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Housing construction: the balance of 2024 and the challenges for next year - Infobae
Source:
www.infobae.com
December 16, 2024
The real estate sector faces the impact of rising prices and legislative changes, while betting on mortgage credit and money laundering as drivers to consolidate the market
By Jose Luis Cieri
Bricks remain attractive as a safe haven for investors, despite the challenges and constructions are still underway in CABA and Greater Buenos Aires (Illustrative Image Infobae)
With the year just a few days away, the balance sheet of the private housing construction sector in Argentina reflects significant progress and persistent challenges. During 2024, construction costs increased by 145% , raising the average price to more than USD 1,500 per square meter.
This increase had a direct impact on the profitability of projects and forced developers to find alternatives to sustain activity in an inflationary context. However, the market showed signs of dynamism, driven by the return of mortgage loans and money laundering , which introduced opportunities for the sector.
Damián Tabakman , president of the Chamber of Urban Developers (CEDU), told Infobae that 2024 was a positive year in several aspects, but a challenging one for real estate development. “The rental market was reactivated after the repeal of the Rental Law and the sale of used units grew considerably, but development faced complications due to the increase in costs in dollars. Macroeconomic normalization and the import of cheaper inputs are key to recovering the profitability of the sector.”
According to Tabakman, the expectation for 2025 is that property prices will begin to adjust upwards, which would improve the financial equilibrium for developers.
The repeal of the Rental Law and the return of mortgage credit were considered turning points in 2024.
Tabakman highlighted the importance of DNU 1017/24, which enabled divisible mortgages and real property rights , as measures that could transform access to housing in the country. “This will allow developers to have long-term financing for projects in the works, which will boost the economy and promote sustained growth in the sector,” he added.
The economy is expected to consolidate, a situation that will favor the start of new works (Illustrative Image Infobae)
He also stressed the need to streamline construction permits and advance policies that promote greater predictability in the market.
“The cost measured in dollars reached levels that we had not seen for years, affecting the viability of many projects,” said Santiago Levrio , Institutional Director of Alianza Urbana.
Despite the increase in costs, the market showed positive signs thanks to the reappearance of mortgage loans and money laundering.
Looking ahead to 2025, the real estate sector projects an optimistic outlook with a 25% increase in transactions and renewed interest in brick and mortar as a safe haven for value.
Levrio stressed: “We are facing a change of regime where, if macroeconomic stability is consolidated, financing tools will emerge that will allow a new level of prices with reasonable margins for new projects. However, we are still facing negative effects of the change, although mortgages and deeds ( which are closing their best year ) are already showing signs of incipient recovery. It is key to avoid restrictions on building land and to equalize the conditions of real estate investment with those of fixed income, which today compete at a disadvantage.”
According to Zonaprop, the square meter in a pit reached USD 2,741 in October 2024, with an annual increase of 15.3%, although still below the maximum of 2018, when it reached USD 3,040. The most sought-after neighborhoods in CABA are Palermo (19%), Belgrano (12%) and Caballito (12%), while in the northern area of GBA, Nordelta and Pilar stand out.
Leandro Molina , country manager of Grupo QuintoAndar (which owns Zonaprop) for Argentina and Peru, told Infobae that “when buying off-plan, you pay less than for a finished property, which makes it a profitable investment when it comes to resale.”
The purchase-off-the-shelf modality allows for an advance payment in dollars and financing the rest in installments, often in pesos, during the term of the work, which varies between 24 and 36 months (Illustrative Image Infobae)
Currently, a one-bedroom apartment of 50 m2 in a well is listed at USD 132,000, while a two-bedroom apartment of 70 m2 is listed at USD 209,000, approximately in CABA.
Molina also stressed the flexibility of the financial scheme compared to the purchase of finished properties. “It is an option that does not require having all the money immediately, it facilitates access to those seeking to diversify their capital or ensure future income through renting or reselling, so it is expected that this intention in demand will materialize in a greater number of transactions,” he added.
Federico Rosbaco , CEO of Rosbaco & Partners, agreed that 2024 demonstrated the sector's resilience in the face of a complex economic context. “The demand for quality units remained strong, especially in strategic urban areas. Developers opted to diversify their projects and adapt to market conditions, prioritizing efficiency and construction technologies,” he said.
The role of money laundering as a potential driver for 2025 was also highlighted. Rosbaco said: “Money laundering offers a window of opportunity to channel funds into real estate projects, although we are still at an early stage of the spillover into the construction sector.”
Cement and lime are among the most economical materials (Illustrative Image Infobae)
The materials with the smallest increases were sand and stone, with 1 m3 bags at $30,000 and $60,000 respectively. Cement and lime maintained more affordable prices, with bags between $6,000 and $10,000, while hollow bricks remained below $400 per unit.
Palermo and Caballito complete the list of top options. Palermo, with its cultural and nightlife, offers high potential for appreciation, while Caballito, due to its central location, attracts families and investors seeking stability.
La Paternal Island, an area that can progress a lot in 2025, close to avenues such as San Martín, Juan B. Justo and Warnes
According to Martín Flachsland , from Estudio Kohon, these areas have in common a growing demand that responds to their quality of life, strategic location and the investment opportunities they represent. “They are neighborhoods that combine the appeal of residential with the possibility of obtaining significant returns. The key is to focus on developments that integrate design, functionality and future value.”
The diversity and appreciation of these areas consolidates real estate as a solid investment option in 2025.
According to Tabakman, projects such as the Innovation Park, the former Boca Sports City and downtown Buenos Aires open up new possibilities for developers. “The sale of land in these areas and the proposed urban incentives could generate a significant flow of investments,” he said.
The Innovation Park in Núñez, another of the axes that will expand in 2025
There are also areas of Chacarita, Colegiales, Villa del Parque, Coghlan, Villa Urquiza, Paseo del Bajo and “La Isla de La Paternal” that capture the interest of families and investors.
“Building is very expensive now, but we trust that the readjustment of variables and institutional financing will allow us to balance costs and prices. This would be key to recovering the competitiveness of our industry,” he said.
Render of Ramblas del Plata, the new mega project in CABA where the Boca Juniors Sports City was once planned. It occupies 73 hectares and will be developed by IRSA
Federico Rosbaco, for his part, stressed the importance of implementing tax incentives and ensuring the stability of strategic inputs to mitigate the impact of high costs. He also stressed: “the ability to preserve value against inflation makes it a preferred option, especially in a context of economic uncertainty.”
In this context, 2025 is shaping up to be a year of opportunities and challenges for housing construction in Argentina.
“We are closing the year with optimism, but aware that much remains to be done. Macroeconomic stability, the consolidation of long-term financing and the promotion of policies that favour predictability will be crucial to guarantee sustained growth,” concluded Tabakman.
www.buysellba.com
Source:
Construcción de viviendas: el balance de 2024 y los desafíos para el próximo año
El sector inmobiliario enfrenta el impacto de aumento de precios y cambios legislativos, mientras apuesta al crédito hipotecario y al blanqueo como impulsores para consolidar el mercado
www.infobae.com
December 16, 2024
The real estate sector faces the impact of rising prices and legislative changes, while betting on mortgage credit and money laundering as drivers to consolidate the market
By Jose Luis Cieri
Bricks remain attractive as a safe haven for investors, despite the challenges and constructions are still underway in CABA and Greater Buenos Aires (Illustrative Image Infobae)
With the year just a few days away, the balance sheet of the private housing construction sector in Argentina reflects significant progress and persistent challenges. During 2024, construction costs increased by 145% , raising the average price to more than USD 1,500 per square meter.
This increase had a direct impact on the profitability of projects and forced developers to find alternatives to sustain activity in an inflationary context. However, the market showed signs of dynamism, driven by the return of mortgage loans and money laundering , which introduced opportunities for the sector.
Damián Tabakman , president of the Chamber of Urban Developers (CEDU), told Infobae that 2024 was a positive year in several aspects, but a challenging one for real estate development. “The rental market was reactivated after the repeal of the Rental Law and the sale of used units grew considerably, but development faced complications due to the increase in costs in dollars. Macroeconomic normalization and the import of cheaper inputs are key to recovering the profitability of the sector.”
According to Tabakman, the expectation for 2025 is that property prices will begin to adjust upwards, which would improve the financial equilibrium for developers.
The repeal of the Rental Law and the return of mortgage credit were considered turning points in 2024.
Tabakman highlighted the importance of DNU 1017/24, which enabled divisible mortgages and real property rights , as measures that could transform access to housing in the country. “This will allow developers to have long-term financing for projects in the works, which will boost the economy and promote sustained growth in the sector,” he added.
The economy is expected to consolidate, a situation that will favor the start of new works (Illustrative Image Infobae)
He also stressed the need to streamline construction permits and advance policies that promote greater predictability in the market.
Step by step
In the first four months of 2024, the Argentine Chamber of Construction (CAC) index grew by 50%, driven by the devaluation of the peso at the end of 2023. This initial increase, which brought construction costs to record levels, began to slow down towards October, with a monthly increase of just 1%. This context generated an increase in the price of square meters in dollars, from 1,400 to 1,900 in the premium segment.“The cost measured in dollars reached levels that we had not seen for years, affecting the viability of many projects,” said Santiago Levrio , Institutional Director of Alianza Urbana.
Despite the increase in costs, the market showed positive signs thanks to the reappearance of mortgage loans and money laundering.
Looking ahead to 2025, the real estate sector projects an optimistic outlook with a 25% increase in transactions and renewed interest in brick and mortar as a safe haven for value.
Levrio stressed: “We are facing a change of regime where, if macroeconomic stability is consolidated, financing tools will emerge that will allow a new level of prices with reasonable margins for new projects. However, we are still facing negative effects of the change, although mortgages and deeds ( which are closing their best year ) are already showing signs of incipient recovery. It is key to avoid restrictions on building land and to equalize the conditions of real estate investment with those of fixed income, which today compete at a disadvantage.”
Buy from the well
Buying properties in a short period of time is becoming an attractive strategy for both those looking for their own home and for investors.According to Zonaprop, the square meter in a pit reached USD 2,741 in October 2024, with an annual increase of 15.3%, although still below the maximum of 2018, when it reached USD 3,040. The most sought-after neighborhoods in CABA are Palermo (19%), Belgrano (12%) and Caballito (12%), while in the northern area of GBA, Nordelta and Pilar stand out.
Leandro Molina , country manager of Grupo QuintoAndar (which owns Zonaprop) for Argentina and Peru, told Infobae that “when buying off-plan, you pay less than for a finished property, which makes it a profitable investment when it comes to resale.”
The purchase-off-the-shelf modality allows for an advance payment in dollars and financing the rest in installments, often in pesos, during the term of the work, which varies between 24 and 36 months (Illustrative Image Infobae)
Currently, a one-bedroom apartment of 50 m2 in a well is listed at USD 132,000, while a two-bedroom apartment of 70 m2 is listed at USD 209,000, approximately in CABA.
Molina also stressed the flexibility of the financial scheme compared to the purchase of finished properties. “It is an option that does not require having all the money immediately, it facilitates access to those seeking to diversify their capital or ensure future income through renting or reselling, so it is expected that this intention in demand will materialize in a greater number of transactions,” he added.
Resilient sector
Despite rising construction costs, more than 50,000 homes are still under construction in CABA and more than 90,000 in Greater Buenos Aires.Federico Rosbaco , CEO of Rosbaco & Partners, agreed that 2024 demonstrated the sector's resilience in the face of a complex economic context. “The demand for quality units remained strong, especially in strategic urban areas. Developers opted to diversify their projects and adapt to market conditions, prioritizing efficiency and construction technologies,” he said.
The role of money laundering as a potential driver for 2025 was also highlighted. Rosbaco said: “Money laundering offers a window of opportunity to channel funds into real estate projects, although we are still at an early stage of the spillover into the construction sector.”
Inputs on the rise
As for the prices of materials, in 2024, the increases in porcelain tiles stood out, going to a range of between $5,000 and $30,000 per m2, and ceramics, from $5,000 per m2. Faucets and sanitary ware registered wide increases and price dispersion, with toilets ranging from $40,000 to more than $1 million, while concrete bricks start at $2,900 per unit.
Cement and lime are among the most economical materials (Illustrative Image Infobae)
The materials with the smallest increases were sand and stone, with 1 m3 bags at $30,000 and $60,000 respectively. Cement and lime maintained more affordable prices, with bags between $6,000 and $10,000, while hollow bricks remained below $400 per unit.
Areas with good prospects
Nuñez, Saavedra and Villa Urquiza stand out in CABA for investing in apartments in condominiums. Núñez combines modernity and proximity to the river; Saavedra grows with connectivity and an expanding market; and Villa Urquiza balances serenity and access to services.Palermo and Caballito complete the list of top options. Palermo, with its cultural and nightlife, offers high potential for appreciation, while Caballito, due to its central location, attracts families and investors seeking stability.
La Paternal Island, an area that can progress a lot in 2025, close to avenues such as San Martín, Juan B. Justo and Warnes
According to Martín Flachsland , from Estudio Kohon, these areas have in common a growing demand that responds to their quality of life, strategic location and the investment opportunities they represent. “They are neighborhoods that combine the appeal of residential with the possibility of obtaining significant returns. The key is to focus on developments that integrate design, functionality and future value.”
The diversity and appreciation of these areas consolidates real estate as a solid investment option in 2025.
According to Tabakman, projects such as the Innovation Park, the former Boca Sports City and downtown Buenos Aires open up new possibilities for developers. “The sale of land in these areas and the proposed urban incentives could generate a significant flow of investments,” he said.
The Innovation Park in Núñez, another of the axes that will expand in 2025
There are also areas of Chacarita, Colegiales, Villa del Parque, Coghlan, Villa Urquiza, Paseo del Bajo and “La Isla de La Paternal” that capture the interest of families and investors.
The challenge
Construction costs are a critical challenge. Damián Tabakman said that lower inflation and a more stable economy need to have a positive impact on the sector.“Building is very expensive now, but we trust that the readjustment of variables and institutional financing will allow us to balance costs and prices. This would be key to recovering the competitiveness of our industry,” he said.
Render of Ramblas del Plata, the new mega project in CABA where the Boca Juniors Sports City was once planned. It occupies 73 hectares and will be developed by IRSA
Federico Rosbaco, for his part, stressed the importance of implementing tax incentives and ensuring the stability of strategic inputs to mitigate the impact of high costs. He also stressed: “the ability to preserve value against inflation makes it a preferred option, especially in a context of economic uncertainty.”
In this context, 2025 is shaping up to be a year of opportunities and challenges for housing construction in Argentina.
“We are closing the year with optimism, but aware that much remains to be done. Macroeconomic stability, the consolidation of long-term financing and the promotion of policies that favour predictability will be crucial to guarantee sustained growth,” concluded Tabakman.
www.buysellba.com
