Real Estate and the dollar

[Chaz]

Will the new restrictions on changing pesos to dollars affect the price of property in Argentina? If it is difficult to get hold of the dollars to put on the table surely there are going to be a lot less people with the cash to buy? I would have thought the market could fall apart? However I only have a limited understanding of economics in the country, has anyone got any views on this? Until recently, property was selling fast as people put money into it to secure it against inflation and keep it attached to the dollar. People in the property industry seem to always find a positive outlook, but for me it looks frightening.

 

[dennisr]

All I know is what I read in the newspapers:

http://blogs.ft.com/beyond-brics/2011/11/02/argentine-real-estate-ditching-the-dollar/#axzz1cvgPViNF
http://blogs.ft.com/beyond-brics/2011/10/28/argentina-let-the-great-dollar-hunt-begin/#axzz1cvgPViNF
http://blogs.ft.com/beyond-brics/2011/10/24/argentina-cristinas-catch-22/#axzz1cvgPViNF

 

[ndcj]

I suspect for real estate it will mostly be business as usual.

You already needed significant documentation, including proving the origin of the funds, in real estate transactions, and AFIP was already involved in all transactions over 300,000 pesos or the foreign currency equivalent (through the requirement for a COTI).

Any change to some properties being negotiated in pesos is probably not going to be born out of any practical difficulty obtaining the US dollars for the transaction, but more so the fear that AFIP might poke around more than they already are.

 

[Chaz]

Perhaps there is not much difference for expats bringing dollars into the country, but for Argentines, who make up most of the market, it is much more difficult to get hold of dollars. The dollars are also more expensive when you can get hold of them, the difference between the black market rate and legal rate it getting larger.

 

[henryb]

Will the new restrictions on changing pesos to dollars affect the price of property in Argentina? If it is difficult to get hold of the dollars to put on the table surely there are going to be a lot less people with the cash to buy? I would have thought the market could fall apart?

It may be the other way around. If you have a substantial amount of money in peso, there is no option to invest it outside of the country without changing it to dollars. Buying real estate is a straightforward option to invest locally. It may be easier for buyer and seller to agree to conduct transaction in peso, than to get get a government permission to exchange the same amount to dollars

 

[Gringoboy]

Our house id for sale and up to last weekend we were showing the house to at least six families every Saturday.
Yesterday, not one viewing ot phone call during the week.
Coincidence?

 

[jb5]

I don't think so Gringoboy. I think most will stand back until we see how things will shake out. If houses will now be bought in pesos, for real estate investment to remain as active, people will have to believe in the value of the peso. It remains to be seen whether they do/will.

There are still some ways for Argentines to keep money in dollars, I'd guess some will choose those over real estate for now. Especially rental properties.

 

[perry]

In Remax Argentina and by my records this week calls are down 80% . This new law will affect business as it creates uncertainty and causes more stress for those who need to obtain dollars to purchase.

This new law is counter productive and will affect the economy creating a downturn in tourism and deadlocks in business transactions. I fear that a recession is now imminent

 

[evitaduarte]

In Remax Argentina and by my records this week calls are down 80% . This new law will affect business as it creates uncertainty and causes more stress for those who need to obtain dollars to purchase.

This new law is counter productive and will affect the economy creating a downturn in tourism and deadlocks in business transactions. I fear that a recession is now imminent

Do you think RE prices will now drop steeply, slightly or not at all?

 

[jb5]

If this dollar ban stays in place? Go up to the top of any luxury Palermo building, drop a rock, and see how fast it falls.

Real estate was a basic go to place when you had too many dollars for under a mattress. As prosperity took hold over the last few years, prices went way up. They can drop just as quickly as they rose. Look to the US and Europe for examples.