Gringo Invasion?

[bigbadwolf]

I see there's a piece in this week's The Economist on the Gringo invasion of Buenos Aires. Apparently these worthless Gringos have been buying up properties in Palermo and Recoleta (areas named in the article), and hence driving prices inexorably upwards. The piece also mentions there hasn't been a "xenophobic backlash" so far because the buying has been confined to these leafy areas. The great expat real estate entrepreneur Michael Koh is named.
Is the great Gringo invasion of the last few years showing any signs of abating? Is it perchance a bit exaggerated? And would it be fair to say that much of the increase in real estate price in the capital has been driven by them?

 

[chris]

Americans and other foreigners keep coming here. I don't know what the statistics are but I hear English everywhere. I imagine the real estate "invasion" will stay confined to Recoleta/Palermo/Barrio Norte. Few expats are interested in marginal areas - except maybe San Telmo which some seem to think has charm, despite lots of visible poverty, crime and dirt. As for possible resentment, no one has to sell to foreigners. A seller can always sell at a lower price to a non-foreigner! I really don't know if investment is fueling property invasion. It may be contributing. I'd like to know what these investors are going to do with the property when they get bored or when inflation erodes the value of the dollar. Is there any chance of your sending me that Economist article? You have my email address.

 

[bigbadwolf]

Chris,
It was a short piece: between quarter and half of a page. I saw it while browsing at a Barnes and Noble. But I'll see if I can trace it online. The magazine is most probably available at a few BsAs outlets.
Postscript: Okay, it is online, but as "premium content," which means you need an account password.

 

[robster]

Hi Guys hows things?I'm moving over to BA from Scotland in October (118 days and counting), and this gringo invasion thing is a bit of a concern if entirely true. I presume times are still pretty tough for the average porteno so there would surely be some resentment if we are seen to be driving up house prices, wouldn't there? I was there in 2003 backpacking around SA and there were loads of gringo backpackers but I had no idea there were so many people moving there and buying up all the property! I was considering buying in BA but I'll only be there for a few months before heading south to base myself.Whats your opinions on this article and do you guys own property over there? Or do you know how much property has gone up over the past 2 years?

Cheers,

Rob

 

[bigbadwolf]

Yo, Rob,
The article cited a gent who bought a loft in Palermo in 2003, and has seen its price double in the last three years. I'm sure such instances are rife, and perhaps even typical, in Recoleta and Palermo. Probably won't hold for other areas in BsAs.
I'm planning to buy something modest but I've only just initiated immigration proceedings. These booms and the irrational exuberance that accompanies them always have me worried because the inevitable consequence is bust and stagnation.
Argentina as a whole is doing well because of a competitive exchange rate, good harvests, and a buoyant global agricultural commodities market. But not so well as to justify this kind of real estate price increase. And who knows how long the economic good times (well, relatively speaking) will last?
A couple more things. Prices now are maybe at pre-2002 levels, or a bit more (in US dollars). I don't know how much upward momentum they can now sustain, other than what the Gringos impart. I've also heard that Gringos have been buying in strength down south (i.e. Patagonia).

Whats your opinions on this article and do you guys own property over there? Or do you know how much property has gone up over the past 2 years?

Cheers,

Rob

 

[robster]

Interesting stuff thanks bigbadwolf or bbw... oh no thats something else! I must admit that I didn't realise there had been such a boom in BA with property prices but I would expect things to be a little less volatile in Patagonia away from Bariloche and the more touristy areas.

I'm planning to buy something modest but I've only just initiated immigration proceedings.

I thought you didn't need to be a resident to buy property? Is it easier or safer when you are?

 

[bigbadwolf]

Nope, don't need to be a resident to buy property. My move is hopefully long-term as I've decided the best place to pursue the American dream is in South America (rather than the USA). Cheers, mate.
Postscript: there are some legal and tax advantages to being resident; as I dimly recall capital gains tax is calculated differently, as is the tax due on rental income. But my memory fails me in the autumn of my years.

I thought you didn't need to be a resident to buy property? Is it easier or safer when you are?

 

[Mendocino]

Its not just happening in Buenos Aires. Over here in Mendoza we`re seeing a huge number of expats buying property. Previously it was pretty much low end fincas round the 30-40,000 US$ mark but there are some pretty big buyers moving in now. I think Argentina has a lot to offer, a spectacular lifestyle, good wine and cheap fags! What more could you want! Other than a good bar to watch the footy in this weekend. Coming over from San Rafael, anyone recommend a place?

 

[bigbadwolf]

So does anyone have an idea of what the numbers are like, if indeed the Argntinian government compiles such numbers? Who are the foreigners who are making an impact in real estate and other investment -- and here I don't mean a 20-something over for a lark, but someone with sufficient means to put down $200,000 or $2,000,000 for a decent spread? More generally, are these foreigners having an impact on the economy beyond real-estate prices? And even more generally, can anything be said about changes to the Argentinian economy? Or is it just all very iffy, and part of the same old cycle of boom-and-bust that produces jaded yawns among old-timers?

 

[bf4]

As far as it goes, the big difference in real estate prices is not driven in BA by americans but rises in flats are driven mainly because of the dramatic downfall of 2001 (where you could find a three bedroom in Recoleta for 100,000 pesos), it is an inevitable recovery of an unseen crisis (I believe americans call it "correction") , the construction industry being its fuel as well as the auto industry .(but no americans are buying cars, I believe?. But somehow the statistics talk of 2005 beating 1996 sales of new cars.
Besides after the corralito of 2001, spending money on bricks seemed a better idea than opening a bank account and the low interest rates of the us treasury bonds discouraged any type of money market investment. Spending money on real estate appeared as an option with a profitability equal or higher to a financial investment (as long as the neighbourhood, and the flat were the right ones)
Personally I believe this has reached its peak. the issue in the provinces is quite different: cheap land (not as cheap as 4 years but still cheap compared to international standardards) with high rates of profitability. Commodity prices will remain high for another 3/4 years. The southern provinces have been more than targeted (from Cholila downwards, look to the north for better prices)