South American Real Estate News

Lifestyle House Hunting in Argentina could get you a bargain

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The housing market is faltering after a sharp decline in the Argentine peso in many of the prime lifestyle locations in Argentina

A good example is what is happening in Mendoza. Luján de Cuyo, is a small town in the western part of the province, a wine-producing region celebrated for its abundant Malbec grapes.

It sits at the eastern foot of the Andes Mountains, in the high-altitude vineyards of the upper Mendoza valley. The area is known for its Malbec but produces other high-quality varieties of wine as well.  The center of the city of Mendoza is only about 25 minutes away. The mountainous area also offers hiking, horseback riding, boating, and skiing. Governor Francisco Gabrielli International Airport, in Mendoza, is only a 40-minute drive. In short a wine lovers paradise.

Like the rest of the housing market in Argentina, Mendoza’s real estate has been “strongly impacted” by the country’s recent currency devaluation.

In August, Argentina’s central bank raised its benchmark interest rate to 60 percent in an effort to stanch a sharp decline in the value of the peso. The devaluation may have helped Mendoza’s regional wine export business, but the benefits were “neutralized by the inflation that made costs go up.”

Prices in the past few months have dropped 10 to 20% and are still weak.

Investors, typically the most common buyers for lifestyle vineyards, are now “reluctant to invest in Argentina,” and many foreigners are selling their assets. There are a lot of properties for sale, but too few buyers.

At Algodon Wine Estates, a wellness, golf, tennis and equestrian resort with coveted backyard vineyards, only six or seven houses have been finished in phase one of development, out of approximately 97 lots that range from half an acre to seven acres and start at $120,000.

The most popular locations with foreign and luxury buyers are “without a doubt” private gated communities with “beautiful amenities, with 24/7 security.

Condominiums are plentiful and popular in the region. “They are widely requested by an ascending socioeconomic class, particularly with buyers between 35 and 45 seeking round-the-clock private security and a “premium lifestyle.” Units of about 120 m2 to 130 m2 sell for USD 280,000 to USD 300,000.

The Opportunity

For investors who like to look for countercyclical opportunities, the landscape has never looked better. The upcoming elections have created an element of nervousness in the market caused by the what if factor.

The fear is that the previous Peronist/K  government will return to power and drive the countries path again towards Venezuela as it has done in the past.

My personal view having lived in Argentina for over 15 years that this is most unlikely to happen. Argentines whilst unhappy with the pain of the current recession do not want to go back to the past.

Many if not most of the Peronist/K politicians involved in the past corruption scandals are now behind bars and many of the weakened important institutions have been strengthened in recent years.

In Mendoza, foreign lifestyle buyers are mostly from Brazil and Chile, with some North Americans in the mix.

The Europeans and Americans who do buy in the area usually prefer “fincas” — estates or rural properties.

Damian Tabakman, dean of the EN Real Estate School of Business in Buenos Aires, was quoted as saying that several gated real estate developments with vineyards previously drew foreigners to Mendoza, but “nowadays, because of the local economic situation, only Argentines are the buyers there now.”

Noting that Argentina’s economy has historically cycled through booms and busts, however, Mr. Tabakman expressed optimism about the future: “I hope that Mendoza will be able to have foreign buyers again, from Europe and the U.S.A., because projects there are similar to what you may find in Napa Valley.”

Dollars, not Argentine pesos, are used for pricing and transactions in Argentina.

Among the requirements for foreign buyers are “a corresponding visa, an ID provided by the government of Argentina and an address certificate provided by the province of Mendoza.

Argentina places some restrictions on properties close to a national border or on a lake. In Mendoza, buying properties west of Ruta 40, a highway that runs the length of Argentina and bisects the city of Mendoza, requires authorization from the Ministry of the Interior.

Closing or Settlement costs run close to 10 percent of the sale price; that includes a 2.5 percent stamp tax and about 4 percent for notary fees and deed expenses. The buyer and seller each pay a 3 percent commission to the real estate brokers.

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.

www.gatewaytosouthamerica.com

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About Gateway to South America

Gateway to South America was established in 2006 as a single office in Buenos Aires. The company has since expanded into a vibrant regional network, servicing the Southern Cone clients in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay with professional real estate marketing services. If you enjoy reading our news site please share it on your social media below.

Post available in: English

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