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90% of rental agreements in CABA are made in pesos: what is the most commonly used type of contract and adjustment? - Infobae
Source:
www.infobae.com
November 03, 2024
This was confirmed by a private analysis that also revealed the following: the supply of properties in Buenos Aires without the Rental Law. Which are the most sought-after neighborhoods today?
By Jose Luis Cieri
Rental agreements in pesos predominate, with a two-year term and quarterly adjustments based on CPI (Illustrative Image Infobae)
A private analysis confirmed that 90% of new rental contracts in the city of Buenos Aires are made in pesos. Although the Rental Law was repealed and the DNU that replaced it allows agreements to be made in foreign currency, these are clearly a minority.
The previous law only allowed contracts in pesos, except for temporary rentals, which could be agreed in dollars for a maximum of one year.
This was confirmed by the Statistical Observatory of the Real Estate Sector, which depends on the Buenos Aires Real Estate Association, in its recent report.
This phenomenon continued despite changes in the economy and inflationary fluctuations. In addition, the dynamics of contract adjustments changed , relying more on the Civil and Commercial Code of the Nation, with the aim of balancing free agreements between the parties, seeking to satisfy both tenants and owners.
Miguel Chej Muse , coordinator of the Observatory, acknowledged to Infobae that historically, rental contracts were generally agreed in pesos and for a term of 24 months, except during the validity of the 2020 Rental Law, which stipulated a duration of three years and interannual adjustments. The idea of making them in dollars arose as a way to minimize the impact of inflation, that is, to protect the purchasing power of the owner.
“However, after the DNU, with the possibility of indexing contracts using the Consumer Price Index (CPI) or other indexes on a quarterly or four-monthly basis, as agreed by the parties, agreements are usually still made in pesos, which is the currency in which most tenants receive their income,” he clarified.
According to the reported data, the DNU, which came into force on December 29, 2023, caused a significant increase in the supply of rental properties. In CABA it grew by 174.95% since that date. However, the data for September 2024 show a slight decrease of 1.07% in availability, reflecting a stabilization in the market.
The neighborhoods with the largest number of available units are Palermo, Belgrano, Recoleta, Barrio Norte, Caballito and Puerto Madero, which concentrate 60.40% of the supply, for example on the Cabaprop portal.
Palermo, although it remains the neighbourhood with the highest supply, experienced a drop of 2.51% in the last month.
Source: Statistical Observatory of the Real Estate Sector of the Real Estate Association of CABA
As for the types of contracts, most are in pesos and have a duration of 24 months, with quarterly adjustments that use the CPI or the Index for Lease Contracts (ICL) as a reference.
Chej Muse added: “The ICL, which is one of the most widely used mechanisms to adjust contracts, showed an increase of 237.9% in October, while the cumulative figure for the year is 155.87%, exceeding the CPI, which was 101.60% between January and September.”
The sector argues that these indices are increasingly being applied on a four-monthly basis, which gives landlords a tool to adjust values in line with inflation without generating conflicts with tenants.
However, prices remain high for tenants. A one-bedroom apartment in CABA ranges between $400,000 and $450,000, while a two-bedroom apartment ranges between $550,000 and $600,000 on average.
“Gross profitability evolved favorably in 2024. This is largely due to the drop in the exchange rate, since although rents are agreed in pesos, the investment is measured in dollars, which helped to recover the attractiveness of rents as a store of value,” commented Chej Muse.
After a decline in properties for sale in CABA until mid-year, the offer grew again two months ago
In cumulative terms, the supply of properties decreased by 37.25% since October 2022, with a reduction of more than 41,000 units.
Chej Muse concluded that “the supply of apartments suffered a significant drop until mid-year, but in the last two months there was an upturn, driven in part by the slight increase in prices and the stability of the exchange rate.”
www.buysellba.com
Source:
El 90% de los acuerdos de alquiler en CABA se hacen en pesos: ¿cuál es el tipo de contrato y de ajuste más utilizado?
Lo confirmó un análisis privado que también relevó como sigue la oferta de propiedades porteñas sin la Ley de Alquileres. Cuáles son los barrios más buscados en la actualidad
www.infobae.com
November 03, 2024
This was confirmed by a private analysis that also revealed the following: the supply of properties in Buenos Aires without the Rental Law. Which are the most sought-after neighborhoods today?
By Jose Luis Cieri
Rental agreements in pesos predominate, with a two-year term and quarterly adjustments based on CPI (Illustrative Image Infobae)
A private analysis confirmed that 90% of new rental contracts in the city of Buenos Aires are made in pesos. Although the Rental Law was repealed and the DNU that replaced it allows agreements to be made in foreign currency, these are clearly a minority.
The previous law only allowed contracts in pesos, except for temporary rentals, which could be agreed in dollars for a maximum of one year.
This was confirmed by the Statistical Observatory of the Real Estate Sector, which depends on the Buenos Aires Real Estate Association, in its recent report.
This phenomenon continued despite changes in the economy and inflationary fluctuations. In addition, the dynamics of contract adjustments changed , relying more on the Civil and Commercial Code of the Nation, with the aim of balancing free agreements between the parties, seeking to satisfy both tenants and owners.
Miguel Chej Muse , coordinator of the Observatory, acknowledged to Infobae that historically, rental contracts were generally agreed in pesos and for a term of 24 months, except during the validity of the 2020 Rental Law, which stipulated a duration of three years and interannual adjustments. The idea of making them in dollars arose as a way to minimize the impact of inflation, that is, to protect the purchasing power of the owner.
“However, after the DNU, with the possibility of indexing contracts using the Consumer Price Index (CPI) or other indexes on a quarterly or four-monthly basis, as agreed by the parties, agreements are usually still made in pesos, which is the currency in which most tenants receive their income,” he clarified.
According to the reported data, the DNU, which came into force on December 29, 2023, caused a significant increase in the supply of rental properties. In CABA it grew by 174.95% since that date. However, the data for September 2024 show a slight decrease of 1.07% in availability, reflecting a stabilization in the market.
Types of properties and areas
The rental market in CABA continues to be dominated by apartments, which represent 95.93% of the total supply.The neighborhoods with the largest number of available units are Palermo, Belgrano, Recoleta, Barrio Norte, Caballito and Puerto Madero, which concentrate 60.40% of the supply, for example on the Cabaprop portal.
Palermo, although it remains the neighbourhood with the highest supply, experienced a drop of 2.51% in the last month.
Source: Statistical Observatory of the Real Estate Sector of the Real Estate Association of CABA
Prices and adjustment
According to Chej Muse, the analysis also reveals a 40.4% decrease in real rental prices from January to September 2024. “This phenomenon is explained by the fact that price adjustments were lower than the pace of inflation, which led to greater acceptance of counteroffers by landlords,” he noted.As for the types of contracts, most are in pesos and have a duration of 24 months, with quarterly adjustments that use the CPI or the Index for Lease Contracts (ICL) as a reference.
Chej Muse added: “The ICL, which is one of the most widely used mechanisms to adjust contracts, showed an increase of 237.9% in October, while the cumulative figure for the year is 155.87%, exceeding the CPI, which was 101.60% between January and September.”
The sector argues that these indices are increasingly being applied on a four-monthly basis, which gives landlords a tool to adjust values in line with inflation without generating conflicts with tenants.
However, prices remain high for tenants. A one-bedroom apartment in CABA ranges between $400,000 and $450,000, while a two-bedroom apartment ranges between $550,000 and $600,000 on average.
Profitability
The analysis also reflected the average profitability of rents, which currently stands at 5.43% in CABA. This figure represents a significant improvement compared to previous years, favoring property owners in a context of economic adjustment.
“Gross profitability evolved favorably in 2024. This is largely due to the drop in the exchange rate, since although rents are agreed in pesos, the investment is measured in dollars, which helped to recover the attractiveness of rents as a store of value,” commented Chej Muse.
Fluctuations in buying and selling
The apartment sales market also showed fluctuations. In the last 30 days, 70,567 property sales publications were registered, which represents a 5.87% increase month-on-month.
After a decline in properties for sale in CABA until mid-year, the offer grew again two months ago
In cumulative terms, the supply of properties decreased by 37.25% since October 2022, with a reduction of more than 41,000 units.
Chej Muse concluded that “the supply of apartments suffered a significant drop until mid-year, but in the last two months there was an upturn, driven in part by the slight increase in prices and the stability of the exchange rate.”
www.buysellba.com
