“Economic uncertainty in Argentina affects Land Prices.” Last month the rural real estate market index fell 12.21%
According to the Argentine Chamber of Rural Real Estate Companies (CAIR), the December index was 21.52 points. The collapse was due to uncertainty over the bill, where the government sought to repeal the law limiting foreign land purchases.
The Argentine Chamber of Rural Real Estate Companies (CAIR) reported that last December, there was a drop of 12.21 points compared to last November in the evolution of the land market. The slowdown occurred due to the general uncertainty in the country, the change of Government and the proposal in the Omnibus bill, which seeks to repeal the regulations that limit the purchase of land by foreigners. Strictly speaking, last month’s index was 21.52 points.
Among some points that motivated this collapse, in that chamber, they indicated that “The elections began to mark the seasonality of summer in advance.” Furthermore, they highlighted that “Economic uncertainty was stronger than the positive market expectations.” In that sense, José María Bauzá, The President of CAIR maintained that “investors are surely observing the development of the measures proposed by the Executive Branch and their approval by the legislative branch (chambers). From this, they will have some certainties.”
The arguments that converge in the report show that “ the activity is very pending what will happen with the DNU, which is under analysis and discussion .”
It is worth remembering that through the mega decree in Congress, the Government will seek to repeal the law that limits the purchase of land by foreigners. In 2011, with Kirchnerism in power, Law 26,737, called Protection of the National Domain over the Property, Possession or Tenure of Land, was passed. It limited the amount of land a foreigner could acquire to 1,000 hectares in the core zone, and then the different provinces drew up their own equivalences.
As mentioned, at that time, the excuse for passing the law was that there was a significant territory in the country in foreign hands. It was stated that they could not have more than 15% of the country’s rural lands. However, later, the data reflected something else: that the “foreigned” surface was, with 16,253,279 hectares, 6.09%. That is, over a total rural area of 266,707,361 hectares. By 2020, the level of foreignization had fallen to 5%.
Due to this law, an active rural real estate market was losing its lustre. The values of the fields in the best agricultural areas of Argentina, such as in the north of Buenos Aires, were detaching from the prices in the United States. Amid this law, plus the exchange rate, while prices stagnated in the US, they continued to rise and even rose more than double in the country.
The Rural Real Estate Market Activity Index (InCAIR) is a monthly index that reflects market activity. In this sense, they pointed out that the base of the InCAIR is 97.5 points, historically corresponding to its maximum peak recorded in September 2011.
The index is made according to the number of advertisements for fields for sale or rent in the main national print media. In addition, with the number of advertisers on the CAIR website, rural operations carried out in the period analyzed, searches and queries made by investors on the CAIR website, and the number of commercial advertisements in the main squares in the country’s interior. In that chamber, they explain that 100 points are taken as the maximum reference base, corresponding to the peak of maximum historical activity. It does not reflect prices/values, only market activity.
Source: La Nacion