BA Real Estate market to take a dive before the end of the year.

[Weyland]

How many of the under construction buildings that sold "en pozo" are going to go bankrupt?

Again, I am interested to know if the actual percentages are enough to affect the sales and price behavior or real estate sales in a depression, which is certainly coming.

Ries it sounds like you have a lot of experience in real estate here. If prices came down a lot of in 2002/3, why don't you foresee the same thing happening again if the economy goes through another deep recession?

 

[garryl]

In 2000 Argentina went into a depression and the rest of the world was still doing fine. This time the whole world is going to be in deep sh1t.

Countries will be putting on restrictions with foreign workers. When you have massive unemployment the first thing you do is restrict foreign workers.

Although half a million Argentines might dream of getting that old high paying job in Europe, those jobs are long gone.

They will stay home and suffer - because there will be no alternative...

I have Argentines friends who worked for a small company and now acquired by Sales Force, they just bought their big American houses and enjoy their time in Bay Area. I hope they do not get laid off before they got their green card.

 

[Pierre Smith]

It's not really strange though.

Argentina is evidently one of the very best countries to live in if you have a good bit of money. You can live with no worries, no war, no pollution, great outdoor activities, tons of fun activities in BsAs, splendid food and wine and many pretty women, plus there is a nice latin, friendly culture, lots of pre and boliches and nobody works like crazy. So, yes, it's normal that Argentines would want to remain in their big country. Except the most industrious and bold, maybe.

What's strange is that in the US, you have full blown immigrant communities of every single non-wealthy country, without exception. These immigrant communities are permanent and look toward integration. The countries where you don't have immigrant communities are all rich - western Europe, Japan, Singapore, etc. AND ARGENTINA!

Like, Argentina is the only Latin American country that just doesn't emigrate to the US. It's wild! Only in Miami do you see Argentines and there, like you see with, say, French in the Bay Area, Japanese in Vancouver, or American expats in Argentina, they all hang out together because they're all around the same age, and aren't particularly interested in integrating or staying long term.

Their behavior is highly atypical for a country with Argentina's profile!

 

[garryl]

I am extremely interested in more information about the statement "There are actually a decent amount of houses mortgaged. Macri worked very hard to increase access to mortgages".

Although its true that the variable rate mortgages (in dollars) are down to around 30% interest rate now, from highs recently of over 40%, I have never met anyone who had a mortgage in Argentina.

What is the percentage that constitutes "a decent amount"?
10%?

I have never seen anyone claiming more than 6%, but I cant find any really current info online.
In the USA, the rate is around 60% of homeowners.

I think in Argentina, home owners with a mortgage is not even 1%.

 

[FallenAngel]

And I foresee a LOT of people refusing to pay rent, and refusing to move out.

You don't foresee how this would encourage Argentine landlords to sell? They can sell, take the capital, and move it to jurisdictions with higher yields, no weird tax or currency risks, and less or no risk of having permanent non-paying countries. What you see as reasons for why someone would not sell is exactly why they will sell.

Certainly, when a person in one apartment refuses to move out it makes it harder for that specific apartment to sell. However, when owner of another apartment hears that story and their tenant does move out and it is now empty they will be faced with a hard choice: Rent with all those risks or sell and get yield elsewhere.

 

[FallenAngel]

I think in Argentina, home owners with a mortgage is not even 1%.

Perhaps you are right, but my guess it is a bit higher. Here is an article from 2017. Mortgages grew greatly following the years after too. Mortgages are a booming business in argentina: https://www.cronista.com/finanzasme...omar-creditos-hipotecarios-20171226-0027.html

 

[Jeremias]

You don't foresee how this would encourage Argentine landlords to sell? They can sell, take the capital, and move it to jurisdictions with higher yields, no weird tax or currency risks, and less or no risk of having permanent non-paying countries. What you see as reasons for why someone would not sell is exactly why they will sell.

Certainly, when a person in one apartment refuses to move out it makes it harder for that specific apartment to sell. However, when owner of another apartment hears that story and their tenant does move out and it is now empty they will be faced with a hard choice: Rent with all those risks or sell and get yield elsewhere.

Get yield where, though? What would you invest in, after this crisis?
Real Estate remains the only safe investment, with gold. But if you have ideas of stuff that would yield benefices in Argentina, apart from buying a vineyard in Mendoza, please share

 

[Ries]

Regardless if landlords sold, the government is still not going to evict. And, in many cases, what will happen instead is landlords who have loans will abandon loans, and walk away.

Remember, in 2000, over 1000 companies were taken over by the workers when owners just walked away. And the laws were changed to allow the workers to keep running the companies (but not get ownership of the real estate) Those laws still exist. I cant see similar things happening here- workers taking over companies to keep their jobs, renters taking over buildings when landlords leave, and so on.

The government in argentina is much more likely to allow renter takeovers than repeat the disastrous attempts to evict by police that took place in 2001.

Although, frankly, the amount of large landlords, who own hundreds or thousands of units, is tiny in Argentina, compared to the USA, which has seen, in the last ten years, a gigantic consolidation of rental unit ownership by hedge funds, real estate trusts, and wall street funds. (like, for instance, Jared Kushners family, which owns 9000 apartments in Baltimore alone).

Most landlords in Argentina own one, or a very few, units.
Most buildings are owned by dozens of individuals- hence the difficulty of gettting everyone to agree to sell for redevelopment.

I said, and repeat- I expect property values to go DOWN- I just dont think that everything in Argentina will be for sale for fire sale prices. I think a lot of people will hang in there, and not sell, and I think, long term, they will come back up, especially the good apartments and houses in good areas.

But I am not going to worry about it myself- my kids can deal with it, later on. And, pretty likely, they will still clear more than I paid. Even now, they would.

 

[FallenAngel]

Get yield where, though? What would you invest in, after this crisis?
Real Estate remains the only safe investment, with gold. But if you have ideas of stuff that would yield benefices in Argentina, apart from buying a vineyard in Mendoza, please share

You are aware that rental yields in buenos aires are abyssmal before this crisis and likely will be worse after. You could nearly get the same yields with a US treasury bond prior to Corona. Nearly every country in the world offers greater rental yields. Pick any country in Europe basically and there you go.

Your mind is closed to investment which is why you think the way you do. Even if real estate remains the only safe investment why would it have to be in Argentina? The world is global and the capital class of Argentina has multiple passports. And many countries beg for foreign investment regardless of immigrant status.

 

[mc kenna]

I don't know if this qualifies for this thread, but since we went from real estate to other investments in argentina, i will have to say that over many years of hyperinflation and just regular inflation or just your regular flat economy of this country the only business i have seen always do great no matter how bad things got is bakeries and butcher shops, and i'm not talking about a trendy all modern bakery,or butcher shop, just your regular everyday nothing to write home about, mundane place. I would even venture to say, buying a well established bakery in some non trendy place will give you better return than real estate, of course the dynamics of the type of business is completely different but still an investment never the less.