wealthy locals now heading off to the slopes of the Andes on a more regular basis.

Someplace Else is exploring the possibilities of venturing further afield, with projects such as Estancia Catalina, a ranch-style holiday estate. The property is an hour from Cordoba, the country’s second city, in a stunning spot with views of the mountains and lake. There is already an established hotel on the site, which draws visitors from Buenos Aires, an hour’s flight away.

Currently there are building plots of 10,000 square metres, which cost from £54,950; build costs for a typical 200-square-metre property are estimated to be around £200 per square metre, so Holwill predicts you could have a very decent country house in a spectacular location for £100,000.

Again, the main thrust of the marketing for Estancia Catalina is investment, not only because, at 16 hours, it’s too far for most UK buyers to fly for their holidays, but because there is such rental opportunity. Argentines like visiting the area for hiking and horse rising and overseas tourists are coming in increasing numbers too.

“Farms and vineyards are very attractive to overseas buyers,” agrees Maria Reynolds. “A more personal involvement is required in most cases, but there a few excellent projects where one can be a part of a trust or pool of investors, and hence no maintenance is required, since it is all coordinated by the trust.”

She cites a couple of examples of such projects currently for sale, including a vineyard costing $150,000 (£75,430) for 50 hectares in Salta, a beautiful northern region ripe for development. Further south is also the spectacularly sited golf resort of Arelauquen, in the Argentine lake district region of Bariloche. Here, building plots start at $138,000 (£69,400). Golf property on a Jack Nicklaus-designed course in the beautiful district of Chapelco in Patagonia is also available, with lots starting from as little as £65,000. 

However, if skiing is more your thing, it’s also possible to buy mountain chalets in popular locations such as Las Tres Marias, near the resort of Cerro Catedral, from around the same price. Even if you can’t make it out here to ski yourself, the sport is proving increasingly popular with the Buenos Aires set and the Andes are more snow-sure than the Alps, so rental is a distinct option.

Buying property in Argentina is relatively straightforward; the only downside is the lack of finance that makes cash buying a necessity. It’s a situation most anticipate will change in the near future, which will open up the market even more, as locals, who have previously been kept off the property ladder by lack of funds, will be able to take that first step towards ownership.

However, one of the advantages of cash-based purchase, is the absence of the kind of credit-crunch type risk now dogging the US and Britain. This is because people can only buy what they can afford. “Having no access to finance seems annoying,” says Mike Holwill, “but at least you know any boom is real not just speculation.”


First published in May 2008.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.