Is Argentine property a buy ?

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Is Argentine property a buy ?

Argentina is now one of the cheapest markets in the world. With good reason, Argentina has been out of favor for ten years, due to its current and past incompetent fiscal management and erratic investment policies. For some time there has been a concern that it was following in the footsteps of the failed state of Venezuela previously led by the deceased dictator Hugo Chavez. However, there a large differences between Argentina and the Central American Countries have followed the Venezuelan model.

1. Argentina does not have an Army, Airforce or Navy. The current government destroyed them.
2. Argentina does not rely on one export to pay its bills like Venezuela has with oil for example.
3. Argentina has a well-educated middle class.
4. Argentina have a love for democracy which has proven resilient despite severe testing by the current government.
5. Argentines have a free press. Watch TV or read the El Clarin and you believe this.
6. Argentina has a good infrastructure that is under utilized ie the airports only work to part capacity.
7. Argentina has a very skilled agricultural skill base and support industries.
8. Argentina has some of the best farm-land in the world.
9. Argentina is European in its heritage and expectations.
10,Argentina has some of the most exciting and spectacular scenery in the world.
11.Argentina has some of the large oil reserves in the world.
12.Argentina is a Christian country with strong family and moral values. No ISIS in this part of the world

Just as important the country has manageable debt,  despite the frightening headlines, at 47% of GDP versus the U.S.’s 100%. Meanwhile, a big political transition in 2015 will be the catalyst for positive change.

It it all depends on the changes when Cristina Kirchner’s populist government steps down in October 2015 or before. Whoever assumes the presidency will take on a number of issues to right the sinking ship. Among them: Addressing rampant inflation which is currently around 45%; restoring credibility in the international debt markets, and cutting overly generous state subsidies. To date all the “more moderate” candidates all are making noises that will move the country forward, especially as the public has tired of populism, corruption and straight out incompetence. Opinion polls suggest the Kirchner presidency is at an all-time low.

In other words, the situation has been so bad for so long, even a modest improvement under a new government will create a rally in values. Prices might have found their floor. You can buy now at such cheap levels right now, that even in a worst case scenario there is strong downside protection. However if we’re right, there is three to four times upside,  George Soros and Dan Loeb of ThirdPoint seem to agree, as both recently made big bets on Argentina future.

We recommend to clients that they ramp up exposure to Argentina before the 2015 election.  The safest way to do this is to get exposure to farm land or residential property in the popular regions. ie Buenos Aires branded suburbs like Recoleta and the Cuyo Valley in Mendoza. This way you will leverage to the upside.

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.

www.gatewaytosouthamerica.com

Post available in: English