Given the fact that Argentina is experiencing its maximum historic values and that some dynamism has been recovered due to the granting of credits, a genuine purchase market is being recreated which will generate the development of construction works in peripheral areas. The Property Section in La Nación newspaper published an article on this topic written by Mariano Capellino, CEO of INMSA.
You can read the article below:
The Opportunity Right Now
By Mariano Capellino, founder and CEO of INMSA
La Nación (Property Section), January 20, 2018
After the successful experience of investing in real estate in Argentina in 2002, it was assumed that you always win. At that moment, the cycle was undergoing a recovery and expansion phase but this situation rarely happens frequently. The cycle of the markets dominates this business and, after the recovery and expansion phase, returns will tend to go down or even become negative. It is very difficult for a successful operation conducted recently in one market and for a type of asset to be repeated again in the near future.
The market is now at its historic maximum values and no appreciation is expected to occur at a fast pace. But some dynamism has been recovered due to the granting of credits. A genuine purchase market is being recreated which will generate the development of construction works in peripheral areas.
From Palermo to La Boca, from Belgrano to Barracas, from Núñez to Caseros, as well as in the interior of the country, the best business has already been targeted by investment funds: acquire lands suitable for residential property projects located at non-premium zones in the Federal Capital City and in the interior, to be subsequently sold or delivered to developers when demand gets higher. With the current low demand, their value is almost a quarter of their price in Palermo and Belgrano and less than a half in areas such as Caballito, Núñez or Urquiza.
As credits get consolidated, demand will rise especially in lands offering building capacity between 5000 and 10000 square meters, thus allowing economies of scale for developers. Even within a scenario of devaluation, where the construction costs and home prices would go down, this type of assets will not be affected, on the contrary, it will have a higher margin to increase.
To bear in mind: If lands are negotiated at an attractive price, this is a type of investment where it is possible to obtain 50 percent profitability in US dollars in a three-year period, this being the great opportunity right now.