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Opportunity real estate market in CABA: Is it better to buy brand new or renovate? - Infobae
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Mercado inmobiliario de oportunidad en CABA: ¿es mejor comprar para estrenar o refaccionar?
Los precios de viviendas lentamente comienzan a subir, tanto en los de primera mano como en los usados. Qué recomiendan los especialistas
www.infobae.com
April 21, 2024
Home prices are slowly beginning to rise, both for first-hand and used homes. What do specialists recommend?
By José Luis Cieri
The decision to buy a new apartment or one to renovate in CABA varies depending on the economy, the market, and personal plans (Getty)
In the dynamic real estate market of the Autonomous City of Buenos Aires, the decision between investing in a brand new apartment or betting on a used one with the potential for renovation is a recurring dilemma between buyers and investors. This situation is important for those who have savings to allocate to brick or who sold a property and must buy another to move soon.
This choice encompasses multiple economic, strategic and practical factors. Faced with a change in trend that is still developing but evident in the real estate market, prices stopped their fall and, although incipient, began an increase with an average increase of 5% .
Currently, given the stabilization of the prices of used units, which have ceased their downward trend that began nine months ago, they are presented as a significantly more attractive investment option compared to brand new apartments, which are experiencing a marked increase. in their costs.
Hernán Barrero , from Century 21 Barrero, told Infobae that “it is likely that, in the short term, we will see how the prices of used units begin to experience greater increases. This context indicates a favorable time to acquire apartments that are only a few years old, whose prices are considerably lower than their sales value 5-6 years ago, remaining between 20% and 30% below the cost of new apartments. ”.
Price gap between new and used
The price difference between new and used units is notable, and can extend up to 30% more for brand new properties compared to used ones.“Taking the Recoleta area as an example, an emblematic neighborhood for its real estate offering, the average price per square meter in used apartments is around USD 2,400, while for new apartments, it amounts to USD 3,100. This gap is even more evident in larger units, revealing a marked trend towards a higher cost per square meter in brand new properties,” said Francisco Altgelt , of Altgelt Negocios Inmobiliarios.
Renovating the home always provides a plus to revalue the used property or if it was opened a few years ago and the owners decide to modernize it soon (Getty)
The purchase decision is strongly influenced by the investment motive. Buyers looking to buy tend to see used properties as a valuable opportunity, anticipating the possibility of a revaluation that could offer a return of up to 30%, especially in the face of a potential reactivation of the mortgage loan market.
Advantages and disadvantages
Used apartments present an attractive opportunity for those with a medium and long-term investment vision. The possibility of acquiring a property at a more affordable price and increasing its value through renovations is a decisive factor for many.Altgelt clarified: “However, it is essential to consider the current high cost of construction, which may reduce the expected profitability of said reforms.”
Although there are some materials that began to decline due to the decrease in sales, costs are high and today the value per m2 oscillates at USD 700 for renovations when two years ago it oscillated at USD 400 per m2. In contrast, brand new apartments offer the advantage of being properties free of structural complications typical of old buildings, and frequently imply lower expenses.
However, its higher price, compared to that of used ones, and the uncertainty about the future revaluation of the property can represent a significant disadvantage for some buyers.
Brand new bathroom. An advantage is that although the cost is more expensive when purchasing, it is vital to take care of the home so that it does not depreciate within two years after opening.
Aspects to consider
“In the case of brand new apartments, attention must be paid to the notarial status of the building, the additional expenses at the time of purchase and the finishes included. For used properties, it is equally important to evaluate the condition of the apartment with the help of a professional, as well as the status of the consortium and possible ongoing litigation,” said Altgelt.It is advisable to consider technical aspects, the quality of construction and the background of the developer. Generally, projects with renown and recognition tend to appreciate more and better preserve their investment value. They are those that, in the face of market fluctuations, experience less depreciation in their prices and, during periods of appreciation, enhance their performance more effectively.
The feasibility of carrying out renovations in a used apartment was affected by the increase in material and labor costs. While for some this represents an opportunity for customization and value addition, for others, the search focuses on units that require the minimum possible interventions, balancing the cost of acquisition with that of improving the property.
Hernán Barrero explained: “The study of used properties requires a detailed approach, significantly influenced by the location and current conditions. A crucial aspect to consider is the state of conservation of the building, given that without appropriate maintenance, the possibility of revaluation of the investment is compromised.”
There are buyers who choose to purchase apartments in very deteriorated conditions in order to customize them to their liking, a task in which architects or interior designers usually find a particular appeal.
When purchasing brand new, it is recommended to be aware of the additional expenses at the time of purchase and the finishes included in each environment.
On the other hand, there are those who look for properties that require as few improvements as possible. Those who decide on the first option usually consider the total cost of the renovations when calculating the purchase value per m2.
Since 2019, used apartments have recorded a marked decrease in their values, standing at an average of 45% in CABA (but this trend has ceased). This represents an opportunity to discover authentic “jewels” that, with the right renovations, can be transformed into renovated homes with resale potential at a higher price.
Architect Juan Cruz Langone said that “the purchase of properties to renovate and subsequent sale continues to be a profitable business. However, several key aspects must be carefully considered to ensure success in this process. The renovations that turn out to be more onerous and that frequently present unexpected complications are those that require modifying the distribution of spaces, especially in areas prone to humidity such as bathrooms, kitchens and laundry rooms.
Investing in properties to renovate and sell continues to be beneficial, with care to make precise calculations to ensure profitability in a context where inflation remains high (Getty)
Reference values
Today a set of faucets starts at $200,000 and changing windows exceeds $70,000 per unit. The replacement of exterior elements such as doors can also be added to these costs.The remodeling of an apartment, including bathroom, toilet and kitchen, can take 60 days with a team of 10 people.
“For complex projects, with two bathrooms, a toilet, kitchen, and redesign of service areas, in addition to space modifications, the term is extended to 90 days, regardless of whether the apartment has 100 m2 or 150 m2. The crucial thing is to have adequate equipment and materials ready from the beginning to avoid delays,” explained Cruz Langone.
Costs associated with the transaction
The expenses derived from the purchase of apartments, both new and used, include real estate commissions, deed expenses and taxes, which can vary significantly.
It is always advisable to read the writing carefully to detect possible errors and avoid headaches in the future.
Real estate commissions, both for the purchase of used and new apartments, are similar; By custom, the buyer pays 4% and the seller 3 percent.
Regarding the deed expenses, there are significant differences: it is usual that, in the acquisition of brand new units, the payment of Stamp Taxes (3.5% in CABA) is added on behalf of the buyer. Furthermore, since this is the first deed of the unit, other expenses are incorporated, such as registration to the co-ownership regulations, thus increasing the final cost.
In the case of transactions for the purchase and sale of used properties, it is a notarial practice in CABA that both the deed expenses and the Stamp Tax are distributed between the buyer and seller.
“It is important to mention that, although the properties are valued in dollars, the expenses associated with the deed and taxes are calculated in pesos, according to the value of the official dollar on the day the deed is signed,” concluded Hernán Barrero.
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