moving in october relocating from US

[steveinbsas]

It was time for some basic logic...and simple economics."Live long and prosper." (While you can.)

PS: Stan notes: ... fewer and fewer people have the resources to buy property...Those in Argentina whose wages have not kept up with inflation can do what everyone else in the world in the same situation does: rent. This will provide revenue for those who do own the apartments, even in a declining market. Most owners will accept lower rent in the short term than a lower sales price, unless it is absolutely necessary. Some don't rent all all, however, as evidenced by the always shuttered windows (24/7/365) throughout Recoleta and Palermo. If the owners of these apartments are foreigners, they WILL pay when and if they sell. There is an assumption of rent if the foreigner doesn't live here (passports are checked) and the tax rate is 30%. These tax revenues will be confiscated before the sales process can be completed. Foreigners are required to obtain permission from AFIP when they sell, and if all the ducks aren't in order, the government will take even more (if the funds to buy the property were not "correctly" transfered). Argentine residents are apparently exempt from this scrutiny.
If there are no better places for Argentines to preserve their wealth than real estate, those who already own property simply will not sell while the market is flat or even in what would most likely be an isolated and short term decline. And, even as the dollar declines against the peso, prices of apartments (in dollars) will certianly adjust upward to reflect this factor as well.

 

[Stanexpat]

I can't say that I agree with the reasoning being offered, let me make the following points.1.You don't need easy money or mortgages for speculative bubbles to form. Take a look at the dot com bubble from the last decade or go back to the 16th century tulip trade in Holland.2. I agree that real estate can be hedge against inflation over time but that assumes you're not buying at inflated values to begin with. Over the last few years some of the properties here have in increased 2x to 3x times. I would suspect then that current values are well above the historical norms or relationships to inflation and incomes in Argentina. If thats the case then over time you can expect the prices to move downward to get back to historical norms.3. Another argument was that the high inflation here will insure prices stay up. This makes no sense to me. Inflation robs people of purchasing power and over time this will have a strong downward impact on real estate as fewer and fewer people can afford to buy. Big increases in building costs were cited in support of this view. My view that these are not really increases in costs but a reflection of what the builder thinks he can get given the price levels of existing properties. 4. Another argument is that if they can't sell it they will rent it or just sit on it. I agree that people who bought when the market was down can rent today on a profitable basis. However I doubt you could make much money at todays levels given what rents are here. I don't agree with the statement that real estate is the best or only vehicle for Argentines to preserve their wealth. I don't think most Argentines would agree either as most of the people with money here keep it outside of Argentina.

 

[soulskier]

Stan, I think you might be suprised that the short term vacation rental market is very profitable. In many cases, much more money can be made in short term rentals part of the year, than in long term rentals year round. And BA tourism is booming, supporting the demand for these short term rentals.

 

[bigbadwolf]

I would suspect then that current values are well above the historical norms or relationships to inflation and incomes in Argentina. If thats the case then over time you can expect the prices to move downward to get back to historical norms.

I agree. In an overheated market like BsAs, you will eventually see a correction. It may not be sudden or dramatic but it will occur. In the same way that it's now occurring in England and the United States.

4. Another argument is that if they can't sell it they will rent it or just sit on it. I agree that people who bought when the market was down can rent today on a profitable basis. However I doubt you could make much money at todays levels given what rents are here. I don't agree with the statement that real estate is the best or only vehicle for Argentines to preserve their wealth. I don't think most Argentines would agree either as most of the people with money here keep it outside of Argentina.

Again I agree. Your return on equity in BsAs property is not exactly stellar. As for short-term rentals, it's no bed of roses. A lot depends on how much you're asking. There can be quiet periods. Wear-and-tear adds up. The government wants its share of the loot.
Argentines who can't salt their money overseas or who have to keep something in the country prefer property. It's tangible. Its value won't crash through the floor. But it is true, for example, that historically the US stock market has outperformed property prices in the long term.


[/quote]

 

[ramon]

I remember trying to buy a property in 2003 in Recoleta and the huge problems I had to find a nice space at a reasonable price. The argentines must be the worlds most difficult if you are dealing with them in real estate. They constantly cancelled appointments, withdrew sales, and even upped the price when I showed an interest.. Saying that I found a great proeprty with the help of a broker . I recently sold it furnished for close to double the price which is a hefty increase in 5 years. I find prices very high these days but I doubt if they would ever get cheaper when you consider there is nothing good for sale under 200 thousand and still they sell. It beats me that they pay these prices for new developements in Puerto Madero but they do and in cash somenthing unheard of in most countries. I have heard that it is mostly laundered money as Argentina is famous for that now. What else could it be when 3000 a metre and up has become the norm for a new build there