Buying Property in Buenos Aires

[nikad]

Hey Simon, sorry for the sarcasm, but your answer was way too short! Inquiring minds want to know What kind of projects are you working on and where in BA? Any price ranges etc?

 

[fifilafiloche]

Hello Simon,

Sorry for my naive questions, but they were sincere. As a European, i m not allowed to exit more than 15,000 dollars out of Europe, and not authorised to bring more than 10,000 dollars in Argentina. So technically, i m puzzled. If i was to take 100,000 dollars off my bank, my central bank would be immediatly warned and an fiscal inquiery would be launched against me.

I have another question. I m staying in a very nice area in Vicente Lopez, an area that should be very demanded. I m surprised to see a lot of signs advertising houses for sale here. I know that many argentines are trying to get funds out of the country in fear of a new credit crunch crisis in Argentina (The federal government had to ask for new credits to the IMF).

Do you think this is the best time to invest here when housing prices are so disconnected from wages? It takes 20 years of wages of a 400 usd monthly salary to collect 100,000 USD without eating, sleeping to make that money. If you take a 10% saving capacity, this is 200 years, if you take 25% accomodation budget, this is still 80 years.

Once again, i apologise in advance for my naive questions, but i m sure you could help me understand those incoherences since you are an experienced professional.

 

[tangobob]

Steve...it does not requiere much thought when thinking of how one could bring money into the country ...ever thought of using a bank unless your think of evadind taxes.

This answer suggests to me you do not understand the problems of bringing money into the country:
Only currency exchange houses, like Banco Piano and Alhec Group, are allowed to bring in amounts large enough to purchase property, even then the rules around it are a minefield.

 

[perry]

There is a tremendous amount of misinformation about investing in Argentina when if explained clearly is a relatively easy process.



Unfortunately 90 percent of realtors do not know the rules of investing legally and there are others as well who make it complicated on purpose to reap bigger rewards.

Property taxes and personal income tax must be paid each year and these can be minimised by obtaining your DNI.

The Argentine government does not discriminate against foreign investors and treats all equally . If you pay your taxes it is simple to sell your property and also its simple to transfer monies out of the country,

The biggest plus is the low taxes that one must pay when selling in Argentina .
There is no capital gains tax on the sale as quoted incorrectly by many others on this and other sites.

 

[perry]

Do you think this is the best time to invest here when housing prices are so disconnected from wages? It takes 20 years of wages of a 400 usd monthly salary to collect 100,000 USD without eating, sleeping to make that money. If you take a 10% saving capacity, this is 200 years, if you take 25% accomodation budget, this is still 80 years.

Thats a most interesting question and one that demands an answer . In most of Europe and Asia and most of the world the wages required to buy a property in a well situated area are very high but still they sell . Why you ask . I will do my best to answer this question.


The reality is purchasing a property is very rarely achieved by wages in Argentina and is in most cases achieved by
1. investments in farming land and returns
2. investments in other properties that have been sold
3. investments from testimonials that leave sizeable sums of monies to the inheritants . This is more common in Argentina than most countries due to Napoleonic Law.
http://en.wikipedia.org/wiki/Napoleonic_code

Mathematically it is simple to see that property prices while high will always be the best investment due to the simple factor of supply and demand. The fact is that Buenos Aires in its premium neighbourhoods has very few excellent properties for sale and certainly they do not have the land nor the space to construct more properties in Recoleta and the finer parts of Barrio Norte.Antique category apartments in these neighbourhoods are rare and will become rarer in the next years and the quality of course is better than what passes as new luxury.

The local demand from the Upper Class is enough to sell 100 percent of these properties within a reasonable sale period.
The properties that are not selling are simply overpriced in dollar terms for the metres offered in the assigned location.

Foreign investment makes up very little of this and at best constitutes 5 to 10 percent of sales in Recoleta and Barrio Norte . I believe that this market is very small and should be much higher due to the relative low international prices and the high quality of some properties on offer.

There is no doubt that buying a well located property in a category building will be a safe and profitable investment. The question I ask to those hesitant investors is that to keep monies in dollars far outweighs the risk of buying in Buenos Aires a well appointed apartment.

 

[fifilafiloche]

Thanks for that detailed and well informed report, Pericles. Your vision of the current B.As real estate seems a bit too optimistic to reflect exactly the reality of the market tho.

There are true reasons why Buenos Aires shouldnt be price at the same price as western democracies capital towns. Here are a few :

-Service and public infrastructure are unreliable : recurrent electricity and internet shortcuts, less efficient sanitary system, streets get flooded at each rainfall.
-No warranty on the quality of the construction by law. Landlords are not obliged to give evidences about hidden defaults.
-Tax structure is complicated and not transparent. The governement is always in dire need of taxes to compensate its deficit.
-Insecurity has a cost, in terms of well being and security services.
-Economic instability. Last credit crunch 7 years ago obliged landlords to give away their ownings in desperate search of liquidities and there is no warranty it will not happen again in the very next coming years.
-Obligation to pay large amounts of money in cash and foreign currency makes transactions difficult and risky.
- The market yields way less than inflation.
- Argentine laws dont protect landlords interests. You can end up being dispossed for years from your property if you dont actually live in it.
- Locals have a poor access to long term credit due to jobs instability and high unemployment.

Your statement about market fluidity surprises me. What i witness here contradicts your claims. My area is filled with former embassies, beautiful cottages and "se vende" signs are florishing like the jacarandas in springtime.

Foreign investors who oportunisticly entered the argentine risky market in 2002 are now looking to cash out their profits to find new oportunities in less risky markets where the quality/price ratio is becoming acceptable, since renting yields now much more than bonds.

Real estate bubbles are characterized by the impossiblity for local people to enter the market, market transactions become very thin, mainly between professionals. USA, Ireland, Spain already went thru those speculative phenomenons and housing lost 50% of its value in the last few years.

I understand it can be tempting for local realtors to advertise on expat forums since that niche clientele is supposed to have the means to invest at locally inflated prices, but you should present the market as it is, not as it ideally would be. A house is a source of problem in your homeland, it can be a never ending source of stress in a foreign country with a different culture. This is an important point to be made. Add to this that the conjuncture doesnt seem to favorable, since the question right now is not if Argentina will undergo another fincancial crisis, but when it will visibly start (the sharp rise of insecurity is like the wind before the storm).

 

[tangobob]

Comparisons to Spain are a bit far off the mark: The Spanish property boom was fuelled by foriegn investors buying on credit, often buying two properties off plan in the hope that the second property would sell at a massive profit paying for the first.
With worries about properties being demolished and government grab backs, followed by a collapse of sterling, many brits pulled out unable to pay for either of their two properties never mind make a profit, and as we have seen credit fuelled booms can very soon become credit fuelled busts.
In Argentina where there is almost no credit for housing, this is unlikely to happen. This said, my own view is, you are probably onto a good investment, but I would not put money int Argentina I was not prepared to loose.

 

[perry]

My post was not absolutely positive as stated by some as I am only relaying the current market as it stands.

The reality is I have more enquiries and more genuine searches from buyers looking to purchase in Buenos Aires than ever before including in the so called boom years.

When I stated that buying a property is a good investment that does not signify any property or any area of the city as well as the province. There are good buys and bad buys like there are in most investments that can be made in currencies or stock.

I do know though that anyone who takes great care in purchasing and looks for a special place with antique features will not lose monies and certainly make a good profit in 7 years.


The most important rule is always location , location , and location.

 

[EMR]

You know, every time I look at this board, I am amazed at the negativity on every subject. Too many really bitter people. I will say this, for those who bitch about everything and think Argentina is doomed etc, just leave the country and go somewhere else, why continue to vent on this forum. For those looking for real answers here is one on property.
Foreigners can buy property and can send the money legally via wire transfers. Yes, there is a costs to this and yes, depending on who you buy from, some will either accept or not. The reality is many developers do things to evade taxes and ask for cash payments, their prices may or may not be a bit cheaper but the risk is all of the headaches associated with bringing in cash, selling without having brought the money in legally etc. There are developers that do things legally and all can be done through bank transfers and all is handled transparently so you have no problems with AFIP or with your home country. The simple reality is many people buy-sell, develop etc in cash and avoid taxes and if you choose to buy from them, you have to be prepared for the hassles of doing that. If you want to do it legally, you can very easily. So, if you choose to buy in black, you pay the price, if anyone is really interested in purchasing legally and wants to understand it more, PM me, I am not going to engage in a debate with people who have either had bad experiences because they were misinformed or people that do not know what they are talking about. The reality is just like anywhere else, you can buy property legally and send the money legally. The reality, you pay a slightly higher price to do so but you avoid the problems of doing it wrong.

As to prices, differences of opinions are what make markets, I would say Buenos Aires is very cheap relative to other world capitals and as for the future, I would bet on prices increasing for many reasons and not decreasing but again, this is for each person to decide. I would certainly not take financial advice from this board or listen to the naysayers, because I am pretty sure if we were to look at their net worth statements, they would be very low indeed. I suggest people interested in investing do so because of their own instincts and feelings, and do their own research through other venues. I believe it is a great time to buy in BA and only time will tell if I am right or wrong.

Oh and Fifila, you are factually wrong about most of your statements. You may only know the black way of doing things but just as in any other country, there is a perfectly good way to legally protect yourself etc, just have to know how to do it and hire the right lawyers. There is a 3 year warranty by law on construction, in the US it is mostly a 1 year warranty so again you are factually wrong. I will not get into each item but again, I suggest if anyone has real interest in buying and doing it right, contact the appropriate people to get the right answers.

Now I wait for the attack from Steveinbsas who will surely state that it is impossible to do it right and bitch about something for sure.

 

[fifilafiloche]

You are very right, Pericles, location is very important, and Argentina is not ,imho, the best one at the moment for international investors, like it wasn t 10 years ago (unlike other markets).

EMR, my few words of caution are obviously not adressed to people making a living off real estate here. The lack of warranty remark was not for new buildings, but for already owned ones (see the landlord word in the sentence?). Anyways, a 3 years warranty on new buildings is very minimal for building meant to last a century. In France, this is 10 years.

Now that pros and cons were displayed on the table, investors can knowledgedly make their choice.