Real Estate News When will property be cheap in Buenos Aires?

[earlyretirement]

The best person to ask is Garryl a member and realtor on this forum who recently brought real estate in Athens

Ah no worries. I can search around online. Honestly, I don't enjoy Greece as much as I do Spain and some other countries. Very friendly people and great food but just don't go enough.

 

[JorgeNIce]

I've been keeping a casual eye on the real estate market in recent years and noticed a consistent uptrend in listed prices, although it's uncertain how much is actually being sold. Considering the possibility that prices are genuinely increasing and transactions are ongoing, could this trend be attributed to a perception of economic instability? It seems plausible that individuals are hastening to invest their savings in real estate as a secure asset to withstand potential economic uncertainties. As demand surges, prices naturally follow suit. Given this perspective, it appears unlikely for the real estate market to experience a sudden crash when bricks serve as a perceived safe haven amid economic uncertainties. What are your thoughts on this?

 

[earlyretirement]

I've been keeping a casual eye on the real estate market in recent years and noticed a consistent uptrend in listed prices, although it's uncertain how much is actually being sold. Considering the possibility that prices are genuinely increasing and transactions are ongoing, could this trend be attributed to a perception of economic instability? It seems plausible that individuals are hastening to invest their savings in real estate as a secure asset to withstand potential economic uncertainties. As demand surges, prices naturally follow suit. Given this perspective, it appears unlikely for the real estate market to experience a sudden crash when bricks serve as a perceived safe haven amid economic uncertainties. What are your thoughts on this?

Many people that don't understand Argentina mistakenly believe because the economy is so unstable and inflation is so high that property prices would plummet. While I do agree that property prices are very high there, I don't think they will plummet. They could soften but in a country where there is NO safe investments except for bricks and land, real estate should always do ok over the LONG term.

With the instability of the peso, many, many many locals use it as a sort of bank account. The rental yields aren't too good but still will make a few percentage points per year in guaranteed cash flow. I still own several apartments but mostly have been selling my properties there in Buenos Aires the past two years as prices are high.

I didn't sell because of a fear that prices would crash. More so, that you can make a much higher yield with much better capital appreciation potential in other places. With the crazy inflation there, HOA and expenses have gotten really expensive even considering the US dollar exchange rate is so high. There has been a total explosion in the # of listings on the market which causes short-term rental prices to be capped for the most part. The only properties that I know of that are still making double digit % cash flow are larger properties that have limited competition. But the studio or 1 bedroom apartment is totally inundated and difficult to make great returns.

Plus Argentina being Argentina you have hassle factor of dealing with shady property managers, horrific utility companies, internet companies which can be problematic to deal with or constantly going down.

I'll always keep a few properties in Buenos Aires but rental yields are not good there. But it's exactly as you mentioned, "Bricks/land" are a safe haven for many locals. Also, you have to remember all of those billions of dollars that came into Argentina during the last amnesty program all went into real estate or will go into real estate. I recently sold 2 very small studio apartments in Soho and sold them within a few days of listing it. My realtor found a potential buyer but in the end I just sold them to a local friend. Their family just continues to build up their real estate portfolio.

Personally, I believe this is a good time to sell. NOT a good time to buy. Most of the buying is NOT by foreigners but by locals. I sold 7 of my properties all in the past 2 years and in each case it was a local that bought it. In each case they were locals that brought back $$ during the last amnesty program.

For foreigners there isn't really any good reason to buy unless you're planning to keep it for the long haul or retire there and you are absolutely in love with the property. Otherwise, with the plethora of properties on the rental market you can easily rent something wonderful on Airbnb vs. buying.

No one can say if property prices can keep going up. Personally I think they are very expensive now relative to rental yields but I'm not in the camp that says prices will crash. What I've noticed is that higher end bigger more expensive properties are sitting on the market longer. But my studio, one and two bedroom properties sold relatively quickly. But they were all move in ready and renovated.

Plus, to add insult to injury for reasons not to buy now...... previously there was 0% capital gains tax. But starting if you purchased a property after January 1, 2018 you have a capital gains tax when you sell your property.

Really the key and what it comes down to when you buy real estate is location, location, location. Over the LONG term I always feel comfortable buying and holding real estate in premium areas. Typically you can get a premium on rentals so you have decent to good cash flow on rentals until you sell. In times of recession, of course the values will go down but over the long term they will typically come back up.

Case in point, in many areas in the USA property prices fell 50%. I purchased properties in the USA in 2011 and 2012 at the bottom and today they appreciated over 50%. Much of the question to ask yourself is why do you want to buy? What's the motivation and what will you do with it. To many people that are buying to live, it's not really an "investment" to them but a "home" where they want to nest and settle down in. If that's the case then even now at the high prices, it can make sense to buy in Buenos Aires.

I have close friends that fall into that category and even though prices are high in Buenos Aires they are still much much cheaper for them vs. NYC or London where they live and bought insanely nice properties in Recoleta and Palermo Soho.

 

[earlyretirement]

Also, I forgot to mention that many expats have this romantic notion and idea that it would be fabulous to own an apartment in Buenos Aires. They imagine spending their golden years there or early retirement there. They have this idea in their head it's great to have their own property. Don't get me wrong. It's a great feeling owning real estate in Buenos Aires. But I purchased all of them either at the bottom or close to the bottom of the market.

But I have to say that it's not really romantic owning there. It's kind of a pain in the ass. I'll never sell all of my properties but it is a major pain in the ass on many of them. It's a pain in the ass to deal with utility companies when there are issues. Or water leaks from the upstairs neighbors in the event of a water leak. Or the HOA when it's a broken pipe in the building and it's their fault. Or a doorman getting fired and having to pay a big severance to them even if they are getting fired for cause or outright theft. Or a gas leak that causes a building to be without hot water or gas for stove for up to 12 months. (ALL of these things have happened in buildings I own in).

I get the hunch that you've lived in Buenos Aires long enough to know what I'm referring to. BA is a fabulous city but it's also one of the most corrupt and inefficient cities in the world. Not to mention, that many expats over the next few years (if they weren't smart enough to already have moved out of Argentina) will end up moving out of the country.

Some ex-pats say silly things like they will never leave Argentina. Or have a significant other or family there and not want to leave. But the situation is as such that eventually most people will "cry uncle" and wise up and leave Argentina for a more stable life. I'm still in the camp that says we will NEVER see real estate so cheap like after the correlito. Much like the real estate crash in the USA in 2011'ish, I believe that was a once in a lifetime chance to pick up prime real estate so cheap.

Not to say prices can dip again but you'll NEVER see prices so cheap per m2 like it was then. IMHO.

 

[JorgeNIce]

Certainly, the dynamics of property speculation bubbles, reminiscent of Japan's imperial palace being valued similarly to all of California's real estate, are inevitably bound to burst. Historical instances like tulip booms and dot-com frenzies underscore how these bubbles sustain only as long as the prevailing hysteria endures. While international investment capital plays a role in keeping big city prices high, external factors, such as economic downturns, can swiftly trigger a nosedive in property prices, as seen in places like Dublin where unrealistic expansion led to a stark decline.

Real estate, being a hedge against price inflation despite its low liquidity, may witness softening prices when priced in a stable currency like the US dollar, especially if the dollar remains robust while domestic currency faces inflation. However, the inherent stickiness of house prices comes into play, particularly when owners hold out for higher rents and individuals are constrained to sell and buy within the same market for essential reasons like housing. In the international context, Argentina seems comparatively affordable both for buyers and renters, particularly for those with a stable, dollar-based income. I'm curious to learn if there's any evidence of expats and others selling and leaving in significant numbers. From my intuitive impressions based on various postings, it appears that more individuals are expressing eagerness to come and settle here, often concerned about immigration rather than emigration issues. I'd be interested to hear your thoughts on this.

 

[Marthaty]

Certainly, the dynamics of property speculation bubbles, reminiscent of Japan's imperial palace being valued similarly to all of California's real estate, are inevitably bound to burst. Historical instances like tulip booms and dot-com frenzies underscore how these bubbles sustain only as long as the prevailing hysteria endures. While international investment capital plays a role in keeping big city prices high, external factors, such as economic downturns, can swiftly trigger a nosedive in property prices, as seen in places like Dublin where unrealistic expansion led to a stark decline.

Real estate, being a hedge against price inflation despite its low liquidity, may witness softening prices when priced in a stable currency like the US dollar, especially if the dollar remains robust while domestic currency faces inflation. However, the inherent stickiness of house prices comes into play, particularly when owners hold out for higher rents and individuals are constrained to sell and buy within the same market for essential reasons like housing. In the international context, Argentina seems comparatively affordable both for buyers and renters, particularly for those with a stable, dollar-based income. I'm curious to learn if there's any evidence of expats and others selling and leaving in significant numbers. From my intuitive impressions based on various postings, it appears that more individuals are expressing eagerness to come and settle here, often concerned about immigration rather than emigration issues. I'd be interested to hear your thoughts on this.

I'm not sure if there are official "expat exodus" numbers, but almost all the expat friends I had (who said they would NEVER leave) left long ago. Most didn't leave due to the country's economic issues. Most left because they simply got bored with BA. Argentina had its turn as the "hot" expat destination. Times change. Trends change. People constantly want something new.

And yes, BA might still be cheap compared to many major cities. But it's now expensive enough that it's no longer as attractive as an expat destination. The expat dream is the luxury apartment for $50k USD close to the beach — not a studio apartment in BA. Whether or not that $50k beach villa exists is another story. But that's what people go in search for.

And I could be wrong, but I don't think most people posting here about visas are necessarily in the market for an apartment. They seem to be looking for a short-term adventure, not a permanent or even part-time home. Of course, I could be wrong, but that's the impression I get.

 

[earlyretirement]

I'm not sure if there are official "expat exodus" numbers, but almost all the expat friends I had (who said they would NEVER leave) left long ago. Most didn't leave due to the country's economic issues. Most left because they simply got bored with BA. Argentina had its turn as the "hot" expat destination. Times change. Trends change. People constantly want something new.

And yes, BA might still be cheap compared to many major cities. But it's now expensive enough that it's no longer as attractive as an expat destination. The expat dream is the luxury apartment for $50k USD close to the beach — not a studio apartment in BA. Whether or not that $50k beach villa exists is another story. But that's what people go in search for.

And I could be wrong, but I don't think most people posting here about visas are necessarily in the market for an apartment. They seem to be looking for a short-term adventure, not a permanent or even part-time home. Of course, I could be wrong, but that's the impression I get.

BA is ok to visit for the occasional trip but I don't have ANY desire to live there full time. I do enjoy visiting the city and always will but to be honest, the airfare down there is always really expensive. I can fly to Europe for a few hundred dollars as many airlines have fare wars and from both the East and West coast you can fly to many destinations in Europe for $300 to $500 (https://www.secretflying.com or https://boardingarea.com ). There was just a round-trip airfare from NYC to Paris for $266. You can go to Spain or Portugal and eat like a king for really cheap.

Even at 45 pesos to $1US Argentina is no real bargain because with inflation they just keep adjusting the prices.

I don't think you can use comparisons of Venezuela and what real estate prices were like there vs. Buenos Aires as it's totally an apples/watermelons type of comparison.