Also confused

#1
Hi
I have been searching the web and blogs about Buenos Aires for a few weeks. I did the same before moving from Key West to Cartagena Colombia four years ago. But I am getting bored again. I have spent the last four years renovating proprties here and have basically finished and new properties have increased beyond the investment stage. Cartagena is a beautiful place on the Ocean but generally culturally boring. There is very little to do as far entertainment is concerned. I am a little concerned about corruption and its effect on the economy in Arg.. I have lived with S/A buerocracy but the level of government extorsion makes BA sound like a well polished Venezuela where property can be nationalized or seized in time of crises. It seems that the goverment has its hand in the pocket of everyone in an attempt to redistribute the wealth for political purposes. Is there a chance for a reform government and protection for proprty owners. I have only spent two weeks there but really liked it. I have heard the advice about renting but really prefer to own. But then again, I hate to lose money. It seems the cost of purchasing is over 7% in commisions etc. was it always that way or only the result of a sellers market CH
 
#2
I think you've hit the nail on the head. The level of corruption there is bad. The current government is tied very closely to Mr. Chavez. They are badly mismanaging the economy. The risk for all investments in Argentina are rising including real estate. Could a reform government follow? Maybe but the past history here wouldn't make that seem likely.
A lot of expats here seem to ignore or dismiss the potential danger in Argentina. The risk of another economic crisis is rising by the day. If I wanted to buy property in Argentina I would wait until this government is gone. My guess is this will occur in the next year or two. Hopefully, they would end up with something better but I wouldn't count on it.
 
#3
Having recently moved here to BsAs about a month ago to work in the financial sector, I can say that there are a few peculiarities directly related to the financial sector and the real estate market here that are both tied equally to the crisis back in 2001 and what's currently happening now. Basically, here in BsAs, you'll notice that two types of investments are strangely popular: fixed-term deposits and real estate purchases. The first because it has guaranteed liquidity and the latter because of the 2001 crisis in recent memory. A lot of wealthy people here buy in order to rent, basically turning the real estate market into a more sophisticated way of keeping your money under the mattress and out of the banks, should they go under (and also as the variation in value is assumed to weather a shock better than hard currency). The result is that the real estate market here (at least in BsAs) is unexpectedly high. To put things into perspective, the bank I work for is paying for a 1-bedroom apartment (albeit a beautiful one) only USD$200 more per month than what I paid for the last two years for my monthly rent back in Manhattan. This is compounded, of course, by inflationary pressures. It seems like everyone is trying to rent out their apartments out of panic or who knows why, which means that the prices are all over the place with no point in sight of calming down...In sum, on the one hand, you could probably purchase and, if you were able to secure a long-term lease (here the standard is 2 years), be able to profit from whatever you decided to charge for rent. On the other hand, considering the combination of gv't corruption, spiraling inflation, and potential real estate bubble, Argentina might not be the best place to look (not to mention the fact that it would probably take at least 3 months for you to open a bank account here unless you're sponsored by a bank or already have your social security number for Argentina in the works...).
 

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#4
There are a lot of hidden transaction costs to buying real estate in BsAs, and I think you would be much safer if you used a figure of 10% on top of the sales price.
Then, you should figure on at least some, and probably a significant amount, of immediate renovation expense, if you are buying anything but a brand new place.
There is a lot of "lipstick on the pig" style of home decorating here- stick on wallpaper over peeling plaster, 30 year old plumbing fixtures that were cheap to begin with.

This is not to say there are not amazingly beautiful apartments and houses for sale in Buenos Aires, which, by world prices for the age and quality of the buildings, in a city of 4 million, are pretty reasonably priced.

Also, buying in BsAs is no sure thing short term- it is not easy to get money back out of the country, and the purchase and sale expenses lead me, at least, to think its not worth it unless you plan on holding the property for a minimum of 5 to 10 years.

Buy an apartment here if you love Buenos Aires, if you find a place that is charming and beautiful, not to make a quick buck.