Argentine farmland sales are active but selective, which is a surprise in the middle of the electoral year
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Operators in the sector highlighted strong interest from investors who envision a political change starting in December of this year.
There are strong expectations of a change of political signs with the next elections to generate strong movements in economic activities. The countryside is no stranger to this; particularly, the rural real estate market is in an “active, but selective” mode. This is how sources from the sector summarize it they are optimistic when contemplating the present and future in the purchase and sale of fields.
For Juan José Madero, former president of the Argentine Chamber of Rural Real Estate (CAIR) and director of the Campos Division of LJ Ramos Real Estate Brokers, the current situation in the sector “is very different, because historically as elections approach, it slows down activity”.
“But this year, there is a perfect rhythm, where there are farms for sale being offered with a decision to sell and genuine investors who are not browsing, finding out, but rather there is a firm determination to buy,” he stressed.
Analyzing the current context, he recalled a similar situation before Mauricio Macri won the elections: “It was inferred that the arrival of a change in the Government would bring more rationality, more normality; Today we are in a similar scenario, only with a much more complicated economic outlook”.
For Madero, you must enter the business in difficult times, which is a tough economic time in the country. “Election year, with a confusing political situation, loaded with uncertainty, is a good opportunity because buying land is a long-term investment. And that is what those who seek to invest see.”
Coincidentally, Mariano Maurette, head of Campos de Álzaga, Unzué y Cía., also views this market as active in an election year “with surprise.”
“There are many interested people, many inquiries, even a small rebound in values is hinting. In addition to the possible change in political colour, another explanation is that the financial vulnerability unleashed in the world recently, where several banks have gone bankrupt, makes investors panic. It should also be added that the fields that had fallen in value last year, that investors saw only as a way to diversify; then they settled in prices and began to give profitability”, he remarked.
“For buyers, this potential change of government is an incentive because the current administration has a hostile view of agriculture, sees the countryside as an enemy and persecutes it,” he added.
After a historic drop of 20% on average after the STEP in August 2019, little by little, the values of the fields began to rebuild, and today they are stabilized. “2021 was the floor where, for example, one hectare in the core zone dropped to US$12,500. Today, to get out of pesos and position itself in meat and grains, prices per hectare in the agricultural region returned to US$16,000. The mirror of those lands is the corn belt of the United States, where they are quoted at 50,000 dollars,” Madero said.
For Roberto Frenkel Santillán, president of Bullrich Campos, The reason for this phenomenon is that there are many pesos in the market, added to the expectation of sowing an official dollar and selling a free dollar with a new government. Also, crop numbers are good.
“Everyone thinks that the country’s situation can be recovered quickly, opening up the economy and generating foreign currency through the countryside. It is presumed there will be an abrupt 180º change, not gradual as Macri tried to do. That is the feeling. If the opposite happens and this government continues with its policy, the buyers of the fields will feel they have shot themselves in the foot,” he said.
In this sense, Madero stressed that if an investor finds what he is looking for, he moves forward. “In addition to looking at the establishment’s folder, today there are tours of fields that are more than last year,” he described.
However, he assured that the investor is selective, where the strong demand is in 100% agricultural fields, that is to say, the core and pampas area and that segment is the scarce one: “There is a lot of demand for agricultural land, but that type of field is not offered so much in this market”.
Finally, this encouraging and optimistic scenario still needs to take one last step: closing the sales. Although the investment ticket went from 2 million dollars between last year and the current one to more than US$5 million, Due to the stocks, a lot of engineering is needed to close the operations. “They inevitably fall behind or fall: the stocks is the mother of all evils to operate”, Madero stressed.
For Maurette, another issue is financing five-year operations, as they were usually carried out. Today “it is a risk”, and many landowners are reluctant to accept this methodology and prefer to protect their hectares within their heritage by renting it and not selling it.
“The owners of the fields are afraid to embark on a long-term purchase and sale operation in dollars, with the uncertainty that there will be a change against them in the laws and, above all if they will have the dollars from their sold field with them in the future,” he closed.
Source: The Nacion Mariana Reinke
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