Who buys up all these expensive properties?

[Fiscal]

If the average wage in Argentina is $1000/month and the economy is (and long has been) a mess, who is buying up all the property in Argentina? Homes in BA seem incredibly expensive vis-a-vis many parts of the United States.

 

[sergio]

Right now it seems that nothing is selling but otherwise it's around 5% of the population who have enough money to buy expensive properties. Maybe another 5% in the upper middle class.

 

[Ries]

I think it really varies. I know a bunch of younger people who could not even consider buying an apartment. Then, to contrast, two of the units in my building have sold in the last 6 months or so- both to single professional women, who both immediately hired contractors to do extensive remodeling- months, and tens of thousands of dollars worth. So, there are definitely still people out there who are buying, if its the right place, and who have the money. ( these were both Argentines- we are the only extranjeros in our building.)

 

[Fiscal]

Are there upwardly mobile "yuppies" in BA -- lawyers, doctors, hedge fund traders -- similar to the U.S. that form an upper middle class in BA and can purchase these homes?

 

[earlyretirement]

Consider that there is NO functional banking system in Argentina. While it's improved quite a bit since the last crash, no one really trusts it. The ONLY safe things to invest in Argentina is land and "bricks". That probably won't change until the end of time. Further consider that most wealthy locals don't have anything else safe to put their money in besides apartments/properties. And if they are going to invest they'd rather do it in the Capital. Same goes for many other wealthy people I know that live in other cities in Argentina. They aren't buying in Bariloche, Salta, Mendoza, etc. They ALL bought in the Capital. (Mostly Recoleta and Palermo).

Just look at a HOA bill and you will see many, many same families that own many units in the same building. I'm certainly not saying prices are cheap in BA now. Quite the opposite. But you had over $100 BILLION come back into Argentina with the tax amnesty and most of it went into real estate which artificially drove up the prices.

The one lesson that can be learned from the various recessions/depressions Argentina has had is if property prices fall drastically in the Capital in good areas, buy it up.

At these prices, it's not a good investment because ROI on rentals is far lower than you can get in other places. But many people that brought back money with the amnesty didn't have a choice to put it into anything else safe.

Prices DEFINITELY will fall as the recession gets worse. But rest assured there will be investors that are ready to pick it up.

 

[perry]

The market for expensive properties has dropped abut 80 percent as investors are holding on to their dollars . Argentina has a small very wealthy class that would put Europe and Australia to shame . I have met many clients with over 20 properties ( this is very rare elsewhere)
The problem in the real estate market is not lack of money as Argentinians of the elite class are very cash rich but confidence . The sentiment now is worse than I seen and surpasses by far the cepo cambiario .

I see very tough times ahead and would be very cautious.

 

[earlyretirement]

The market for expensive properties has dropped abut 80 percent as investors are holding on to their dollars . Argentina has a small very wealthy class that would put Europe and Australia to shame . I have met many clients with over 20 properties ( this is very rare elsewhere)
The problem in the real estate market is not lack of money as Argentinians of the elite class are very cash rich but confidence . The sentiment now is worse than I seen and surpasses by far the cepo cambiario .

I see very tough times ahead and would be very cautious.

I absolutely agree with you Perry. Even those that have a lot of money during times of recession press the pause button and wait on the sidelines and see how things play out. I totally agree with you about the wealthy locals there. I have wealthy friends all over the world that are very wealthy but many of them don't hold a candle to some of my Argentine friends. Yes, several of my friends (and their family) own over 10, 15 or 20 properties in their family and just live off the income spun off from these rental properties.

Yes, no doubt about it there will be very tough times ahead for Argentina. I don't see anyway out of it. IMF bail out will only realistically carry them to the end of 2019. It's going to be tough times.

 

[Bajo_cero2]

Real estate is the best way to wash money. So, there you have your answer: illegal money: drugs, tax evasion, brives, etc.

 

[Bajo_cero2]

The market for expensive properties has dropped abut 80 percent as investors are holding on to their dollars . Argentina has a small very wealthy class that would put Europe and Australia to shame . I have met many clients with over 20 properties ( this is very rare elsewhere)
The problem in the real estate market is not lack of money as Argentinians of the elite class are very cash rich but confidence . The sentiment now is worse than I seen and surpasses by far the cepo cambiario .

I see very tough times ahead and would be very cautious.

Of course, there was cepo with a strong economy while now the economy is in freefall.

 

[earlyretirement]

Real estate is the best way to wash money. So, there you have your answer: illegal money: drugs, tax evasion, brives, etc.

Hmm. It might be a way to "wash money" as you say but these days they are much more stringent. The last few properties I've bought and sold I had to fill out a lot of paperwork and they even took fingerprints. Years ago when I first started buying there wasn't too much to it.