Real Estate and the dollar

[perry]

I have spoken to many people involved in the construction business who accept their payments in dollars for new projects . All these operations have been affected . Many will have to accept pesos but there is a large difference between the official and non official rates .

Property prices do depend on demand and in this new market on dollar controls of course there will be more of a buyers market

Many are even talking about property prices being in argentinian pesos which will create a current price differencial at official rates of 15% to the favour of the buyer.

 

[jb5]

Only in Argentina can a whole market change in 3 weeks with no major event other than an election:

http://baexpats.org/expat-life/18009-right-time-buy-property-argentina.html

 

[evitaduarte]

I have spoken to many people involved in the construction business who accept their payments in dollars for new projects . All these operations have been affected . Many will have to accept pesos but there is a large difference between the official and non official rates .

Property prices do depend on demand and in this new market on dollar controls of course there will be a buyers market .
I told many friends to sell this year many did not listen to me and now I am sure that they will be worried as they will find a much more difficult market from now on. Many are even talking about property prices being in argentinian pesos which will create a current price differencial at official rates of 15% to the favour of the buyer.

If, as you say, domestic business people, e.g., contractors, suppliers, etc will begin to accept pesos - but at the parallel rate - why would RE prices be severely affected since, in essence, people are just paying in US $ equivalents? Are domestic buyers all of a sudden not going to change US $ on the black market to get the cash to pay builder/sellers? A healthy black market should insure an active market. To the extent local people stay on the sidelines foreign buyers may prop up the maket for good properties.
I recall the days when Evita was Pres. There was high inflation, but full employment and milanesas para todo. Really.

 

[mariposa]

I recall the days when Evita was Pres.

Evita was president? hmm i missed that one...

 

[perry]

If, as you say, domestic business people, e.g., contractors, suppliers, etc will begin to accept pesos - but at the parallel rate - why would RE prices be severely affected since, in essence, people are just paying in US $ equivalents? Are domestic buyers all of a sudden not going to change US $ on the black market to get the cash to pay builder/sellers? A healthy black market should insure an active market. I recall the days when Evita was Pres. There was high inflation, but full employment and milanesas para todo. Really.

You cannot accept payment in pesos at the non official rate . The official rate of ARS/USD = 4.25361 is the legal tender. For the constructor or a seller to now get dollars he must pay 15% more than that leaving him out of pocket

Any owner that rents apartments must accept the official rate of 4.25 to the dollar .

 

[jb5]

Why prices will change is because real estate will no longer be a hedge against peso fluxuations for local buyers. Foreign buyers will be gone overnight from any market they can't get their money out of in US dollars (and the dollars out of Argentina). So for both local and foreign buyers, AR real estate is now far less attractive. Far.......

And in your scenario, where are the domestic buyers going to get US dollars?

 

[perry]

Why prices will change is because real estate will no longer be a hedge against peso fluxuations for local buyers. Foreign buyers will be gone overnight from any market they can't get their money out of in US dollars (and the dollars out of Argentina). So for both local and foreign buyers, AR real estate is now far less attractive. Far.......

And in your scenario, where are the domestic buyers going to get US dollars?

Your scenario is incorrect as getting the money out of Argentina in dollars in not a problem as long as it is declared . There is no change in this law .

The problems are that to get dollars for the local market has become difficult creating a premium price for the dollar atm .

This will affect the market short term I am sure but like most things in Argentina things will bounce back very fast once the uncertainty passes.

 

[evitaduarte]

Evita was president? hmm i missed that one...

Meant Isabelita. Sorry.

 

[steveinbsas]

Meant Isabelita. Sorry.

This just goes to show you should never judge anyone by their user name.

And think that they might actually know something about the individual whose name they ursuped.

Talk about irony.

 

[evitaduarte]

You cannot accept payment in pesos at the non official rate . The official rate of ARS/USD = 4.25361 is the legal tender. For the constructor or a seller to now get dollars he must pay 15% more than that leaving him out of pocket

Any owner that rents apartments must accept the official rate of 4.25 to the dollar .

Sorry, I need more help in understanding things.

Let's suppose I own an apt that I planned to sell for $US100,000. A week or so ago that was equal to about 425,000 pesos. Am I now going to ask for 480,000 pesos instead of 425,000? If I hold the price at 425,000 pesos, will I be able to deposit my pesos in a bank and get a good enough rate of interest so that I won't be disincentivized to acquire the pesos? Do people keep pesos deposits in AR banks ? What are the prevailing rates of interest?

Let's suppose I am an AR resident and have saved $US100,000 offshore to buy an apt. Do the new laws prevent me from bringing my US$/foreign currency into AR in order to buy the apt even if it is properly declared? How do the authorities, AFIP or whoever, know whether I did or did not comply with all laws in the process of acquiring this money?