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Gated communities: The costs to build a turnkey house tripled in just 8 months - Infobae
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February 17, 2024
The value of the square meter fluctuates at $1,736,000, due to the impact of the devaluation. However, buildings continue to develop in corridors of the suburban real estate market
By José Luis Cieri
Even with higher costs due to the effects of the economy, construction remains active in urbanizations
The construction of premium category homes in countries and private neighborhoods experienced a notable increase in costs at the end of December, reaching around $1,736,000 per square meter, considering taxes and professional fees.
For a 315 m2 home, the total cost would amount to $546.7 million. This increase exceeds 260% year-on-year, almost triple the cost recorded just eight months ago and is a substantial impact on the high-end residential construction segment.
During the last two years, experts had been pointing out the volatility of costs in US currency, fluctuating in time with inflation in pesos and recurring devaluations.
The intensification of inflation in recent months, added to the significant increase in the official dollar, while the blue dollar did not follow the same trend, catapulted costs to a new level, measured in US currency. This situation, recorded until December, places costs very close to the highest point observed in 2017-2018 when the price fluctuated around USD 1,700 per m2, according to a report by Real Estate Report.
Germán Gómez Picasso, from the platform that prepared the report, attributed this increase in the cost in blue dollars to three key factors. Firstly, the marked inflation in pesos that affects the entire economy. Secondly, to the stability of the dollar bill in its price. And finally, the impact on certain construction materials of the strong devaluation in December, especially on commodities and certain imported elements, which directly affects completions.
Whoever chooses to build a house has already decided to change their life and probably does not evaluate the profitability. Your main consideration is to determine if your savings or monthly income will be enough to complete it.
Costs in dollars continue to be nominally below the maximum levels recorded in 2017-2018. Comparing these costs with those in other countries shows that “saving on bricks” still has considerable appeal.
“The increase in costs in dollars is a snapshot of recent months especially, because we came from relatively stable costs that varied day to day in line with the variable dollar. How they will evolve in the future is uncertain, it will depend on what happens with inflation and the price of currencies, both the blue and the official dollar,” said Gómez Picasso.
What materials rose the most
The greatest pressure fell on imported materials, which still face difficulties in entering and registered a notable increase in prices.Added to this is that the devaluation impacted the price of imported products. This phenomenon affects the final equipment of a home: air equipment, appliances, technology, among others.
Nicolas Degano, director of Eidico Housing, said that materials linked to the dollar, such as iron, mesh, cables and heating installations, experienced the largest price increases. “Likewise,” he said, “an increase was observed in products related to finishing, such as adhesives, sealants and plastic glues, whose costs are affected by the import of pigments and additives.”
House prices, measured in dollars, maintained their stability, while the greatest increase is observed in pesos. According to the Index of the Argentine Chamber of Construction, the cost per m2 increased by 250% year-on-year.
Source: Real Estate Report
“In each devaluation process, a portion is reflected in the costs in pesos. However, by having an informal or financial dollar and a gap that is below inflation, costs registered a notable increase. The dynamic between inflation and the dollar greatly favors inflation, directly impacting the value of the m2,” said Mariano Otálora , from Sat Group, the company that develops La Magdalena, in Canning.
Although the construction value still remains relatively accessible, it is in a transition stage, marked by changes in relative prices and the imminence of exchange rate unification. This period of exchange rate appreciation boosts demand and raises prices. “If this trend persists and is combined with a more stable macroeconomy and access to credit, current costs in pesos, considered high, could soon become more accessible,” Otálora added.
A home that takes its first steps of construction in a private neighborhood
Investing in homes is beneficial when you are looking for a real, long-term investment, without immediate liquidity. Real estate and “bricks” offer this capacity for sustained investment over time.
According to Degano, “The situation becomes more complicated if all the money is not available to build, since inflation can generate complications. But if it is possible to accumulate the greatest amount of materials and let only labor adjust for inflation, at least one of the variables is under control.”
Turnkey or build
The choice between a turnkey home or purchasing a lot to then build on depends on the buyer's approach and needs. Opting for a turnkey house is convenient if you want to avoid the responsibility of the construction process, with its possible complications and deadlines.
Turnkey homes are a suitable choice for those who want their own residence with quick access
“On the other hand, if the purchase is considered more as an investment and you can wait for the construction time, having a lot and building can be more advantageous. It allows for greater control over expenses as the work progresses,” Degano said.
The disparity between land prices and the increase in construction costs per m2 opens opportunities for investors. Purchasing land at discounts is still a good investment, as long as you choose a solid project.
“Buying a lot and building is still a good deal. The choice between turnkey or building on your own will depend on the knowledge and time that each person can dedicate to monitoring their work. It is common to finance turnkey projects and also houses from USD 160,000,” Otálora concluded.
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