INTERNATIONAL HOMES MAGAZINE
Argentina – Why Cash and land are both still king in this vast country
December 2007 /January 2008 Edition - Volume 14 # 10
"Few economic revivals have been quite as stirring as Argentina’s. Little over five years ago the country’s massive external debts brought on a full-scale depression, the peso became virtually worthless and millions of Argentines saw their banked savings disintegrate. Much has changed since – Argentina’s economy has rebounded strongly with annual GDP growth of around 5%, and it has been given the all clear from the IMF for the next decade – but general mistrust of banks remains. This has served to back up by an age-old Argentine conviction that true wealth lies in a tangible asset such as land, not money. In Latin America’s second largest country you truly are what you own.
By this measure Michael Koh of ApartmentsBA is one of Buenos Aires’ major players. Originally from the US, he has been at the forefront of the capital’s property market for the last five years, securing properties in BA’s emerging locations, renovating and reselling them for excellent profit as small-scale rental businesses. “Back in 2002 when I started looking at bringing money into Argentina people told me I was crazy,” says Mr. Koh, “but I saw the potential of the economy, the real estate market, the exchange rate and tourism. All my forecasts have been spot on.” He cites as an example an apartment he purchased for $90,000 (£44,200) in 2004, which recently sold for $200,000 (£98,300).
Since late 2006, property values have continued to rise across the city. “While rates are plummeting in the USA due to sub-prime mortgage problems, prices in Argentina are soaring,” explains Mr. Koh. “Just about everyone buying real estate is paying with 100% cash over the table so interest rates aren’t a concern.”
Fast-growing areas include Recoleta, known as BA’s Mayfair, and Palermo Soho, Viejo and Hollywood. “These neighbourhoods continue to see strong demand and price growth as well as growing numbers of boutiques, restaurants and cafes,” says Mr. Koh. “They’re trendy areas that attract tourists and locals alike and are a developer's dream. You can buy property for under $2,000 (£980) per m2 and I believe a ‘double’ could happen in Palermo within five to six years. Recoleta, meanwhile, will always be the safest and most affluent part of the city.” Apartments in the latter can cost in excess of $200,000 (£98,000) but see high rental demand. The renovated docklands of Puerto Madero are a former hotspot and one of the most expensive places in the city. With an average property price of $4,000 (£1,960) per m2, Mr. Koh thinks the area is unlikely to match its past growth rates."
REVIEW ASIA MAGAZINE
Asian Bargain-hunters on the Prowl
Amid the gloom in the US, savvy investors get to cherry-pick American and Canadian assets, even as Latin America starts to look enticing.
By Wendy Leung | July 2007
The real estate market in the United States has given property owners and investors little to cheer about over the past year.
Housing starts and sales of previously owned homes tumbled in 2006, while average home prices edged up 5.9% from a year before, growing at a far slower pace than the 13.2% jump in 2005.
Combine that with rising mortgage defaults, and many are bracing for a prolonged housing slump and a weakening US economy. But depending on whom you ask, the glass is half-full.
Some analysts note the housing slowdown follows a five-year boom, and while prices are rising more slowly, they are now more in line with historical norms.
Global investments strategist Andrea Eng, who has worked for some of Asia’s wealthiest, including Hong Kong tycoon Li Ka shing’s son Richard Li Tzar-kai, believes there is still ample reason for Asian investors to buy US property.
“The panic isn’t happening in hot areas, such as San Francisco and New York”, Eng said, adding that there was little to suggest the mortgage problems will cause wider economic damage.
When it comes to riding out market uncertainties, Asian investors generally take a long-term view than their local counterparts, since they tend to treat real estate as a tradable commodity, whereas North Americans do not, Eng said.
As some investors pull back, savvy global buyers are able to cherry-pick properties where they can find good value, she said.
North of the border, Canada’s property market continues its upswing, bolstered by robust economies in the country’s western region.
The oil rich province of Alberta neighboring British Columbia, which is experiencing a construction boom ahead of the 2010 Olympic Games in Vancouver, are attracting workers and investors from other parts of Canada, driving up property sales and prices.
Nationally, the Canadian Real Estate Association predicts existing home and property prices will moderate this year, rising an estimated 6.9%, compared with 11.1% in 2006, but it expects the housing market to remain strong over the next two years.
Amid jitters in the US, some investors are looking southward to hedge their bets.
Mexico, in particular, is winning the confidence of international buyers. The country’s real estate association signed an agreement with the US National Association of Realtors in October, aimed at standardizing their practices.
As well, according to the online property investment publication Amberlamb, many are hoping Mexico’s economy will prosper under its new president, Felipe Calderon.
In the Caribbean, the tax havens of Barbados and the Bahamas have traditionally attracted global properties investors, but the Dominican Republic is also gaining attention from international real-estate heavyweights, such as US tycoon Donald Trump, who recently announced he is building a US$ 2 billion luxury resort in that country.
Meanwhile, Brazil and Argentina are emerging as the property darlings of South America. Brazil’s economy expanded 2.9% in 2006 and, based on recent reports, sales of luxury apartments in Sao Paulo jumped 76% in the two years to 2005.
A surge in real estate is also taking place in Buenos Aires, where a growing number of foreigners are purchasing property, said Michel Koh, one of the largest buyers in Argentina and president of ApartmentsBA.
“Buenos Aires is a world-class city, yet the prices are extremely cheap compared with those for most capital cities around the world”, Koh said, noting that the average price of property in the Argentina capital is US$ 1,600 per square meter –roughly six times lower than in New York City.
Investors also enjoy low taxes, strong capital appreciation and cash flow from rents in the thriving tourist destination, he added.
Even so, Latin American property markets have yet to register on the radars of most Asian investors. Eng said they tend to stick with purchasing in Canada and the US, where many have received Western education and where they send their children for schooling.
Regardless of the market, she advised: “if you’re playing global monopoly, make sure you know the fundamentals. You could easily get burned by buying the wrong thing.”
Clarin Newspaper | One of Argentina's Largest Newspapers
A Real Estate business study on the value of property in the main cities of the world Buenos Aires, a low cost city for foreign investors.
The average price per square meter is U$S 1500 in Buenos Aires. In New York it is around $12,000 and in London $18,000. Those living abroad appreciate the quality/price relation of houses and living style.
By Daniel Gutman | March 1st, 2007
Encouraged by prices which are very tempting at an international level, combined with the attractiveness of this City, there are more and more foreigners buying property in Buenos Aires.
Faced with prices that climb up to $12,000 dollars per square meter in New York and $18,000 in London, Buenos Aires is far behind, with an average of $1500 dollars per sq. meter.
This is what appears in a report prepared by the consultant Reporte Inmobiliario, who predict how the media of different countries encourages people to invest in properties in Buenos Aires, defined ashyper competitive in quality/ price relation, compared with the sums handled elsewhere.
"Buenos Aires offers some of the finest properties in the world ", said the London newspaper The Sunday Times last January, which also quotes an article of the Australian International Living, placing the Argentine capital in the 10th place in quality of life, ranking with 193 other cities.
The first thing foreigners like of Buenos Aires is the prices. Those who come and settle with the purpose of buying property are mostly Spaniards, Italians and Americans, who often have an income in their countries which is worth much more here in purchasing value. They find in Buenos Aires an attractive city, with mild weather, entertainment, and an active cultural life. “And where you also find a renovating air which at least in Europe does not exist", says architect and builder Gustavo Kancyper.
"Foreigners prefer rather small apartments, with a vanguard design, a lot of air, light, sun, a terraced balcony. And they love the “parrillas”, he added.
Foreigners generally buy in the most expensive areas of the city, where today prices are already over $1500 dollars (the average given in the report). In Puerto Madero and Recoleta, in fact, a square meter could climb up to $3000 dollars depending on the area. In the new towers going up in Belgrano, Núñez and Caballito, the price might be over $2000 dollars. Some foreigners buy as an investment but others stay, such as American Michael Koh, who now is precisely devoted to renting and selling apartments.
"There was something in Buenos Aires—he wrote in his company Internet website— that I really loved. I could not describe it to my friends just with words. I liked lots of different things about this city. Its fashion, its sense of style, its architecture, the food, the beautiful women. It is an extremely safe city, something which contradicts the warnings they gave me before I traveled."
The sense of security and the attractions of Buenos Aires are no small thing at the hour of investing in property. In fact, other cities in Latin America have better prices. In San Pablo, for example, the square meter averaged 1000 dollars, and in México DF, 900.
Koh says that when he was renting his first apartment in Argentina, he was deceived by real estate agencies: "Argentines —he says— do not have the concept that what counts is not that the client comes but that you want to achieve the client coming back. Argentines try to get the maximum profit out of the first transaction". And he adds that he met other foreigners who had also been cheated, but in spite of it, "they were not sorry about their purchase, and loved Argentina".
For Mayra Brill, a travel agent, "foreigners who buy apartments and stay in Buenos Aires are generally retired people or young people with an income in Europe or in The United States. Some sell their houses and buy something better here which is out of their reach in their countries. Besides prices, what they like most about Argentina is the warmth of the people".
Nevertheless, the story is not the same for all. Laura, an American living in Argentina with her French husband, has a blog where she tries to advice foreigners who are thinking of coming to live in Buenos Aires.
"Prices —she warns— are slowly going up, particularly food and housing. In addition there is always the problem of finding a guarantee if you plan to rent instead of buying a house...Have all this in mind when you hear how cheap it is to live in Buenos Aires".
Martín Grinberg, of Open Prop, a real estate business, says that "foreigners who come to buy here usually have relatives or friends in Argentina. Hardly anyone would buy if he did not have a special link with the country. And more than once they are not people who intend to stay but leave the apartment to rent to other foreigners. Despite the fact that there are now many doing the same thing, it continues to be very good business".
Brazil's most influential Financial Publication
TANGO WITHOUT THE SADNESS
In Buenos Aires, a flood of investments in the area of tourism becomes the symbol of an economic recovery of the country.
By TATIANA GIANINI | February 2007
One of the classic definitions for this music, born in the alleys and taverns of the Argentine capital, says that the tango “is a sentiment which is to be danced” The birth place of this rhythm became a synonym for the music and the soul of the ‘porteños’ . The city has lived a good part of the last few years wrapped in the same atmosphere of tragedy and sadness which characterized the great songs of Carlos Gardel. The elegant, cosmopolitan and intense city suffered as no other the impact of the recession which culminated in the country’s going into default, at the end of 2001. Visitors decreased, the capital was impoverished, and its streets became the scenario of violent protests.
For the relief of Argentines, the present panorama is very different today. Improvement of the country’s economy --thanks to a BPI which rises at a rate of 9%--, wiped out that heavy cloud of melancholy. Even though expansion is still –to a great extent-- the making up of lost time in the course of the last few years, it is true that Buenos Aires begins to recover that aura which made people think of it by the name of "the Paris of Latin America".
The tourist industry reflects exactly this good moment, by unifying a series of positive results. All along the past year the city received 2 million tourists –the best mark since 2001 (see table below) -- while Rio de Janeiro, the Brazilian capital with the highest rate of tourists, receives 1.6 million visitors each year. The ‘coming back’ of a great number of tourists whetted the appetite of investors. According to a recent study prepared by the consulting firm Ecolatina, investors on hotels and restaurants in Argentina climbed in the last two years from 323 million dollars to more than 600 million dollars. Last year 76 hotels were inaugurated in the country, and another 200 are now being built –most of them in the capital. There are attractions for all tastes, as in the case of Axel Hotel Buenos Aires, in the San Telmo area. On the initiative of a Spanish group, which invested 3,5 million dollars in this project, the hotel intends to be the first five-star hotel in Latin America, targeting a gay clientele. Its inauguration is expected to be in July.
Apart from the places traditionally sought by visitors (such as Recoleta and San Telmo), new areas of the city moved into the tourist circuit. One of them is Palermo, with several parks, bars and design shops, among other attractions. Another outstanding site is Puerto Madero, an old and decaying port area of Rio de la Plata, which became an example of renewal at the end of the nineties and continues to offer novelties. Right now they are investing 300 million dollars to finish the Faena Art District, a commercial, residential and cultural complex.
The first stage of this project was completed in 2004, with the opening of three residential spaces and inauguration of the Faena Hotel + Universe. With the name of the famed French designer Philippe Starck, this site has won several international awards in architecture and tourism; among these, one given by the English review Wallpaper and the American Condé Nast Traveller. The rest of the Faena Art District Project will be ready in three years.
In view of this tourist interest there has been a significant increase in the value of real estate in these areas. In the main suburbs of Argentina’s capital, the price of a square meter climbed 50% in the last four years – while in 2006 alone, the value of real estate went up 20%. “There are many Americans and British investing in real estate in the capital since prices here are still much lower", says Michael Koh, owner of Koh Inversiones, who specializes on advising foreign investors in real estate transactions who are interested in buying.
From the beginning, in 2002, 400 transactions have already been completed. In addition, this businessman is building the Algodón Mansion, a luxury hotel in Recoleta, with only 12 rooms and prices starting at $900 dollars a night.
Beginning with the growth of tourism, there has been a growth in the market for high level products and services. Last year, Italian firm Ermenegildo Zegna invested 6 million dollars to open a second shop in Buenos Aires. It will join a circuit in the capital with other establishments such as Valentino and Tiffany, all of which have recently arrived in the city. Their idea is to tempt both tourist and local consumers of a high level income, recently back to shopping once more. Meanwhile, this movement is far from the great debate in Argentina about the sustainability of the virtual economic circuit. Critics are warning that because of the lack of investment in infrastructure and a lack of fiscal control by the government, the story might end in tragedy. The Argentine challenge at this moment is to demonstrate that the tango can also have a happy ending.
LONDON SUNDAY TIMES
January 14, 2007
Argentina is ready to Tango
Buenos Aires offers some of the best property bargains in the world. And, says Mangal Kapoor, the British are welcome
Mention Buenos Aires, and most people in Britain still think of rioters protesting about the Falklands war. But in Argentina, all that is now a distant memory. The county’s capital has reclaimed its title as South America’s most cosmopolitan city and is once again attracting visitors from around the world. What’s more, the city’s English and Anglo-Argentine communities are thriving.
A 15-hour flight from London, Buenos Aires is a beguiling city of broad avenues and well-maintained parks, where the quality of life is good and the cost of living is low. Summer runs from late November to February, with temperatures reaching average highs of 24C-29C.
And there’s more good news: property is incredibly cheap compared with capital cities of similar sophistication elsewhere in the world. Although prices have recovered substantially from the lows of the economic crisis of June-July 2002, when they fell by up to 50%, it is still possible to buy a flat in downtown Buenos Aires at a fraction of the cost in London.
Prospective buyers, though, should move fast. Official figures from the country’s College of Notaries show that property prices in Buenos Aires rose by 37% in the year to October 2006.
The hottest property spot in the city is Puerto Madero, the former docks east of the central Plaza de Mayo. Giant cranes still loom on the opposite bank of the River Plate, but in Puerto Madero, old red-brick warehouses have been turned into smart shops and stylish restaurants, and a new apartment building designed by Foster and Partners, El Aleph, is due for completion in June 2009, with off-plan flats, starting at £150,000, available through Aylesford International estate agency. The flamboyant developer behind El Aleph, Alan Faena, has already built one of the city’s trendiest locales in the area in collaboration with Philippe Starck: the iconic Faena hotel, which drips luxury. Adjoining it is another recently completed Faena apartment block, El Porteño, where an on-site letting and management service is offered for overseas buyers. Flats here, available through estate agent Pablo Casares, range from 50sq m to 300sq m (540sq ft-3,300sq ft) and cost £110,000- £600,000.
If Puerto Madero sounds too expensive, bargains can still be had a five-minute walk south of the city centre, in areas such as San Telmo, home to many of the city’s tango salons, and Monserrat, the old artisans’ quarter. Jane Green, 38, an interior designer, and her Dutch husband, Klaus van de Meyer, 40, who is in the oil business, bought an investment flat in Monserrat during a brief working stint in the city. Now based in Dubai, they also own a flat in Notting Hill, west London.
“We found a dilapidated loft about a year ago for £30,000 and spent a bit doing it up,” says Green. “It’s now worth £55,000. We rent it to young Europeans, who flock here to set up businesses or just to have fun. The cost of living is so low.” More upmarket is Palermo, north of the centre, where the city’s famous polo ground and racecourse are located. It is divided into Palermo Chico (expensive), Palermo Viejo (moderate) and Palermo Soho (up and coming), where prices for a duplex flat start at about £250,000.
In a city of more than 11m people (97% of whom have European roots), it is possible to indulge your every fantasy. Two years ago, James de Molyneux, an American property developer, and his boyfriend, Rex Crawford, bought the top two floors of an art nouveau building in Caballito, a district he describes as “middle-class”. The flat, on Rivadavia, a road that bisects the city from east to west, needed extensive renovation.
“We now have 7,000sq ft with three dining rooms, a three-bed suite on the roof terrace, a winter garden and a Louis Philippe salon,” says de Molyneux. “There are parquet floors throughout and we have two resident butlers.” He thinks the flat is now worth about £300,000.
But why confine yourself to the capital? Some enterprising buyers, such as Neil Rushen, from Burton on Trent, Staffordshire, have gone further afield. Having decided to quit Britain, he and his wife, Sue, “looked in all the usual places: France, Spain, South Africa, eastern Europe, 28 countries in all”, before plumping for the Mendoza wine-growing region, about an hour’s flight from Buenos Aires.
In August 2004, the couple took possession of a 19th-century country house near San Rafael with a guest lodge and 60 acres, for £100,000. “There are no restrictions to foreigners buying property in Argentina, and the process is relatively straightforward compared with England,” says Rushen, who believes the country’s economic problems are firmly in the past. “There may be fluctuations, but the market is definitely on the way up.”
Rushen has set up Mendoza Property to help other British buyers follow his example. One person who already owns there is the Duchess of York. She has bought a large plot on the Santa Maria de Los Andes development in Lujan de Cuyo, a 2,000-acre vineyard estate where individual owners select the grape varieties to grow on their plot and the estate’s wine-makers do the rest. Plots start at about £175,000 for 12 acres.
Catering to both Argentinians and foreign buyers are the many “country clubs” within a couple of hours’ drive of the capital. These are gated communities with golf courses, polo fields and lakes for watersports, reminiscent of the home counties, but with searchlights.
Plots start at about £50,000 and owners build to their own specifications, with costs low and the standard of finish high. The new Santa Maria de Lobos estate has attracted the likes of Tommy Lee Jones, who splashed out on a triple plot overlooking the lake. Lobos, 70 miles southwest of Buenos Aires along the excellent toll roads, is the main polo centre, but country clubs also exist closer to town, at Martindale, Tortuga and Maschwitz.
Porteños, as residents of Buenos Aires are known, head abroad to find a beach. Punta del Este, Uruguay’s most famous resort, is about an hour away by air. Akin to Miami in the 1970s, it might not be to everyone’s taste, but along the beach, Rafael Viñoly, a Uruguayan architect, has designed Edificio Acqua, a dramatic collection of flats inspired by Frank Lloyd Wright, with sweeping coastal views. Flats can be bought off-plan for completion later this year through Pablo Casares. They aren’t cheap — a 300sq m studio is about £450,000 — but they are beautiful.
All property deals in Argentina are closed in US dollars, so sterling’s current strength is another incentive to buy. But there is one district in Buenos Aires where British buyers might think twice about investing. Its name? Belgrano.
London Sunday Express
By Richard Webber | November 2006
Overseas Property - Argentina
Although sunny stalwarts like Italy, France and Spain remain popular destinations when splashing out on a foreign retreat, increasingly adventurous investors are starting to broaden their horizons.
One country attracting interest is Argentina, the second largest country in South America. Real estate agents report an influx of enquiries from Brits wanting their slice of a diverse country whose 2400-mile length stretches from the sub-tropical north to sub-antarctic south, and boasts myriad landscapes, from the rugged Andes and immense eastern plains to the lakes and forests of Patagonia.
One of the world’s wealthiest countries at the turn of the century, such financial standing reflects in its strong infrastructure. Together with many European influences and properties selling for a song, Argentina has become an attractive proposition for would-be investors, says Dan Hathway, 36, who’s lived in San Rafael, in the western province of Mendoza, with his Argentinean wife, Laura, 33, and two young daughters, since 2004.
Dan’s company, Andino Properties, helps foreigners invest in Mendoza by sharing the knowledge gained buying three properties of his own, including an 84-acre farm, which he’s converting into a vineyard and olive grove, and a four-bed city house, costing £25,000 and now worth £65,000.
“Prices are cheap to the British, but for locals, with an average monthly wage of £150, they’re not, particularly as house sales are conducted in cash,” explains Dan. Although mortgages aren’t available for foreign buyers, they’re appearing for the indigenous population, but prohibitive terms, including interest rates up to 14 per cent, mean most people deal in cash. “Argentines view property like bank accounts, often substituting them due to the perceived lack of security of the banking system.”
Such absence of faith stems from a monumental currency collapse in 2001, when GDP fell nearly 11 per cent. Now, the economy is thriving again, despite climbing inflation and a need to curb corruption, thanks to a revival in exports and domestic demand.
Dan extols the country’s virtues, including spectacular scenery, a relaxed lifestyle and low cost of living. “£350 a month is sufficient for good living,” he says. But it’s the affordable property prices that attract most investors, with land available from as little as £400 an acre and properties from £10,000 in San Rafael.
Thanks to Andino Properties, Billy Buxton, 37, and his 28-year-old partner, Jenny Lowe, have secured a 20-acre plot near San Rafael for around £18,000. Taking a sabbatical from his UK job with a mental health charity, Billy and Jenny have just finished travelling the world.
Stopping off in Argentina, they were soon enamoured of San Rafael’s tree-lined avenues and friendly locals. “I was blown away by how friendly and welcoming the people were,” explains Billy, who admits the close proximity of the Andes and the feeling of spaciousness were also pluses. “We can reach the ski slopes within two hours. And wherever you are, you’re never far from such vast wilderness, which beats the crowdedness of the UK.”
They knew it was a country they could call home, and within five years intend to do just that. “We plan to build a farmhouse, plant a thousand trees and grow olives and other fruit organically.”
For those investors using their property as a holiday home, a growing tourism market and domestic demand is ensuring healthy rental yields. Six hundred miles away in the cosmopolitan capital, Buenos Aires, K. Johnston's luxury three-bed apartment in the Recoleta district is on target to earn nearly £15,000 in rental income in just ten months.
Johnston, 36, uses her apartment, which cost £97,000 in 2005, three times a year. “Buenos Aires is enormously rich in culture, comparable to Paris or Rome.” Says Johnston, who advises potential investors to gain assistance from a reputable company, such as ApartmentsBA.com, who not only sourced her apartment but renovated it and manages its rental.
The company’s American president, Michael Koh, 33, who’s purchased more real estate in the capital during the last two years than anyone else in the world, says: “There’s good potential for renting out to corporate visitors and tourists, creating a solid income stream. Most of my clients netted about 10 per cent last year on rentals alone, together with a 30 per cent capital appreciation on the value of their property.”
Michael adores Buenos Aires. “It’s a city with much energy and life. There are great restaurants, beautiful architecture, an excellent transport network, it’s safe and one of the cheapest cities in the world to live in.”
Michael rates Recoleta as the most upscale neighbourhood, but cites Palermo Solo, Viejo and Hollywood as up-and-coming districts. Prices have risen sharply in recent time and Michael expects the trend to continue, forecasting prices will double within six years. For bargain hunters, he suggests San Telmo. “The area isn’t as developed and you can pick up properties between £480-£640 per squared metre. Recently, I saw a lovely 90-year-old, 133 squared metre apartment for £67,000.”
Argentina, arguably the most advanced South American country, boasts more than its fair share of stunning scenery, typified by Bariloche, a principal Andean all-year resort in the Lake District region of Patagonia. With skiing in winter, sailing and trekking in summer, Maria Reynolds of Reynolds Propiedades compares it, geographically, to the lakes of northern Italy but “even more spectacular at a fraction of the price”. She enthuses: “It has incredible scenery, four full seasons, European architectural and culinary sensibility and every outdoor sport imaginable – it’s one of the last great places on the planet.”
For “luxury at a bargain price”, Maria refers to the Arelauquen Golf and Polo resort, a gated exclusive community just 15 minutes from downtown Bariloche, where a round of golf costs just £2 and homes start around £170,000. “Lakefront properties on Lake Nahuel Huapi, Guiterrez and Moreno start at around £100,000. They’re not easy to find but worth the effort because there is only so much lakefront like this in the world.”
Maria has noticed an increase in Brits buying second homes or uprooting permanently, to enjoy a high quality of life; and with property prices expected to grow, albeit at a slower pace than recent years, she expects more people to invest in the country’s real estate market. “With most people paying cash, it’s a stable market, more so than investments in the UK and US where people are heavily leveraged and prices and subject to variations in interest rates.”
Foreigners are, however, only permitted to buy property in this region in the border zones, which operate within approximately 65 miles from neighbouring countries, if it’s proved it will benefit the local community. “Usually, showing that one is going to invest money in building a house, using local labour and supplies, is sufficient,” explains Maria, who admits the drawn-out process can take up to a year.
But she’s convinced it’s worth the wait. “Many Brits are moving to Patagonia because it has a long history of immigration from Europe. They want to enjoy a high quality life at a fraction of the price of the UK.”
RTE House Hunters in the Sun Magazine
- Ireland's Leading Real Estate Magazine
For many, South America seems just too far away and to untested to be suitable for a property purchase, but for the more daring investors among you, Argentina, Brazil and Chile could really get your temperature up. And as, Ben West reports, with growing property markets, now is a great time to buy.
Today’s property investor is embracing ever more adventurous locations. Where, 20 years ago, purchasing a villa in Italy may have seemed a daring, new exotic country that many of us would be hard – pressed to locate precisely on a map are becoming the order of the day.
The incredible continent of South America, with its breathtaking geographical extremes of volcanic mountain ranges and huge and huge unspoiled beaches, vast rainforests and majestic plains, is attracting a growing band of European buyers. When you look at the fabulous opportunities on offer combined with the low price tags, it’s easy to understand why.
But although the property markets of many South American countries are in their infancy and show great potential, it is important to bear in mind that the continent generally remains afflicted by economic volatility and political instability. Therefore any location being considered for a property purchase needs to be thoroughly researched.
Argentina is packed with attractions for the foreign investor, including the vibrant world-class capital city of Buenos Aires and huge tract of stunning, varied scenery. Although property prices have always been very low here, the economic crash and currency devaluation in 2002 reduced them further.
The economy is gradually recovering, with demand exceeding supply of quality properties and enlarging local mortgage market, prices are now steadily rising. According to Maria Reynolds of Reynolds Propiedades, rental yields in good locations of Buenos Aires typically range between four and eight per cent, although Michael Koh of ApartmentsBA.com is more upbeat, claiming that investors in areas such as Recoleta could see a net rental return of 12 to 16 per cent per year.
“There have been three straight years of appreciation in property prices in Buenos Aires”, he says. “Many foreigners are buying real estate as an investment”.
Like Recoleta (where prices range from € 1,540 to 2,530 per square meter) another current hotspot is the newly developed neighborhood of Puerto Madero in the old dock area of Buenos Aires (€ 2,160 per square meters). A rented 67,000 euros one-bedroom apartment in the Recoleta neighborhood would net about € 755 per month. Lands with coast or lakes in Patagonia, vineyards at Mendoza and farms, land and hunting lodges at La Pampa and Buenos Aires province are also popular.
“My rental clients compare the price they paying to stay in a hotel versus a five-star apartment”, says Marcela del Campo of Settle Business. “People pay at least € 251 a night to stay at nice hotels. “The tremendous potential for rental income is just the icing on the cake for investors. Tourism is booming here in Argentina and I see no slowdown for the foreseeable future”, says Michael Koh.
But if living in the capital doesn’t appeal, Cordoba is a popular province attracting buyers. Its landscape of rolling hills, mountains and rugged cliffs is reminiscent of the south of France and although 500 miles west of the capital, its undeveloped land prices are very tempting, being from around € 170 per hectare.
To buy in Argentina, purchasers are required to obtain a tax identification number (CDI), which is done by granting a power of attorney to a resident so that they can get it for you. You then appoint a notary public (Escribano) to handle the sale for you. There are no purchasing restrictions for foreigners and buying is simple, usually lasting around six weeks. Fees, based on a percentage of the sale price, are made up of around two per cent notary fees and costs, estate agency fees of around three per cent, 21 per cent VAT, and stamp duty of around 2.5 per cent but varying in different provinces. Property taxes are set locally and depend on the property value. Buenos Aires is exempt.
The Economist Magazine
May 25th 2006 | BUENOS AIRES
Looking for Lofts in Buenos Aires
IN 2003, when John Kahoun, a New Yorker, decided to buy an apartment as a rental investment, he was deterred by the cost of property in Manhattan. So for $70,000 he bought a loft in Buenos Aires, the home of his former wife. As Argentina's economy has recovered from its 2001-02 collapse, so have property prices. Mr Kahoun's property in Palermo Viejo, a trendy neighbourhood beloved by film-makers and artists, has nearly doubled in value.
Foreigners like Mr Kahoun have contributed to a continuing property boom in Buenos Aires. They account for up to a quarter of buyers in some wealthier neighbourhoods. Two years ago, Michael Koh, an American, set up ApartmentsBA.com, a firm which buys property for foreign clients and rents it out to foreign tenants—about 15% of whom come to the city for plastic surgery. Mr. Koh says his investors, many of whom have never seen their properties, enjoyed a rise in their capital asset of 25% last year on top of rental income worth 10% of their investment.
By comparison with the United States or Europe, housing in Buenos Aires is still cheap. Modern apartments in the elegant districts of Palermo and Recoleta cost less than $1,500 per square metre, and bargain-hunters can buy in slightly older buildings in pleasant, middle-class barrios for a third less.
So far the foreign invasion has not prompted a xenophobic backlash. That may be because it is largely confined to the leafiest neighbourhoods, where many new blocks of flats are going up. And foreign buyers must climb over mounds of red tape.
Sellers demand cash. But foreigners are not legally allowed to bring large sums of money into the country. So the typical route is to transfer the money to the account of an Argentine foreign-exchange house held at a bank abroad. The exchange house converts the funds into pesos, to comply with controls on the import of foreign currency, and then back into dollars (for a fee of around 2%). On completion, the exchange house presents the buyer with a suitcase full of cash to hand over to the vendor. Only then can the would-be resident of Buenos Aires celebrate with a steak and a bottle of vino tinto.
The Buenos Aires Herald
By James Scott
May 24, 2006
Does Argentina offer More than Paris? World-class restaurants, museums and health-care services are luring overseas buyers to Buenos Aires
Chicago residents Mark Warden and his wife Mary Beth found a steal on the ideal second home, offering a retreat from the bitter Illinois winters, great culture and stunning architecture. The only catch is it takes an overnight flight to Buenos Aires to get there.
The couple paid about US$150,000 last year for a 90-square-meter, one-bedroom apartment on Rodriguez Peña in Recoleta. The experience went so smoothly that the Warden’s are now closing on another place – in a century-old building – that cost just US$60,000.
“I was surprised at the sophistication of the city,” said Mark Warden, a retired president of an Illinois community college. “This could be any place in Spain or Italy.”
The Warden’s aren’t the only ones who’ve opted to move farther south than Florida in their search for a second home, trading in the comforts of a US lifestyle for the rich cultural experience Buenos Aires offers.
With real estate prices soaring across much of the United States, Canada and Europe, investors increasingly are buying up everything from apartments in downtown Buenos Aires to farms in the countryside and even wineries that dot the basins of the Andes Mountain.
The rush is fueled in part by the 2002 devaluation of the peso – once pegged one-to-one with the dollar – that has meant that an apartment in the heart of the city can go for not much more than what a luxury car might cost back home.
Cheap prices aren’t all that is fueling the trend. Buenos Aires offers world-class restaurants, museums boasting European masters and modern health care services that have landed the city on the covers of many world travel magazines.
“It offers pretty much everything for everybody,” said María Reynolds, who along with her husband, Paul, runs Reynolds Propiedades, an agency that assists foreign buyers. “If you like tango, there’s tango. There is also polo, lots of golf courses and the weather and food are fantastic.”
The obvious draw for many is price. In Paris, the costs are about US$8,000 to US$9,000 per square meter. In New York’s Manhattan, the average cost per square meter is US$10,000 to US$12,000 and in some parts of London the numbers can exceed US$18,000 per square meter.
In contrast, Puerto Madero – Buenos Aires’ hippest, not to mention most expensive, new neighborhood that lines the water – the cost is about US$3,000 a square meter.
Homes in the more established Recoleta, with a feel of New York’s Upper East Side, range from about US$1,400 to US$2,600 per square meter. Barrio Norte is an even better deal with at US$1,100 to US$1,300 per square meter.
While costs have been climbing in recent years, many believe the market will continue to rebound, pushed in part by the now soaring tourism industry. The number of visitors is growing roughly 10 percent per year with more than four million tourists expected to visit this year.
Chicago-born businessman Michael Koh helps international investors and second-home seekers buy real estate through his company Apartmentsba.com.
Koh, who bought his first house here in 2003, said he now buys an average of two to three properties a week. His team of 35 employees helps handle everything for clients from showing properties and writing sales offers to overseeing the closings, renovations and decorations.
His business has boomed. What started as buying apartments for individual investors has morphed into working for investment funds, buying land and building new homes and now undertaking the acquisition of dated buildings to transform them into high-end hotels.
“You can buy cheap real estate and make money anywhere in the world,” Koh said. “The good thing about Buenos Aires is it is real estate you will actually use.”
María Reynolds said her family’s business has experienced a similar increase since the devaluation. Prior to the devaluation, the company focused on temporary rentals, handling only a few sales each year.
The company, which now sees more than 100 sales a year, offers seminars twice a year for prospective buyers looking to navigate the bureaucracy.
To facilitate overseas buyers, Reynolds has developed a property management arm of the business as well as provides interior decorating services for clients looking for a hassle-free investment.
“We see quite a stable demand. It has not gone down,” Reynolds said. “On the contrary, there is more international promotion. We see more foreigners becoming aware of this possibility.”
How it works
Buying real estate in Argentina can be daunting for overseas investors. Mortgages are nearly nonexistent, meaning transactions are done in cash. Also, sellers rarely will want to register the actual sales price hoping to avoid taxes.
Unlike other countries, however, overseas buyers here can purchase a home in their name and are guaranteed the same protections as local buyers.
Yearly expenses include property taxes and a 0.75 percent wealth tax that is based on the value of the property. Property owners that rent also need to withhold 21 percent of the income to pay rental taxes.
Prior to selling a property, the government may do a check of the utility records to see if the property was occupied. If a owner hasn’t paid the rental taxes, then the government will assess what it believes is owed in taxes.
For those looking for a stress-free move, businesses have sprung up that will handle most everything. Cliff Williamson runs Transpack Argentina, a relocation firm that will pack your house up anywhere in the world and import it to Argentina.
Williamson also runs Latin American Homecoming, a subsidiary that handles everything from picking clients up at the airport to providing profiles of neighborhoods and schools. His business even offers a 24-hour hotline for late night emergencies.
“We’re moving in a lot of people,” said Williamson, who averages about 400 moves into Latin America a year, many involving corporate relocations. “One of the things that makes Argentina very attractive is that the rest of the world is so turbulent. Argentina doesn’t look so bad.”
Chicago-based flight attendant Anne Elizabeth fell in love with Buenos Aires 30 years ago, but didn’t have the resources then to make an investment.
A year and a half ago, she came back to visit, rekindled her love with the city and ended up buying a one-bedroom apartment in a century old building just a few blocks from the Recoleta Cemetery. Designed by a French architect, she said, the building has a sister in Paris.
Elizabeth spent US$93,000 to buy the unit then spent another US$40,000 renovating it, including a complete overhaul of the kitchen and bathrooms with granite, appliances and cabinets. Her taxes, regime and utilities, she said, never exceed US$250 a month.
For her, Buenos Aires was less about the deal and more about the lifestyle. “I love walking across the street to get my fruit and vegetables from a local vendor,” said Elizabeth, who spends one week a month here. “Everybody in the neighborhood knows my name. I love that part of it.”
Property Investor News Magazine - UK
By: Mark Hempshell
Argentina was sparsely populated until Europeans arrived in 1502 and the country was colonised by Spain - from whom independence was declared in 1816. Over the next 160 years centralist and federalist, conservative and radical, and civil and military administrations traded power. In 1983 after decades of political turmoil, plagued by terrorism and oppression under which countless numbers of opponents 'disappeared', the last military dictatorship was ousted and democracy was restored. In the 1980's and 1990's the Government introduced measures to take civilian control of the armed forces and permanently establish the country as a democracy.
Despite, at times, having suffered from political and economic turmoil República Argentina is still the most developed country in South America, and to all intents and purposes a 'first world' nation, not a 'third world' one. It has the highest GDP per capita, the highest levels of university education and an infrastructure comparable with industrialized nations.
Foreign investment and immigration from Europe shaped Argentina into an advanced economy during the 19th century. From 1880-1930 the country was one of the ten wealthiest nations in the world. But years of political problems contributed to economic decline, leading to massive public debts and severe hyperinflation by the late 1970's. In 1991, under President Carlos Menem, the Government embarked on a programme of trade liberalisation, deregulation and privatisation with the aim of rejuvenating the economy. Most significant of these, as we will see later, was the 'Convertibility Law', which pegged the value of the currency, the peso, to the US dollar on a one-for-one basis.
Initially the economy improved but falling exports, growing imports, unemployment and the impact of the Asian economic crisis eventually took their toll. By 2001 GDP had plummeted, inflation exceeded 1,000% and unemployment reached 25%. The peso-dollar tie was ended in 2002 and the currency lost 70% of its value. Argentina defaulted on its international debts, public employees went unpaid and bank accounts (an extremely unpopular measure known as corralito) were frozen, leading to street rioting.
In 2003 strict fiscal measures including revaluing the currency, import substitution policies and increasing exports contributed to a sudden surge in GDP. Internal consumption increased, foreign investment returned and the so-called 'Tango Revival' began. The economy grew 8.8% in 2003, 9% in 2004, and 9.1% in 2005 by which time unemployment had fallen to 10%. The Government completed restructuring of the national debt in February 2005, which now stands at 69% of GDP and is slowly decreasing. According to INDEC, the National Institute of Statistics and Census, GDP expansion for 2006 could be 7%.
State Of The Property Market
As in other developed nations property here was always considered a rock-solid investment. But the economic collapse of 2001-2002 shook that belief to its foundations. During this time people lost the majority of their savings and their pensions. The breaking of the peso-dollar tie caused the currency to lose 70% of its value against the dollar by December 2002 - making previously-attractive dollar mortgages cripplingly expensive. People were desperate to sell their property to salvage something and, burdened by many sellers and few buyers, the property market collapsed. The rental market was also severely affected : According to 'Reporte Inmobiliario', which reports on trends in the market, average residential rents dropped by 74% from US$29 to US$7 per m² during 2001 alone.
But with the economic revival the market began to move again. By the end of 2003 residential property had, on average, recovered to 67% of its pre-crash value. By January 2006 prices in many areas have recovered to their pre-crash levels, and in some have increased by as much as 34% in a year. Property transactions, together with new build completions, reached a new record in November 2005. Some outside observers wonder how, given recent events, confidence has returned to the market so quickly. One key reason is that, after the corralito, many Argentineans do not trust the banks and still regard land and property as a more secure investment.
Another factor which bodes well for the property market is that buying property here is straightforward. Foreign investors may buy without permission. Once you have found property the title is checked, the escritoire is signed and the purchase is registered. There is no capital gains tax.
Argentina is divided into 23 provinces and one autonomous city - Buenos Aires, widely known as capital federal. The city itself has a population of 2.7 million and the city plus the greater metropolitan area 11.5 million, making it one of the largest conurbations in the world.
Buenos Aires has a modern high-rise centre with thriving commercial districts, yet is notable for its quality of life with extensive green spaces, good public amenities and transport and - as the name suggests - a pleasant climate. It is gradually becoming recognized as something of an undiscovered gem compared to most overcrowded international cities. In a recent article 'The Washington Post' proclaimed 'Forget about Europe, go instead to beautiful Buenos Aires - the city with everything but without the high costs of European cities.' Living costs are indeed low for any city, although rising : A good meal for two with wine costs US$20, a cinema visit US$4 and domestic staff can be hired for US$2 an hour. Not unsurprisingly, therefore, it is proving a major draw to expatriates, migrant workers, entrepreneurs, retirees and students from Argentina, the rest of South America and, increasingly, the USA.
Property prices here have been rising briskly since 2003, but are still extremely low by capital city standards. It is still possible to buy a studio apartment in a good central area for US$50,000, although these are becoming rarer. Across the city generally new build property tends to be more expensive than old, and floor area tends to be more generous than in most European cities.
Recoleta, north of the centre, is regarded as the most desirable and fashionable residential district and is also popular with tourists. It is very much the 'Fifth Avenue' or 'Mayfair' of the capital, home to deluxe hotels, fine restaurants and designer shops. Current apartment prices range between US$1,500-US$3,000 per m², with one bedroom apartments typically selling for US$90,000 and two bedroom apartments starting at US$135,000. Prices were already high by Argentinean standards so showed a relatively modest 15% price rise in 2005.
Palermo is another good quality residential area is Palermo, with a reputation as a 'trendy' district. Current prices in Palermo range between US$1,300-US$2,800 per m². Puerto Madero is a newly developed area, similar to the London Docklands. Prices are already at a premium here, at around US$2,200-$3,000 per m² and only a few sites are left for new development.
Of course, as elsewhere, the greatest price appreciation is often found in the up-and-coming districts. San Telmo to the northwest of the centre is a bohemian area of pavement cafes, bistros and antique shops, still showing signs of its working class roots. A regeneration programme to improve security and enhance the street scene is currently underway. Also up-and-coming is La Boca on the southern edge of Buenos Aires at the
mouth of the River Riachuelo. These districts are home to the city's famous Tango clubs. Prices are currently in the region of US$800 to US$1,200 per m² and these areas are tipped by many commentators for growth.
Michael Koh, President of ApartmentsBA.com, has made extensive real estate investments on behalf of his own company and as a consultant to investors, and firmly believes in Recoleta despite its relatively high prices. He says 'Recoleta will always be Recoleta. The best investment is buying in a good area like Recoleta but not on a posh street like Avenida Alvear where prices have already gone over US$3,000 per m². You can go just a few blocks away in a very nice part of Recoleta and pay US$1,500 per m².' He points out 'Many investors are buying for short-term rentals (serviced apartments). So it doesn't make sense to pay US$3,000 per m² when you can pay half of that in a good part of Recoleta. The average tourist that comes down and books an apartment won't know the difference of 5 or 6 blocks.'
Michael is also very confident about the Palermo Soho/Viejo/Hollywood areas which he believes will be transformed, particularly as tourism increases. He tells us 'I predict these areas will explode with growth within the next 3-5 years.'
Tourism, Agriculture And Land Investments
An important issue to factor in is the part tourism could play in the property market. Tourists dwindled to almost nothing when the peso-dollar tie made it prohibitively expensive to visit. But today's bargain living costs saw visitors rocket to 3 million last year. Tourism Secretary Carlos Enrique Meyer recently predicted 4.1 million tourists and US$3.5 billion of tourist income for 2006, with 10 million visitors projected by 2010. A number of airlines are restarting or launching new routes.
Major draws for tourists are Buenos Aires, the Iguazú Falls and Patagonia. There are several good quality ski resorts in the Andes (the season is June-September) such as Bariloche, Las Leñas and Villa Angostura. Hotels in these areas are frequently fully booked, fuelling the demand for short-term house and apartment rentals. Investors are also active in buying land with future residential development potential in tourist areas.
Argentina has always been a major and well developed agricultural country. As well as being self-sufficient in food it is the world's fifth largest agricultural exporter, and agriculture accounts for 60% of all exports. Agricultural land is very cheap by international standards and there has already been notable foreign investment in agricultural land. International investors such as George Soros, Kerry Packer, the Sultan of Brunei and Ted Turner are already believed to have bought up large tracts of land, particularly in Patagonia. Analysts agree that, should the USA and EU eventually agree to remove or reduce subsidies for their own agricultural sectors countries like Argentina could benefit considerably.
So what are the prospects for prices in 2006 and of course rental yields? Michael Koh reports 'Prices have drastically risen all over the city in good areas like Recoleta, Barrio Norte, Palermo, Palermo Soho/Viejo/Hollywood, Puerto Madero. Areas outside of those areas were not as drastic. Property prices went up by as much as 25%-30% last year in some areas of the city. However, much depends on the kind of apartment, building and location.'
On rental yields he says 'The rental market has exploded. There are a lot of apartment rentals on the market for tourists. Hundreds if not over a thousand. The typical average rental probably yields about 6-8% per year on the total investment.' However, he advises that high quality, well equipped properties can yield much more. I offer luxurious furniture, high-tech electronics, local cellphones, USA phone lines, high-speed Internet and many other features. Most locals aren't willing to make this investment. However, it enables us to make a much higher rate of return. Many of my clients have yielded as high as 11% - 16% a year on the rental income alone.'
Michael is extremely confident about prospects for the market, stating 'I've always said that real estate here in Argentina is one of those once in a lifetime opportunities. I still maintain that property rates can easily double in good areas from today's prices.'
February 19, 2006
A World of Affordable Choices
By STEPHANIE ROSENBLOOM
THE NEW YORK TIMES
NEW YORK — sung about by Frank Sinatra, chronicled by Carrie Bradshaw and trampled by King Kong — has long had mythic status. Even the real estate is legendary.
Rents have always seemed exorbitant compared with those in other big cities, and now buying in Manhattan costs a record-setting $1,002 a square foot, on average. Still, there are plenty of properties for less than $500,000, and some dynamic neighborhoods in Brooklyn and Queens have rentals for below $1,000 a month.
New York, though, is not the only city capable of captivating the unencumbered and adventurous. The world is dappled with electric and storied cities — and real estate is staggeringly affordable in many of them.
"There is so much value in a lot of foreign countries," said Nigel Leck, an international property expert on the BBC program "Uncharted Territory." "The capital growth will be very, very good."
Entrepreneurial types should seize the moment in Eastern Europe, where cities like Budapest, Prague and Krakow, Poland, are in need of basic services and programs to propel them into the future. Those who want the privileges of home — a democratic government, a transparent market, the protection of property rights — but want more bang for their buck, should consider Toronto,Montreal and Quebec.
Sun-seekers looking to live and invest in a more tropical climate may want to migrate to one of the many flourishing cities in Latin America. Young executives who want to position themselves for the next decade can get deals in Shanghai, while romantics can embrace a piece of Paris for less than they may have thought.
Jeff Hornberger, manager of international market development for the National Association of Realtors, said that many European and Latin American countries welcome foreign buyers.
But that does not mean the process is devoid of red tape. Information about ownership laws in 24 countries can be found on WorldProperties.com. Click on "Country Info," then "Business Practices." Select a country from the drop-down menu. Where it reads "Select Business Practice," choose "Foreign Ownership." That will note any restrictions. In Mexico, for example, Article 27 of the Mexican Constitution of 1917 prohibits foreigners from owning residential real estate within 30 miles of any coastline or 60 miles of either border.
"As a rule of thumb, countries that were former British colonies have few, if any, restrictions, whereas many other countries restrict and require you to get a special permit to buy," David M. Michonski, chief executive of Coldwell Banker Hunt Kennedy and an international real estate specialist, wrote in an e-mail message. "But in resort markets, the countries often make exceptions."
Renting is a more informal process. "It is always easier to rent in a foreign country than to buy and I know of no restrictions on renting anywhere," Mr. Michonski wrote.
By and large renting is an agreement solely between the property owner and the renter. "If you're going to Italy and you're renting from a mother whose kids have left the home, she probably just wants a down payment," Mr. Hornberger said.
Some property experts say the most challenging part of relocating is finding a job. Yet it can sometimes be easier than buying property. "Many countries welcome American know-how and since Americans rarely compete for the low-paying local jobs, restrictions are often far more lax than to purchase," Mr. Michonski wrote.
At WorkAbroad.Monster.com there are job listings for nearly 200 countries. The site has tips about working papers, corporate relocation and private-sector jobs like teaching English. It also makes mention of risk-takers who, without any business connections, travel abroad to study, work freelance or start their own business and end up making valuable local contacts and securing work for themselves.
Of course, to learn about a country's visa and residency requirements, you will have to contact its embassy or visit its Web site.
Latin American cities are among the most exciting and affordable, especially Buenos Aires, the sultry, party-until-the-wee-hours city known as the Paris of South America. In 2002, the Argentine peso was devalued by the government, resulting in a currency crash. But four years later the city is getting back on its tango-dancing feet.
"This is a city that is getting more expensive because the economy is on the recovery," Mr. Hornberger said, "but it's still at a fraction of the cost."
Dinner for two with a good bottle of wine and dessert is $15 a person in a nice restaurant, said María Reynolds, who is an owner of Reynolds Propiedades & Relocation in Buenos Aires. "If we ever go out and pay more than $18 a person it's like 'wow, that's expensive,' " she said. (In Manhattan it costs $16.95 for a fajita at Señor Swanky's, a Mexican chain.)
The enclave of the moment is San Telmo, a "young, hip urban scene with a thriving arts community and a strong ex-pat community," as Mr. Hornberger put it. The neighborhood is dotted with fine restaurants, bars, boutiques and colonial houses. Property costs between $56 and $93 a square foot, Ms. Reynolds said. Renting is also affordable. There are furnished studios with weekly maid service for $450 a month at www.buenosaireshousing.com.ar. (That is less than the $497 it costs to keep a car in the garage near New York's Museum of Modern Art.)
Real estate is more costly though still reasonable in Recoleta, an elegant downtown tourist magnet. Prices are about $180 to $300 a square foot, Ms. Reynolds said.
Lief Simon, the editor of Global Real Estate Investor, a newsletter published by International Living, likes Panama City with its high-rise buildings, restaurants and some 80 banks. "It's a first-world city," he said, and yet two-bedroom apartments can be had for $60,000 to $80,000.
Mexico City, recommended by some property experts, makes others cringe with its crowded streets and polluted air. Still, "there are a lot of young Americans living down there and they're finding employment," said Mr. Hornberger, who suggested living in Condesa, a chic area that has been likened to New York's East Village. There are two- and three-bedroom apartments in Condesa for about $1,200 to $1,500 a month. Some one-bedrooms in downtown Mexico City are less than $700 a month.
Those who are partial to cooler temperatures but wish to remain on this side of the Atlantic could head north to Canada. "It's a great opportunity for kids today," Mr. Michonski said.
Toronto is the financial headquarters of the country and three of its trendiest neighborhoods are among the most affordable.
"It's a mini-Manhattan, but we're decades and decades behind in terms of where you are with your price points," said Michael Kalles, president of Harvey Kalles Real Estate (harveykalles.com) inToronto.
The Beaches neighborhood has a lively beachfront boardwalk, volleyball courts and an outdoor swimming pool, yet is close to the city's downtown. Buying at the low end of the market in the Beaches is about $260 to $300 a square foot, said Michael Manley, a director of the Toronto Real Estate Board.
Rent is $690 to $1,210 a month, said Ryan Schwerdtner, managing director of a Canadian rental Web site, http://www.viewit.ca. Rents vary significantly, he said, because properties range from beachfront homes to basement apartments.
Two of the trendiest downtown areas are West Queen West (known for its galleries, dance clubs and shopping) and King West Village (its myriad pubs make it ideal for night owls). New condos in Queen are going for $220 to $330 a square foot and are being snapped up by young people, Mr. Kalles said. Loft and one-bedroom rents in both areas are about $870 to $1,130, Mr. Schwerdtner said.
In Montreal, the "place to be and to be seen" is Plateau Mont-Royal, said Bertin Jacques, a spokesman for Tourisme Montréal. Property in this area — which is popular with young Canadians because of its cafes, restaurants and nightclubs — is about $220 to $240 a square foot and rentals are about $650 to $1,470 a month, he said.
The Gay Village enclave, which can be likened to New York's Chelsea neighborhood, also draws a number of straight people because of its dynamic night life and affordability, Mr. Jacques said. Real estate is about $190 a square foot and rentals are about $780 to $1,210, he said.
If Buenos Aires is the Paris of South America, Quebec City is the Paris of North America. It is divided into Haute-Ville (the upper town) and Basse-Ville (lower town). Haute-Ville is more expensive than Basse-Ville, which, like New York's South Street Seaport, is distinguished by a port (Old Port) along the St. Lawrence River. Warehouses converted into 750- to 2,000-square-foot apartments are about $170,000 to $390,000, said Richard Séguin, a spokesman for Quebec City Tourism.
Speaking of Paris, the city of Renoir and haute couture is far less expensive than New York and San Francisco, a fact that has escaped many would-be expatriates.
"There's a lot that is still way underpriced because it needs renovation and gentrification," said Adrian Leeds, who moved from Los Angeles to Paris in 1994 and is the editor of www.parlerparis.com, a newsletter about Paris, as well as other Web sites about France, including French Property Insider (www.frenchpropertyinsider.com).
Those looking for a deal should skip the Sixth and Seventh Arrondissements, home to the Luxembourg Gardens, Eiffel Tower and Musée D'Orsay. Instead, they might consider buying in developing arrondissements where the city's bohemians and "bobos" (bourgeois bohemians) flock: the 10th, 18th and 19th.
Just be wary of the 10th Arrondissement (one of the city's up-and-coming areas), advised Yolanda Robins, a property manager for French Property Insider who moved from Philadelphia to Paris two years ago. The areas along the tree-lined Canal St.-Martin are beautiful, she said, but those near the train station "can be horrible." The average price per square foot in the arrondissement is about $530 to $670, she said.
The artsy 18th Arrondissement, known as Montmartre, is perched on a hilltop, and the Eiffel Tower can be glimpsed from some of its apartments. Property costs about $670 a square foot on the west side of the arrondissement and about $440 a square foot on the east side, which is undergoing gentrification, Ms. Robins said. Property in the 19th is about $440 to $610 a square foot, she said.
Long-term furnished rentals in those arrondissements are about $3 to $4 a square foot a month, according to Ms. Leeds. "It doesn't even come close to London," she said.
As Mr. Hornberger put it: "London is out of reach unless you've got a really good trust fund."
Yet some Anglophiles and English majors remain undeterred. Ryan Benson, director of Dream Properties London, suggested renting in St. John's Wood. But even there, a 270-square-foot studio on the famous Abbey Road is on the market for about $1,470 a month (at www.foxtons.co.uk). Other areas to search are Maida Vale, West Hampstead and Little Venice, though the pickings are slim. Suburbs like Stanwall and Radlett are less expensive but what is saved in rent is paid for in gasoline or commuting time.
Those doing business in China (Mr. Michonski calls it "the land of the future") may want to work and buy in Shanghai. Adrienne Farrelly, general manager of Shanghai Properties (shanghaiprops.com) suggested looking in People's Square, nestled among two of the city's major commercial and retail streets. Nearby is Top of the City, an apartment complex where property is about $350 a square foot and rentals start at around $700 for a 689-square-foot one-bedroom, Ms. Farrelly wrote in an e-mail message. "It's probably the best value in town given that it's at People's Square," she wrote.
Property experts agree, however, that the best values are really in Eastern Europe. There are "huge swaths of land" available for "knockdown prices," said Mr. Leck of "Uncharted Territory."
"That's where the opportunities lie," Mr. Simon said, "and that's where the young person who's entrepreneurial could make some money." It costs about a $110 a square foot to buy in Bucharest,Romania, he said.
"I think the biggie there in Eastern Europe is Bulgaria," said Mr. Michonski, adding that it has magnificent beaches as well as mountains for skiing and that "you can live like a king on $10,000 a year."
But, alas, if the siren song of New York is too mighty to ignore, you can find rentals for about $1,000 a month. Manhattan Apartments (www.manhattanapartments.com) and Mark David & Company (www.markdavidny.com) have some in Harlem and Washington Heights. In Brooklyn, there are a few studios in Park Slope and Kensington for less than $1,000 and in Williamsburg and Greenpoint for about $1,200 on the Craigslist Web site. In Queens, some studios and one-bedrooms in Astoria are less than $1,000.
Those who are cash-strapped but still want to live in Manhattan can rent a room (or a corner of a room) for about $500 to $800 a month. They may lack space and privacy. But they provide a sliver of the Big Apple. And more than one dream in this city began with less than that.
International Homes Magazine - Vol. 13 No. 1 February 2006
Land and Freedom
By: Michael Gunn
Is Spain looking just too crowded and familiar? Latin America has the ideal alternative for those who’ve honed their Spanish but hunger for more dramatic surroundings, greater adventure and much cheaper property. Take a bow Argentina – the continent’s second largest territory with plenty of land to spare.
“Argentina isn’t some small Caribbean island or tiny Central American tax haven,” says David Cummings of Tierra Estates. “It’s a proper country with vast opportunities for exploring. There are tropics at one end, glaciers at the other, sea on one side, soaring mountains the other.” Even the most cursory glance at a map bears him out – from the subtropical borders with Bolivia and Paraguay, down the western spine of the Andes range, all the way to the Patagonian steppes, this 5,000-km stretch of land promises a lifetime of exploration.
Also, unlike some of its South American neighbors, Argentina is a safe and friendly destination that can deliver a first world lifestyle, but at third world prices. Such a climate is a direct result of the country’s 2001 economic plunge – when Argentina defaulted on massive international debt and saw the peso lose 75 per cent of its value in a single day. Five years on and things have definitely improved. The economy is back on track, foreign investment has returned and unemployment has leveled at 12 per cent – the World Bank predicts the country will remain economically stable for the next 20 years. Tourism is set to play a major role too with a target of 10 million annual visitors by 2010. Added to that, low cost airlines have resumed flights to Buenos Aires and firms such as Air Milan and Continental are restarting direct routes. For now, however, living costs are still very low. “Investors can buy wonderful properties with land for very little and without the burden of a mortgage,” says Dan Hathway of Andino Property. The state of affairs has brought burgeoning numbers of overseas visitors keen to join Argentina’s first wave of property pioneers.
Air and graces.
First stop is Buenos Aires, the so-called ‘Paris of Latin America’, where old world elegance still flourishes at the heart of one of the continent’s largest cosmopolitan centres. With a population of 2.7 million divided between 47 districts (or barrios) modern BA is a fantastically varied beast. The architecture showcases the country’s resplendent past in the Metropolitan Cathedral and Teatro Colon, the world’s largest opera house, while the enterprising future finds it place in the redevelopments of Palermo and Puerto Madero.
Currently the biggest attraction is that property is extremely cheap for those armed with foreign currency. Values are pegged to the US dollar and the real estate sector accounted for 60 per cent of all investment in Argentina last year. By some estimates, half of luxury apartment purchases in Buenos Aires were by foreigners – unsurprising when you consider what a relatively small sum can buy. One-bed apartments can cost less than $50,000 (£ 28,250), a stylish two-bed place from $80,000 (£45,205).
That’s set to change in the near future. “Real estate has risen dramatically since the 2001-2002 devaluation,” says Michael Koh of ApartmentsBA.com, a company specializing in redevelopments and high-end rentals. “Argentina’s economy has rebounded from the financial crises with three straight years of nine per cent growth – one of the highest rates in the world.” In some areas of the city, property prices have risen by 30 per cent in the last year and construction figures have soared too. “The people buying aren’t speculators,” he explains. “Mortgages are almost non-existent here so buyers are true investors. Purchases are 100 per cent cash for the most part, literally paid with dollars over the table.”
Recoleta in Barrio Norte is the very top rung of the property ladder. “It’s the Mayfair of Buenos Aires – stylish, chic and very safe,” says Mr. Cummings. “An address here is considered the right one to have. It’s true to say it has a certain snob appeal.” Central to practically everywhere in BA, it boasts grand European architecture, wide boulevards and the city’s finest restaurants and designer shops. Prices range between $1,500 and $2,500 (£850 - £1,420) per sq. metre depending on the age of the building.
Also of interest is Palermo – BA’s Notting Hill or Chelsea and the haunt of Argentina’s fashionistas. Here you’ll find the parks, lakes and the racecourses that draw the city’s rich clientele and not a few moneyed ex-pats – Price Harry has been spotted here. “It’s got a great location and it’s very trendy these days,” says Mr. Cummings. “Although you’ve got to know where to buy, if you fancy property developing in BA then both Palermo Viejo and Palermo Hollywood are sure-fire hits.” Prices range from $1,000 to $1,600 (£570 - £900) per square metre.
Perhaps the freshest opportunities are to be found in Puerto Madero, the city’s former docklands. Like its London namesake, this industrial area lay derelict for decades when it proved too small to keep up with the country’s busy shipping trade. Following its resurrection in the 1990s, redevelopment continues apace with cranes crowding the skyline. Prices are already at a premium at around $2,200 - $3,000 (£1,240 - £1,700) per sq. metre and only a few sites are left for development.
Luxury apartments lead building boom in Argentina
October 8, 2005
BUENOS AIRES, Argentina (Reuters) – Luxury apartment towers are sprouting up across the Buenos Aires skyline, leading what developers hope will be a wider building boom four years after Argentina’s economic collapse.
The market for high-end properties is attracting both wealthy Argentines and foreign investors, helping to spur more than $850 million in new projects concentrated in Buenos Aires’ wealthiest corridors.
Brokers say this property market has attracted Argentines in search of a financial safe haven. Most buyers, they say, have few intentions of actually living in their newly purchased apartments.
Argentina’s economy is rebounding from its 2001-2002 financial crisis with the third straight year of growth of about 9% a year – one of the highest in the world.
But many Argentines remain leery of keeping money in banks after their savings were frozen for months and dollars were forcibly converted to devalued pesos with a 70% loss. As a result, many have turned to real estate where property values are priced in dollars and prices have rebounded to pre-crisis levels.
Construction activity soared 18% in the second quarter of this year, compared with the same period a year earlier, the government statistics agency reported last month, adding the sector accounted for 60% of all investment. But a look at where the construction is concentrated has raised questions about the benefit of the pell-mell growth.
“The real estate sector is a reflection of the polarization of Argentine society,” said Germán Gómez Picasso, director of the Web site www.reporteinmobiliario.com, which tracks the real estate market. For a majority of Argentines, these properties remain far out of reach – apartment and home prices often start at around $175,000 in a country where the per capita income averages around $230 a month.
“We build for the wealthy because it’s the only demand that’s out there,” said Eduardo Gutiérrez, president of Vizora, an alliance of the Argentine housing developer Farallón and banking group Macro-Bansud. Rául Sáenz Valiente, general manager of Ceaurbán, which has invested $50 million in developing luxury properties, said these buyers don’t mess with mortgages and rather pay in cash. According to private estimates, foreign investors accounted for some 15 to 50% of property sales.
Luxurious Puerto Madero
The epicenter of Argentina’s high-end property boom is the neighborhood of Puerto Madero, where a stretch of red-brick docklands and grain silos built in the late 1800s now house gleaming apartments, restaurants and offices. Construction cranes have filled the area in recent months as new apartment towers have sprung up. Prices per square meter in Puerto Madero average $2,600; brokers say apartments are being sold even before they are built.
Recently announced housing complexes include a $220 million project by real estate developer Vizora. Another group, Faena Properties, plans to build a $170 million high-end apartment complex, a year after opening a $120 million five-star hotel.
Boom or ‘mini-boom’?
The construction boom has in part helped fuel Argentina’s economic recovery.
The government says the sector accounts for about one-ninth of the gross domestic product. President Néstor Kirchner has also launched a public works program, hoping to lower the country’s 12.1% jobless rate.
Vizora’s Gutiérrez said he hopes the growth in luxury properties proves a starting point for more real estate projects aimed at ordinary Argentines. Credit remains limited for a majority of Argentines, who saw their purchasing power shrink dramatically after the country’s bruising 2002 devaluation. Even with what many in the industry are calling a “mini-boom,” statistics show the sector remains far off its heady days during the 1980s when mass projects went up aimed at middle-class Argentines. “The concentration of sales in exclusive areas and the fact that most are cash transactions show that today’s market remains reduced,” said Construya, an association of construction firms, in a report released last month.
Real Estate Update – February 2004
The real estate sector in Argentina declined sharply during a four-year recession followed by the economic crisis and financial collapse of 2001-2002. However, the sector is gradually recovering to pre-convertibility levels and is estimated to grow between 15-20 percent in 2004.
In 2002, following the lifting of frozen bank term deposits, there was an artificial demand for real estate as an alternate secure investment for life savings to exchanging released funds for Argentine bonds.
An incipient, though real, reactivation started during 2003, as the Argentine economy began to recover through exports, import substitution, and increased consumer spending accompanied by an upswing in demand for upscale residential property.
Currently economy recovery is particularly noticeable in the real estate industry, driven by the surge in construction activity, which climbed during 2003 by 37.6 percent over 2002 statistics. According to MVA Macroeconomía consultants, for each point that the GDP grew during the reactivation, construction increased by more than 5 points. The business cycle of sector was cast in sharp relief with a dramatic downswing followed by a sharp recent upswing marking a recovery.
Current construction levels are similar to those of 2001, and construction activity is projected to grow another 25 percent in 2004, driven by urban developments in top residential areas and other non-ABC1 neighborhoods.
Several small and medium investors are focusing on construction given low land and residential properties prices post devaluation. However, prices have also been rising quickly following the demise of the 1 peso to 1 U.S. dollar exchange rate, known as convertibility, particularly for upscale property.
The reactivation also includes new developments. Over 63 residential developments are already approved for building in Buenos Aires, an investment totaling over US$100 million, particularly in top neighborhoods such as Puerto Madero, Recoleta, Palermo, Belgrano, but also including other areas such as Caballito, Flores and Villa Urquiza.
Another area that experienced recovery in 2003, reaching similar levels to those of the convertibility era (and doubled 2002 construction levels), were gated-community developments (barrios privados) in the Greater Buenos Aires area, amounting to 4,000 single-family units for a total of US$340 million .
Even if these figures represent only 30 percent of the construction levels reached during the convertibility boom of 1996-98, it is still an encouraging sign of economic recovery spurred by public confidence in the Kirchner administration.
Another encouraging sign for the real estate growth was the gradual reappearance last November of new credit lines by some private banks.
However, these incipient signs of reactivation will only be consolidated if the demand is maintained and financing returns.
U.S realtors and developers may find that the most successful way of entering the Argentine market is through association with local partners. The construction development community is rather exclusive, and therefore it may be difficult for U.S. companies to enter this market without an Argentine counterpart.
OFFICE SPACE REAL ESTATE MARKET
Argentina is witnessing a comeback in its premium office space, the one sub sector that lagged behind in the strong recovery of the real estate sector that Argentina has been experiencing since 2003.
Real estate business in Argentina was deeply affected by the 2001-2002 crisis and the prior four-year recession. However, currently the real estate business is recovering to pre-convertibility levels. Top residential and commercial property have fully recovered pre-devaluation prices in US dollars.
Argentina’s premium office space has experienced sustained growth since the second quarter of 2004.
Not only have the percentages of occupancy increased but also the rental rates, a fact that is mainly explained due to lack of construction of new properties and the rising demand of corporate clients looking for more modern office space. With no new office space projects under construction, it is expected that available stocks will dry up by the end of 2006.
In the first eight months of 2004, some 70,000 m2 of AAA offices have been rented in the city of Buenos Aires. Rental prices per square meter have returned to US$12 to US$14, a figure that is very close to that of the best time in the market.
The strong increase in the rental prices has turned itself into an important partner of the banks in the difficult task of recreating the real estate credit market. While lack of credit is an obstacle for a genuine demand– though the recent reappearance of some credit lines is an encouraging sign for the real estate sector. There are already five banking institutions that have lengthened the maximum term to 20 year, with variable interest rates.
U.S realtors and developers will find that the most effective way of entering the Argentine market is in partnership with local firms.
We Are the Imperial Race
October 1, 2005
by Bill Bonner
It is early spring in the southern hemisphere. A fresh warm breeze blows across the Rio Plata. Trees along Buenos Aires’ broad boulevards are budding out. Cherry trees are in bloom. Here and there, groups of American tourists peer in shop windows. Birds sing. Lovers stroll arm in arm. It looks as though it might be the beginning of something.
Americans abroad have a mixed reputation. They are loud. They dress badly. And they have a superior attitude that foreigners take for arrogance. But they tip better than Europeans.
In our trip through Argentina, we were no different, no better. None of us had bothered to learn Spanish properly. We spoke it badly, if at all. We expected the locals to speak English…and often commented on how bad the hotel clerks’ command of our mother tongue was, hardly noticing that it was still far better than our knowledge of Spanish.
We Americans are not mean-spirited or pompous about it; still, unconsciously, we expect a little deference…a little obsequiousness…a little bowing and scraping in our direction. After all, we are the imperial race. We are the alpha nation. We have the most popular culture. We have the most powerful military. We have the money.
"Why do so many Americans hate the French," asked a member of our party. The answer is obvious: the French refuse to bend. The unmitigated Gauls actually turn up their noses at American tourists and make them feel like bumpkins. The French don’t dispute that our army could whip their derrieres, if it came to it. They concede, too, that the average white American probably has more money in his pocket than the average Frenchman. But neither of those things counts, say the French; what matters is culture and French culture is superior.
"God*mmit…I’m an American," says the ugly tourist. He is convinced that the frogs, the Huns, and the A-rabs are all incompetent and uncivilized. He is the heir of his English cousins, who used to say: "The wogs begin at Calais." He demands better service than they give each other. He can’t understand why they can’t seem to do things the way they do back in the states…can’t pick up the trash…and can’t be trusted. Why do they drive old cars? Why don’t they have more ATM machines? How come they are always taking passport numbers and demanding papers; don’t they know that freedom is the way to go?
He is convinced, too, that the whole world yearns to be just like him, and that it is just a matter of time before they succeed. This conceit is so deeply felt he is not even aware of it. Besides, he sees more evidence of it every time he takes a trip abroad. He leaves the airport in London and sees McDonald’s along the way. He reads the classified in Paris and sees apartments advertising their "American style" kitchens. He picks up a menu in Buenos Aires and finds he can order an American breakfast. He goes to the Far East and finds familiar brands everywhere he looks (he may not even realize that they are made there…not in America).
He judges the quality of everything he sees by how American it is. Is the toilet paper soft…just like it is at home? Do the shops take credit cards, just like they do in Flagstaff? Are the roads paved as well as they are in Michigan?
If not, they soon will be, he tells himself; for he is convinced that the whole world is going his way. At least, that is what we thought on this trip to Argentina. The country is big, beautiful and cheap. Surely, Americans will want to live here. The Atlantic coast of Argentina is just like the Carolinas…but empty. The far northeast is like Utah or Montana…but at a third the price. And down in San Martin, isn’t it just like Aspen…as it was in 1965?
But won’t Americans find Argentina too, well, foreign? Not at all, down on the pampas they are becoming just like us back on the Great Plains. Soon, we will be able to live as comfortably in Patagonia as in Pennsylvania.
At the peak of an imperial cycle, the imperialists always seem to delude themselves. Looking at the world, they see neither a glass half empty nor one half full, but one spilling over. The Romans spread out all over their empire, building villas in France, in England, and out on the banks of the Black Sea. The Moorish empire reached its peak in the eighth century. Then, too, they were making plans for new mosques in Poitiers, just before they were chased from the country. And all over Africa, you see the ruined houses of the European imperialists who colonized the country. "I used to have a farm in Africa," they still tell people.
The trouble with being on the top of the world is that the world turns, and there is nowhere to go but down. In national economies and markets, as in the movement of the planets, there are small cycles and big cycles. The world turns, and also revolves around the sun. Day follows night; winter follows summer. National pride is self-correcting.
Argentina recently had a dark night of crisis…one of many in a long season of bad weather. The 1930s brought Peronism – a popular brand of socialism – to the country. The nation’s politicians shot the country in the foot, and then in the leg. By the 1980s, they had the gun to their heads – with inflation running at 1,000 percent, per year and war with the English. One problem lead to another and in the 1990s, intending to stop inflation, the Argentine currency was pegged to the dollar, but at too high a rate. The economy collapsed again; much of the middle class was ruined.
But in 2002, the sun peeked over the horizon and began what might be not only a new day, but a new season. Since the second quarter of 2002, the country has seen 12 consecutive quarters of growth, with GDP shooting up at twice the rate of America’s "recovery." We put the word in quotes to signal that we think there is something fishy about it. America’s dawning prosperity came without pain or sacrifice. Americans never stopped borrowing and spending in the recession of ’01–’02; they merely borrowed and spent even more coming out of it. See, they said to the world, our economy can’t be beat. Because, god*mmit, we’re Americans. But the recovery was phony. There was never much of a correction to recover from. So, when the time for an upturn came, all consumers could do was to borrow more money and go further into debt. They had never stopped spending, so they had no money saved.
South of the Rio Plata, on the other hand, the recovery seems to be real. Here is an economy that seems to be getting back on its feet, after a long spell on the sickbed. The recovery is driven not by debt, but by real savings…and not by consumption, but business investment, which rose recently at rates as high as 11.2% per quarter. Consumers couldn’t lead a recovery in Argentina even if they wanted to. Who would be foolish enough to lend them money? Credit card debt is extremely limited. And if you want to buy property down here, we were told, "you have to pay cash." Or, if you have good credit, you may get a bank willing to finance half of the price.
Not surprisingly, real estate is not very expensive. Apartments on Buenos Aires’ most fashionable streets sell for about a quarter of what they would fetch in Paris, London or New York. Out in the boondocks, prices fall even further. How much would you expect to pay for a vineyard/winery in the Napa Valley? Out in Salta Province, one is available at a price that must bring tears to the eyes of a California vintner: 1,000 acres of mature vines for only $1.5 million. And there, he would pay only $10 a day for a good worker, and only $2.50 for a steak dinner.
North of the Rio Grande a homebuyer needs only a pulse. He will pay $25 for dinner, and at least $50 a day for labor. His $1.5 million will barely buy a trailer.
In both Argentina and in the United States, there is a light on the horizon. But on the pampas is the light of dawn. In America, alas, it is probably evening stretched out across the sky…like an emperor’s corpse on a viewing table.