December  2007

Buenos Aires Real estate is a boom.  Our anecdote tells you just how much real estate in Buenos Aires is booming.  In February 2006, we went to see a 70 square metre two bedrooms apartment on the Palermo and Recoleta borders.  Palermo and Recoleta are fantastic neighbourhoods next to the city centre, Centro or Downtown Buenos Aires.  The Palermo apartment needed a new kitchen and bathrooms, en-suite and guest.  The Palermo Apartment sold for US$78,000.  We happened to notice last month that it is back on the market, after what looks like a basic cosmetic upgrade - price guide: US$150,000.

The Palermo apartment is okay, with two reasonable double bedrooms and a good size balcony that overlooks a tree-lined street.  The kitchen is small (the reason we did not buy) and should have been open plan, but never mind.  We find it hard to see $150,000, but it will sell.  You must expect to pay $2000 to 3000 per square metre for residential real estate in Buenos Aires’ best neighbourhoods.

You cannot get a mortgage in Buenos Aires and so cash buyers drive the market.  Numerous agents tell us that the Buenos Aires real estate boom is due to foreign investment, particularly, American and European money.  However, many of our Argentine property owners have added one, two, or three properties to their own portfolios over the last two years and we act for consortiums of Argentine investors that pool their resources to invest in residential real estate in Buenos Aires. 

One might think that foreign investment could dry up with the credit crunch hitting banking systems and the ongoing fight to find liquidity and cheap money.  However, we are not sure that Buenos Aires’ micro-economy will suffer.  Buenos Aires is a cash-driven economic jewel in Argentina’s tilted crown. 

The credit crunch and knock-on economic uncertainty will no doubt reduce the number of properties purchased by foreign investors during 2008, but those more learned than us feel that Buenos Aires real estate will hold its value. 

Many of our clients have made their money and sold expensive homes in Europe and United States of America.  They happily leave the so-called civilised world, cash-rich and in search of low-cost living and a better quality of life. 

Moreover, since 2001, porteños are getting wealthier and they will continue to buy property to let to tourists and business folk because it is a fantastic business.

The districts (barrios) where prices have appreciated most quickly are in the centre of Buenos Aires, the barrios where tourists prefer to stay and upwardly mobile Argentineans choose to live.  These gentrified barrios are the safest, policed well and home to both commerce and Buenos Aires’ main tourist attractions.  Click here to read about my barrios of choice.  

If tourism is to grow to the dizzy heights of double figures in the millions, Buenos Aires needs work on its infrastructure, and a lot more apartments and hotels are necessary to lodge guests during high season, November to March – today, we need at least 100 new properties for waiting tenants.  We have less than 90 properties available for the whole month of December and just 180 for January.  If you are thinking of buying real estate in Buenos Aires and want our advice on rental income returns, please email raemac@bastay.com.

Back to Buenos Aires real estate, and our US$150,000 apartment in Palermo, Buenos Aires.

The apartment in Palermo, Buenos Aires we described, with basic furnishing, internet connection and cable TV would yield US$400 each week or US$1300 each month.  If we went to town decorating the Palermo apartment and it had grade one appliances and a minimalist and luxury design, we might ask US$700 (longer rents) up to US$900 each week for 5* accommodation.  To be on the safe side, we tell our clients to expect eight months rent each year.  We normally reduce rents by 15-20% for bookings of one to six-months.  We will let you do the math.  The return is very good.

Many clients ask us to guesstimate refurbishment and furnishing costs.  It is not an exact science.  We use a company called DACTIVO for the renovation and furnishing of both houses and apartments.  We selected this company because they specialise in expatriates, speak English, operate subject to a written agreement, and seem to project manage in an effective and timely manner.  We must add, Argentine construction companies, in our experience, can be worse than the worst builders you might instruct at home.  Be warned. 

James Boyd Niven of DACTIVO said, ‘prices fluctuate in Argentina constantly and inflation means that raw materials become more expensive from month to month.  We have first-class suppliers and our vast experience and contacts in the construction and property sectors ensures that our clients achieve good value for money and their projects completed to budget.  ‘As a rule of thumb (I love your expressions),’ we estimate that the cost to refurbish an apartment is between US$500 and US$700 per square meter, and US$200 and US$ 400 per square metre to furnish.

Buy to let real estate Buenos Aires Argentina.
Ask our expert - free!