Purchasing Rental Property in Buenos Aires: Part 2

Since 2007 Good Morning Buenos Aires has been offering the expat and international community of Buenos Aires Argentina the best in news, information, weather, travel guides, travel assistance, a services directory, events calendar, temporary apartments and more.

As one of our services, Good Morning B A is pleased to bring you this informative article about purchasing rental property here in Argentina.

Reasons to Buy

First off, the northern hemisphere very closed and saturated in many sectors. Buenos Aires remains one of the most desirable and affordable cities to purchase real estate in with prices in even the most exclusive neighborhoods sitting at between one-fifth to one-tenth that of Europe and the United States. Current estimates also show that the international situation offers high liquidity and interest rates in Argentina are low. The country has been stabilized and economic forecasts call for growth rates in the future at nearly 10% a year. According to an Argentine real estate trade group, Camara Inmobiliaria Argentina, housing prices have increased 50% since 2002 and according to Credit Suisse in a report from a little over a year ago Argentina is undervalued at between 20-30%. Obviously the time is ripe for investment and development as economic considerations continue on a dramatic upswing.

Argentina currently presents a windfall of an opportunity, especially if you already own property here or are in the process of obtaining holdings. Local prices for your investment could rise an additional 20 to 30% from inflation alone until the peso catches up in value, which will increase your returns by at least that much or possibly even more. Additionally as property is in such high demand here you are not likely to have any problems selling at some point in the future if you so desire.

Second, as noted above properties rent for high amounts of money here. With an ever increasing demand for rental property not only by nationals, but also through the expansion of the tourism industry, expected returns will likely reach close to 10% in most areas in the next two or three years and could reach as high as 30% in some more exclusive parts of town.

In addition to apartments in the city, there is also a very attractive market for real estate in the suburbs. Of particular note are the northern suburb’s gated communities that currently are seeing annual returns of about 7% a year. Overall, houses in the northern suburbs rent very well, especially for long term rentals to the corporate expatriate market. There is an English-language school there, shops, restaurants, parks, and even a commuter train that goes to the city. Investment in these areas undoubtedly has great potential for long-term appreciation (long-term being more than the expected two or three years of apartments in the city).

Third, housing prices are continuing to go up. Prices in the city’s wealthier districts have shot up by as much as 25% in the last year. More important the real estate boom here is just that: a boom and not a bubble. Investment in real estate here is in cash so real estate prices are real. Mortgages and interest rates simply do not factor in when looking at the ever expanding real estate market here in Buenos Aires.

Fourth, capital gains opportunities are incredible here. A recent report by Report Inmobiliario notes that "investing in real estate in Buenos Aires continues to be a valid investment option". That same report notes that it is worth remembering that there is no capital gains tax here if or when you decide to sell.

Finally, Buenos Aires is a developing city in a country of ever expanding economic development. With a reported Gross Domestic Product increase of about 8.6% in 2006, and an expected increase in tourism from about 4 million people this year to over 10 million by 2010 the country is booming. There are numerous projects in the works to rehabilitate many areas of the city as well. For instance there is a train track between Palermo Hollywood and Soho where there are several large storage units whose leases are currently expired. The government here is looking at rebuilding the area and are looking to construct a cultural center there, a mall, and movie theaters making investing in the area now a lucrative proposition.

As one can see, reasons abound to purchase property here in Buenos Aires whether for your own use or as an investment. Prices of real estate here continue to remain a fraction of that in Europe and the United States, rental prices are on the rise, tourism and the economy are increasing, capital gains are virtually guaranteed, and most important the real estate boom is just that and not a bubble that is expected to crash in the northern hemisphere.

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