In Buenos Aires, there is a lot of Residential Real Estate for sale, but few buyers: there are 163,000 Buenos Aires apartments on sale and less than 2% of the operations are completed
Although prices have fallen 34.7% in three years, according to one report, sales have improved little. San Telmo, San Cristóbal and Mataderos are among the neighbourhoods where prices fell the most
The real estate stock is above 163,000 units, and only 1.57% of what is offered is sold. The excess of properties is so great that at the current level of demand, it takes 6 years to absorb all the real estate for sale in Buenos Aires when the historical average was two years.
This was confirmed by Real Estate Radar, a report that specified that the decrease in prices from 2019 to date is 34.7% (data obtained from Real Estate Report), but there are neighbourhoods where it touches 40%, such as San Cristóbal, San Nicolás, Villa Crespo and Boedo, always in used units. Valuations also fell a lot in Retiro, Monserrat, Mataderos, Constitución and Parque Avellaneda, according to experts.
“When we analyze the dynamics of prices at the neighbourhood level since the beginning of the economic crisis aggravated by the pandemic, the fall was quite homogeneous, except in the neighbourhoods where the adjustment was more pronounced. However, the speed of the adjustment during the crisis was not the same in all the neighbourhoods, such as Recoleta, which adjusted more quickly and which today already shows some stability”, he explained to Infobae Fabián Achával, CEO of the company that makes Real Estate Radar.
“The speed of the adjustment of the values for the sale of apartments during the crisis was not the same in all neighbourhoods, such as Recoleta, which adjusted more quickly and which today show some stability” (Achával)
Closing prices, the level of figures where the supply and demand for real estate meet, accumulate a drop of 29.3% since the first quarter of 2019. The decrease was 6.4% when comparing the 2021 average to the year’s first quarter (see below).
According to the report, the process of sustained decline that was verified in the publication values is mainly based on 4 factors: 1) the record in the oversupply of real estate; 2) the cost of construction in dollars (USD 729/m2 ), which rose sharply in April and May but continue to be below the historical average; 3) the drop in wages in dollars, which is still at values that limit purchasing power in Buenos Aires, and 4) the low gross rent profitability, which in April was 3.74% per year and is still far from the expectations of owners and investors.
Why do they keep going down?
From the real estate industry, they do not clearly perceive if the values are touching their floor since the price dynamics are still heterogeneous.
Ezequiel Wierzba, Click Aparts Founding Partner, told Infobae that “the first factor that affects the drop in prices is the socio-economic context of the country; Added to this is that there is a wide range of apartments for sale, so buyers have a wide range to choose from and negotiate values.”
In Buenos Aires, properties are sold in “ticket” dollars in cash. The almost complete lack of mortgage loans, the stocks on the dollar that is still in force, the exchange rate run of recent days, and the macroeconomic and political upheaval that is constituted by uncertainty, motivate and they accelerate the decline in property prices mainly because that uncertainty is transferred to people who decide to wait to buy.
“By not finding apparent flats, a stagnation in sales is generated, and the market is mixed: there are those who really want to sell and those who only publish to test the demand. In this context, it is natural that those who need to sell their property agree to make adjustments to the list prices in order to reach the meeting point with a possible buyer”, explained Diego Lo Nigro, from Grupo TGR.
Improvement in writings and what can happen in the future
The latest written data shows a recovery compared to 2020. In May 2022 (last surveyed by the College of Notaries of Buenos Aires) 2,866 purchase and sale operations were carried out in the city, 50.8% more than the same month of 2021. With a sign of improvement, they are still historically low numbers for the activity, which until 2017, averaged 5,000 deeds per month.
“Although in recent times we have had a slight recovery in terms of the number of operations carried out, we understand that the rise in the dollar is going to impact the market since both buyers and owners enter a stage of speculation until later stabilizes and the upward curve that we had begun to cross a few months ago is resumed. In Argentina, these ups and downs are common, and those of us who have been in the real estate market for so long know that they are moments that appear and then get back on track. At least we hope that this happens, ”said Wierzba.
What increases the number of operations in times of economic-political upheaval is a historical trend of the market. As the dollar is a refuge of value and in a similar situation, two of the players in the sector always proceeded in the same way: the buyer clings to the dollars and tends to delay or give up the purchase; for his part the real estate broker withdraws and hides behind the assumption that buyers are not going to make decisions at a time like this.
Cristian Guerin, from the TGR Group, stated that “the second possibility comes from the proactive and trained real estate broker who redoubles his efforts to compensate for the loss that could eventually be generated, focusing on the search for market opportunities (many arise in these contexts) and bringing them closer to potential buyers, who from that impulse take advantage of their holdings in foreign currency to acquire real estate, which in another context, they would not be able to acquire .”
By background, the second semester is the most active in terms of closing operations. Although it will be necessary to see how the course will continue after the measures promoted by Silvina Batakis, the new Minister of Economy.
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