I've been walking and biking all over central BA the past week and you can't help but notice the number of condo construction projects. In Palermo there's practically one on every block, sometimes several. If you hadn't read all the bad news about the Argentinian economy you would think this place is booming. I realize there are long lag times for these projects and it's easy to get something designed and coming out of the ground just in time for the market to turn against you (that is happening all over Austin, TX), but still...
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Question on Real Estate
- Thread starter CraigM
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Billy Goat
Well-known member
Yes there is always a lot of construction projects going on in Buenos Aires. Especially Palermo. Property prices were very cheap the past several years in Buenos Aires so many developers purchased land when it was cheaper. Now they are all building. Better to stick with well known developers as some projects go bust.
earlyretirement
Moderator
Yes, it's true @CraigM it seems like they are building all over the city. The economy is terrible but the one place that most people feel safe putting their money is in real estate. Previously, people didn't even feel safe putting their cash in the bank. It's only with President Milei that people feel safe putting their savings in the bank. But most people use real estate as their "piggy bank".
As you noted, there are long lag times of up to 4 years to finish a building depending on how tall it is. If you're buying with an established developer you should be ok. How it works is most of these developers are only buying the land. Some have some cash but mostly they are building as they sell units. If they stop selling units the project can stall. You can see several projects that take much longer to finish.
@billygoat is correct that many developers bought land when it was cheaper. Real estate prices fell for the past 5 years. It's only last August 2023 when it hit bottom and starting to go up. Both land and also construction costs have gone up significantly over the past year. I can't emphasize how important it is buying from a developer that has a lot of experience building. In the US, they don't have to worry too much about severe inflation on materials. Here in Argentina it can be extremely high in a short amount of time. Things like concrete, steel, etc can wildly swing from one month to another. You have to have experience as a developer with this.
I look on Zonaprop all the time at real estate and all the ones that look nice all say they are under construction and not done for several years. I read that even if they say it will be done in 2026 it probably means 2027. Many of the older apartments for sale are ugly. What happens if a building stops building or runs into issues? Does that happen often @earlyretirement? Is there any legal action you can take against the builders if that happens?
Betsy Ross
Well-known member
Sometimes I think there are too many projects. In fact, the government has put a halt to new construction projects that haven't already been approved for 6 months. They are worried about neighborhoods changing too much.
Good advice to research the builder. I know some friends that bought in new condo developments and the developers went bankrupt. No recourse as far as I know.
Very true. Sometimes you can see photos or banners that say the properties are done in 2023 and they still have the same banner up. Sometimes properties are listed for sale that have not even broken ground yet. Many apartments for sale that are older need to be renovated. I purchased an older apartment and had to renovate it. That is a process in itself. If a builder goes bankrupt you still own your share of what you paid but someone else needs to take over which can take years. I had a friend that invested in those types of projects and 3 years later she is still waiting.
It is cheaper to buy at the beginning of a project but there is more risk.
The situation is totally different here vs. the United States but yes there is a lot of developments. Also many investors or developers bought land many years ago and were waiting to see how the election turned out. Once Milei won, many people started projects so you are seeing many now. Someone like Milei is good for the market so I think there are more than usual now.
Many people here in Argentina don't intend to live in the apartments. Many investors initially buying are just buying and then flipping before the building finishes. Just follow the advice of the others and make sure whoever is building has experience. Ask what other buildings they have built. All the dependable builders will have a website with all their prior projects.
Uncle Wong
Well-known member
This is what several people told me that they were on a big downturn with real estate prices the past 5 years. I guess I should have bought something last year while I was there. But there really wasn't too much on the market. I looked at some buildings that were almost done but they were all sold out on the higher floors. I didn't want something on a lower floor. The rest of the projects I looked at were going to take 3 years to build and I wanted something that will be done in the next year.
I heard the sweet spot was to get something about 1 year from being done as most of the risk is all gone from the building already going up.
MickMolloy
Well-known member
Kind of related about 10 years ago I lived in whatever the area is behind the abasto shopping mall, between Cordoba and Corrientes up to like Estado de Israel. At the time I was sad the area was very ugly and run down. I lived in a beautiful new building which stood out among the shacks and falling down buildings. Everytime I walked out my front door I felt so paranoid and watched like I had a big sign on me "Im a rich foreigner and I live in that beautiful new buildling please shoot me and take my valuables."
Well I went walking around there recently and there are so many beautiful new buildings, most with 24/7 concierge and great security. Also lots of new constructions. Cafes packed with people sitting outside. Actually the building where I used to live now looks a bit run down compared to the surroundings
Well I went walking around there recently and there are so many beautiful new buildings, most with 24/7 concierge and great security. Also lots of new constructions. Cafes packed with people sitting outside. Actually the building where I used to live now looks a bit run down compared to the surroundings
Vince
Well-known member
Yeah that entire area is all getting nicer. It used to be very ugly but many old buildings were torn down and newer modern buildings went up. This should continue. Did you ever have any problems with crime in that area @MickMolloy? I heard it's only an issue at night. I'm never in that area at night.
The trend now seems to be not wanting to put 24/7 security in many buildings and instead going with a more modern screen that monitors everyone entering the building. Much cheaper to outsource that.
@CraigM - most of my friends that visit me here in Buenos Aires are always very shocked when they come here because all they hear on the news leading up to their trip is all kinds of issues with the economy and high inflation. They are expecting things to be bleak here. But then they witness all that you are seeing and have the same reaction as you. They see all the cafes and restaurants packed all the time and say you would never know there was a big recession and so much poverty.
Of course, you're in the most affluent and richest and nicest neighborhoods of the country. If you go outside to other neighborhoods you would be seeing it's not all like this.
earlyretirement
Moderator
Very true that the vast majority of properties listed on Zonaprop that are pre-existing need to be renovated. Usually, the kitchens or bathrooms are very dated. But you can always renovate them. You just have to use a reputable architect and contractor for the renovation.
The judicial system here is not really functional. There are a lot of building projects that run into issues. I just had dinner recently with a popular Twitter poster in Buenos Aires and he was mentioning he purchased several pozo properties that have been dormant for many many years. Sometimes you think you are getting a great deal but it's not a great deal if it never finishes or takes many years past when they say it's going to be finished.
I don't buy anything unless the developer has been around at least 10+ years and done many projects. I prefer to buy with long established developers that have been around 30 years. I did buy a few units in a building once in the early 2000's and about a year before the building was going to be finished, they made all the owners pay about 25% more or they threatened to declare bankruptcy and stop. Fortunately the prices went up about 100% since I invested before the groundbreaking.
Most projects always take longer vs. what they tell you when you first buy. I've never seen a project finish on time.
You would never know any issues there. Homelessness has picked up a bit but it's still MUCH better than most downtown areas of major cities in the U.S. I recently visited SF and Portland and was shocked how bad it has become. Just horrible. I hear the same thing about other major cities.
There is a lot of people that have money in Argentina and most of them are in Buenos Aires and the neighborhoods you're in @CraigM is one of the wealthiest in South America. Also, many people that want to invest even if they don't live in Argentina buy in Buenos Aires as it is safer as an investment. Much easier to rent and also to sell in the future.
I have friends that live in Bariloche, Salta and other cities but they bought in Palermo. Some for investments but also some apartments for their children.
Johnny
Well-known member
I was also very surprised by this! I read for years about how horrible the situation was there economically. I was assuming a very bleak situation but I was very pleasantly surprised. Every restaurant I went to was totally packed with people. In fact, several of them I went to, it was impossible to get into without a reservation and there was a line out the door in several of them (Don Julio, El Preferido, Osaka, Lima, La Mar, and several others).
I spent 10 days there and visited several projects @CraigM and had the exact same impression that you have. I had the same concerns so bought a property that is almost finished. Hopefully, in 60 days it will be all finished.
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