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Inflation and dollar raise alerts in new construction - Infobae
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La inflación y dólar encienden alertas en la construcción en pozo
Siguen en marcha más de 50.000 viviendas en ejecución en distintos barrios de CABA y expertos sostienen que hay un cambio de ciclo pero que ni bien se despejen los nubarrones económicos la actividad y las operaciones de compra venta retomarán una senda positiva
www.infobae.com
March 18, 2024
More than 50,000 homes are still under construction in different neighborhoods of CABA and experts maintain that there is a change in the cycle but that as soon as the economic clouds clear, activity and purchase and sale operations will return to a positive path.
By José Luis Cieri
Even with economic disconnections, housing construction continues at its usual pace in the city of Buenos Aires
The panorama of newl construction in Buenos Aires faces significant fluctuations marked by inflation and the swings of the dollar with a downward trend in the blue exchange rate in the last week, aspects that directly affect the development of new projects and the buyers' considerations about the convenience of investing in the real estate sector.
The current situation presents a challenge for developers and buyers alike, given the variable economic conditions that influence construction costs and sales prices in the real estate market.
Likewise, in CABA, more than 50,000 homes are still under construction in different neighborhoods, with Palermo, Villa Crespo, Caballito, Colegiales, Belgrano, Núñez, Villa Devoto, Parque Patricios and Villa del Parque, among others, leading the expansion.
Santiago Levrio, institutional director of Alianza Urbana, highlighted to Infobae that “the economic situation leads to a change in the construction cycle, where the aim is now to convert dollars into an investment that can accompany inflation. This approach responds to the need to adapt to an environment where the cost of construction in dollars has increased, discouraging many from self-building and causing many others to remain expectant as to how the panorama evolves.”
In this context, the average price to build a square meter in CABA ranges between USD 1,000 and USD 1,200, experiencing a year-on-year increase of 30 percent.
This increase not only reflects the variability of costs but also the differential impact depending on the stage in which each project is, especially in finishing materials, which have seen the largest increases.
Current conditions led some construction materials to break their average price, especially those not related to gray work, which saw their value in dollars and indexed pesos decline towards their historical average thanks to lower activity and a progressive ease of obtaining supplies.
For buyers, the decision to invest in property from the well requires a careful evaluation of the resources they have. Levrio adds that “it depends on the type of savings the buyer has; Paying upfront can be very beneficial.”
However, for those with a surplus flow in their income, facing adjusted fees under the Construction Chamber Index (CAC) represents a viable option given the economic outlook.
Against this backdrop, the development of new projects continues to be motivated by a hope for stabilization in costs and a recomposition of prices that could improve the profitability of the real estate business in the long term.
Despite market fluctuations, real estate remains a good way to store value
“It is logical that the business shows an adjustment in profitability; However, there are reasons to trust in stabilization,” concludes Levrio.
Well unit prices
The average prices for a two- and three-bedroom apartment in CABA show a significant variation depending on the neighborhood.It is estimated that in the most sought-after neighborhoods the price per square meter averages USD 2,000 (Belgrano, Villa Urquiza, Núñez, among others), while in less sought-after neighborhoods (Barracas or Liniers, for example) it can be found below USD 1,500, “however, the buyer must take into account that the decrease in price may be offset by lower market dynamics and a possible delay in sales. Therefore, it is important to evaluate whether the 25% reduction in cost justifies the possible inconveniences that may arise in the acquisition process,” Levrio clarified.
Find the way
In this sense, Damián Tabakman , president of the Business Chamber of Urban Developers (CEDU), regarding the problems that real estate development is currently going through, highlighted that “the cost of construction in dollars increased considerably, but this did not translate to house prices in new construction.“Therefore, they face the difficulty of finding a price that is profitable for development, without alienating investors and buyers who want to pay in dollars,” he noted.
Businessmen argue that they are in a moment of intersection between the need to fund development with the sale of units, but without committing to taking money under unfavorable conditions.
“Investors know that what they do not buy in dollars today will increase in price in the future due to the current market situation. We hope that at some point these variables will be rebalanced to find a solution to this problem,” Tabakman added.
In addition, competition in the used property market is strong, since prices are determined by supply and demand, which makes the investment an attractive option for several savers with banknotes in hand.
Tabakman expanded: “Rents in dollars also rose following inflation, but in proportion to the valuation of the apartments, which has improved profitability for owners. It is a constantly evolving market, which offers interesting opportunities for those looking to invest in the real estate sector.”
Materials
A decline is beginning to be seen in some materials such as sheet metal, steel and coatings (porcelain floors) due to the reduction in sales, a decrease between 7% and 10% is estimated, and it is expected that values will normalize with the opening of the market international and imports.
Sheet metal and steel are among the materials that have decreased by up to 10% in recent days
“As for the price per square meter of construction in CABA, for the Premium segment it ranges between USD 1,600 and USD 1,800, with a year-on-year increase of 20%; For the buyer, the decision to do so and the choice to pay in installments through the CAC Index will depend on their particular situation and the volatility of the market,” said Alejandro Ginevra , from the GNV Group that is carrying out works in Puerto Madero.
As for the average price of a 2 or 3-room apartment in Puerto Madero, it ranges from USD 4,000 m2 for used properties and between USD 5,000 and USD 8,000 m2 for brand new units, depending on the specific characteristics of each property.
While standard homes for sale range between USD 2,000 and USD 2,500 per m2 in other Buenos Aires neighborhoods such as Caballito, Floresta, Villa Urquiza or Coghlan. They descend a little in Almagro, San Telmo or Montserrat.
Specialists maintain that it is true that they are facing a complicated situation in terms of inflation and the dollar, but it is important to remember that the construction of real estate projects is a safe long-term investment.
“It is important to highlight that the global trend shows that financial assets are increasingly volatile, while property prices continue to rise. Therefore, investing in bricks remains a smart decision in the long term. “We remain committed to our work and are confident that we will achieve success despite the current adversities,” Ginevra said.
Experts are confident in moving forward with their projects with confidence in the future. They believe that once the Government manages to solve the problem of inflation, materials will stabilize and the outlook will be much more encouraging.
Ginevra concluded: “Ultimately, despite dollar fluctuations and inflation, the real estate market continues to present solid long-term investment opportunities.”
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