When will property be cheap in Buenos Aires?

[AFVA]

Is it a common practice when buying real estate in ARG to haggle over property prices? If it's a buyer's market, how much leverage would we have when it comes to these overpriced properties requiring sinking a hefty sum into updating and cleaning up?

Another thought: there might be a business opportunity for professional home stagers and real estate photographers in Argentina. Some of the way these properties are advertised is ridiculously self-defeating if they're hoping to sell for a good price.

 

[tangobob]

I have read these posts with interest. I know some on this site have made money on the property market here, but to do that you need to be on the spot and at specific times. If like me you live away I would only say this, "do not buy with money you are not ready to loose". There is a big tax burden for foreigners, then there are expensas and finally large (even compared to Europe) realtor fees.
I have had my place ten years now and would not have had it otherwise, but I have managed to let it to friends when I am not here. When I bought the pound was strong against the dollar, nearly twice what it is worth now and the value of my property has risen as well. All that said, with taxes and sales fees, I do not expect to get my money back if I sold now.

This is my home for three months of the year and I have saved considerably on what I would have paid in rentals, but it is not an investment and with the state of Argentina, never could be.

 

[rickulivi]

Are prices overvalued in Buenos Aires? Short answer: perhaps, but not that much. Long answer: below is why.

Residential real estate prices are mainly affected by three variables: location, price and terms. Looking at prices in BA now, we can ignore the location part because that's very specific to where the unit is located. Lets analyse then price and terms. If you offer me very good terms, I don't mind paying more than market value. For example, suppose your want to sell me a property at 20% over market, but you offer me 40 years to pay it off and at a low interest rate. The terms maybe very appealing, so I will not mind paying the premium. However, if you offer no terms but want to be paid all cash, then I will expect a lower price. Cash is king: he who has the gold makes the rules (or something similar).

in BA, terms are all cash, so really there are no terms. Therefore, you can expect that in general, market prices tend to reflect the lack of terms, therefore, prices are at equilibrium or as low as you can expect. Thus, it is unlikely that if you wait, you'll get a huge discount.

If you are planning to flip a property, that is, buy cheap and sell high in two or three years, forget it. Sales commissions and other transaction costs are very high in BA, so that reduces the incentive to buy and sell and make a profit.

Who should buy? Only those with a long term perspective.

What does the current market offer, that it did not a year ago?Or, why is it attractive to buy today rather than last year? Large supply, which means you might be able to find exactly what you are looking for. Other times, inventory was low, so you might get stuck buying something you really did not love.

In sum, if you have a long term perspective, don't let the naysayers discourage you. Spend time looking, find a great property, and buy it. Don't worry about the price.

 

[Joglide]

I have read these posts with interest. I know some on this site have made money on the property market here, but to do that you need to be on the spot and at specific times. If like me you live away I would only say this, "do not buy with money you are not ready to loose". There is a big tax burden for foreigners, then there are expensas and finally large (even compared to Europe) realtor fees.
I have had my place ten years now and would not have had it otherwise, but I have managed to let it to friends when I am not here. When I bought the pound was strong against the dollar, nearly twice what it is worth now and the value of my property has risen as well. All that said, with taxes and sales fees, I do not expect to get my money back if I sold now.

This is my home for three months of the year and I have saved considerably on what I would have paid in rentals, but it is not an investment and with the state of Argentina, never could be.

Sage advice here though the interesting point is that rentals (in my experience) show little sign of downward movement as USD$ strengthens against the ARG Peso - rather the reverse - so renters can make a lot of money. My tango friend tells me he pays more than USD$100 a week to rent a place in San Telmo (not the most expensive area) which means USD$6000 a year as he lives here semi-permanently. In peso terms his rent is going up steadily.
You say foreigners face 'big tax burdens'. Can you be more specific here please?

 

[fredinba]

Let's look at the macro situation and based on that conclude the fate of the real estate market.

1. The currency is not recovering, it is on life support and likely to devalue further.
2. Inflation is on the rise and cannot be slowed because they cannot raise the interest rate again, if anything they would only lower it to stimulate the economy and that in turn would add more pressure on the money supply.
3. Industrial output and production numbers are embarrassing and more businesses are continuing to fail.
4. More and more people are getting hired under the table and less companies are filing their taxes or reporting their sales en balnco, in other words tax evasion is on the rise.
5. The interest rate on the monstrous foreign debt will inhibit government's ability to inject capital into public sector projects and various initiatives that Macri's administration was so excited about in the past, at best they would puddle along financially further squeezing the pocket books of ordinary citizens.
6. Job creation is dead too because nobody is in their right mind would be hiring now that demand has suffered and labor laws remain untouched.

Considering all of the above and knowing the real estate is mainly driven by employment it is safe to conclude that the real estate market is about to tank.

 

[Rich One]

I have read these posts with interest. I know some on this site have made money on the property market here, but to do that you need to be on the spot and at specific times. If like me you live away I would only say this, "do not buy with money you are not ready to loose". There is a big tax burden for foreigners, then there are expensas and finally large (even compared to Europe) realtor fees.
I have had my place ten years now and would not have had it otherwise, but I have managed to let it to friends when I am not here. When I bought the pound was strong against the dollar, nearly twice what it is worth now and the value of my property has risen as well. All that said, with taxes and sales fees, I do not expect to get my money back if I sold now.

This is my home for three months of the year and I have saved considerably on what I would have paid in rentals, but it is not an investment and with the state of Argentina, never could be.

If you had rented an apartment of US$600 per month, for 30 months (10 years) would total US$18000 . Where is the savings? You perhaps stand to lose more than that when you sell? with considerable headaches for 10 years?

 

[Joglide]

If you had rented an apartment of US$600 per month, for 30 months (10 years) would total US$18000 . Where is the savings? You perhaps stand to lose more than that when you sell? with considerable headaches for 10 years?

Not sure of your point here: you say 'you perhaps stand to lose more than that'? Perhaps. Perhaps not. Given the reluctance of so many people to sell at any loss even in these conditions, evidence suggests that people prefer to hang on to their headaches rather than embrace the headaches of renting? Anyone buying 3-4 years ago (and esp in early 1990s) would still be significantly ahead on renters as I read the evidence. Maybe I am missing some of the migraine but up to recently property was pretty attractive, though renting gives you fewer problems and you can walk away after your lease is up.

 

[Joglide]

Not sure of your point here: you say 'you perhaps stand to lose more than that'? Perhaps. Perhaps not. Given the reluctance of so many people to sell at any loss even in these conditions, evidence suggests that people prefer to hang on to their headaches rather than embrace the headaches of renting? Anyone buying 3-4 years ago (and esp in early 1990s) would still be significantly ahead on renters as I read the evidence. Maybe I am missing some of the migraine but up to recently property was pretty attractive, though renting gives you fewer problems and you can walk away after your lease is up.

ps I should have underlined perhaps that $450-500 US per month is nowhere near the top of any market: just checked somewhere in Recoleta which looked good:
Barrio Recoleta Tamaño 1 DOR - 1 Baño (68 m²) Cant. de Personas 2 Características
LOFT - Internet Wi-Fi - Jacuzzi - Balcón - TV LCD - Lavadora
Precio Semana: $780 USD
Mes: $1,790 USD
Nice place but USD21,480 per year before bills gets you more than USD107,000 over five years even if the rent were not raised in that time, which I assume it would be.

 

[tangobob]

Sage advice here though the interesting point is that rentals (in my experience) show little sign of downward movement as USD$ strengthens against the ARG Peso - rather the reverse - so renters can make a lot of money. My tango friend tells me he pays more than USD$100 a week to rent a place in San Telmo (not the most expensive area) which means USD$6000 a year as he lives here semi-permanently. In peso terms his rent is going up steadily.
You say foreigners face 'big tax burdens'. Can you be more specific here please?

There is a wealth tax of 1% PA, not applicable if you have less than $250,000 and DNI. No DNI you pay on everything. When you come to sell they will assume that when you were not here, you rented and tax you accordingly.

As for rents. To rent out to Turistas ( The only way you will get $1000 per month) You need a local agent, and you need to trust them. You need a cleaner, someone who can be called upon to do maintenance tasks and someone to hold and pass on the key. After paying expenses and utilities, expect to see less than half.
I prefer to rent long term to friends, they get it cheap, but I know no one is sub letting, the bills are paid and the place is looked after.

 

[tangobob]

If you had rented an apartment of US$600 per month, for 30 months (10 years) would total US$18000 . Where is the savings? You perhaps stand to lose more than that when you sell? with considerable headaches for 10 years?

I have often thought along those lines, it may be true, but I am Anglo Saxon and like having my own place. The answer will only be known when I sell and that is not something I see happening in the near future. For what I paid I could have bought a seaside caravan on Anglesey, it would be after ten years valueless and would have to be moved. The ground rent would be huge and I would not have Tango. As I keep saying "Do not buy here unless you can afford to loose all your money"