South American Real Estate News

Opportunity: how many fewer US dollars are needed now to build a house in a gated community in Buenos Aires than even last month

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In dollars, the square meter is less than US$1,500, but the devaluation is not enough and the costs in pesos skyrocket.

The financial instability that has shaken the economy in the last two months opened a new window of opportunity for savers in dollars from a new drop in the cost of construction: in July, building a house in a country house fell to less than USD 1,500/ m².

However, despite the continuous devaluations, the strong inflation in pesos in construction means that costs in US currency are maintained and are not as attractive as the minimum level that generated a construction boom in 2020.

According to a report by Reporte Inmobiliario, the cost of building a category home premium in a country or private neighbourhood approached AR $442,000/m² at the end of July this year, with a monthly increase of 17.49%. This strong rise was due to inflation plus devaluation, which had a strong impact on materials.

“Despite the strong rise in the blue dollar, costs did not fall as much because everything increases very quickly in pesos,” says Germán Gómez Picasso, head of Real Estate Report.

For a house of approximately 315m2, the current construction cost is USD 25,000 less than in June.

After a sharp drop in costs measured in dollars in mid-2020 due to devaluation, –in May 2020 it reached the historical minimum with USD 776.23/m², amid a pandemic- the cost began to rise gradually and had a few months of stability from March 2021 to January 2022. From February to May of this year, costs began to skyrocket in dollar currency, causing savers to practically lose all the benefit of the strong devaluations. During the last seven months, the dollar kept almost the same price, with strong increases in pesos.

At the end of June, the dollar rebounded again, again generating a drop in costs measured in that currency, falling to USD 1,492.41. With the blue dollar of the last days of July ($296), the cost in foreign currency fell again from USD 1,764 to levels of four months ago, when it was USD 1,463/m² in March.

Beyond the drop in costs in dollar bills, which was important in the last two months, the graph clearly shows that with a dollar of $296, it is unthinkable to return to boom That was lived in private works in the second semester of 2020; This is because the increase in costs in pesos is too rapid and rapidly liquefies the defect of devaluation if it does not accompany the increases in pesos on a daily basis.

The measurement carried out by the Real Estate Report is based on a house with a very good level of finishes, on two floors and with an area of 315 m², which reaches a cost that is close to $139,152,411, which translates to a total of USD 470,109 which, measured by the price of the marginal foreign exchange market, implies about USD 25,000 less than in June.

However, the cost may vary depending on the quality of materials, the time of purchase and the time of the work at the end of July.

Source: La Nacion

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