These residential areas of Buenos Aires are in a boom, and that will precipitate a change in the property cycle of the local real estate market
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The return to the office of workers cooled the demand for green, and the southern area of the city of Buenos Aires was the only one that registered record sales.
The real estate market was going through one of the worst stages in terms of the low number of operations but, paradoxically, construction is experiencing a construction boom in the City of Buenos Aires and its surroundings. This phenomenon has its explanation: developers want to take advantage of a construction cost, in US dollars, that is at the lowest level in history.
In numbers, between May 2019 and this year, it was around USD 603 per square meter for projects under construction of a building between party walls on a lot with 8.70 meters of frontage. That value is 40% lower than that of the previous three years -that is, 2016, 2017 and 2018-, according to Real Estate Report data. It is important to clarify that the characteristics of the undertaking mark different costs: this type of project is not the same as a larger one with amenities.
Still, there is no doubt that today, in dollars, building new is a good business to be in. However, with the strong increases in pesos, the question that has been hovering over the sector for months is how and why it continues to be built in a market other demand is low. Perhaps one of the reasons is that the developers anticipated a post-pandemic phenomenon: the return to the city.
It was Eduardo Constantini, creator of Nordelta, who anticipated at the Real Estate event organized by El Nacion this change in trend: “In recent weeks, more operations were closed in our projects in the city than in the ventures in the north: Nordelta (Tigre) and Puertos (Escobar) where in the last two years, we sold 2,000 plots of land for USD 400 million”.. The employer refers to two months ago, he sold 10 units of his top venture, Oceana Puerto Madero, in 30 days; a project where the square meter is sold for USD 5,900 and already has 70% of the apartments placed to final consumers, but also to multinational companies that seek to “refuge” or “dollarize” the surplus pesos.
The same trend was also observed in a USD 67 million investment project located on Huergo Avenue, in which Consultatio together with the construction company Criba put their chips: the number of sales is above 50% of the departments that the undertaking has when there are still more than two years to deliver it. And, in the last month, they registered a high sales rate, with more than 30 apartments sold.
Another advance made by Costantini with José Del Río, secretary general of LA NACION’s Editorial Office at the Real Estate Summit, is that the prices of residential units in the Federal Capital hit the floor, “unless the economy generates an exacerbated rise in the dollar that leads to a hyper, something I really do not see”, he clarified.
But the data that “kicked the market aboard” and that perfectly reflects the change in trend, and to which LA NACION had exclusive access, is that the developer that created the Quartier brand registered a sales boom in its Quartier Del Bajo project, located on Huergo Avenue on the edge of San Telmo with Puerto Madero. “On Monday, August 8, we went to the market to sell the second tower and in just two weeks we sold 132 units. Today there are less than 100 apartments available out of the 800 between the two buildings”, details Carlos Spina, a partner at Argencons, to refer to this change in the cycle that market leaders are talking about.
Spina in the midst of a pandemic had launched the first tower of that project for sale. Today it goes on the market at the same value as a year and a half ago: $2,500/m² and the subscription of the units is carried out through the cost trust modality, with a schedule of contributions that start with an advance amount of US$8,588 and another in pesos of $19 million, plus 25 instalments in pesos for a total of $17 million. . The price of an average unit is USD 125,000, details the developer.
These numbers show that the company that created the Quartier brand is one of those that seems to have found the formula to sell when no one buys.
So, the question is how can you analyze the sales success of a project in a context like the current one, when monthly instalments (Quotas) reach values close to $700,000? As Spina points out to LA NACION, East boom of sales finds its explanation in various factors: a contained demand, the need to “locate pesos” in a context of exchange rate adjustment and the proximity to other category projects, like the Huergo 475 tower, where the square meter is sold at USD 3,500/m².
What is the profile of the customer who buys today? Spina warns that there is a kind of mix between end users. “There are those who buy a property for their children, those who seek to get rid of pesos and take it for granted thinking about the future dollar and, especially, rental investors who seek to take advantage of the temporary rental boom, which in this type of buildings quadruples and even quintuples the value of a traditional rent, a little as a result of the rental law and the exchange rate gap, ”explains the developer.
The urban area of success in sales
Added to the variables of the economic situation are the paradigm shifts in urban life generated by the pandemic and the search for new horizons. So much so that one of the maxims that is repeated the most among referents in the sector is that the key is not only in the construction of the building, but also success also involves “generating zones”.
How to sell when no one buys is the question that should be answered by developers who dare to launch projects, and much more by the daring who dare to plant a flag in underdeveloped areas such as the area of Huergo Avenue. In fact, the concept of “creating neighbourhoods” was one of the topics on the agenda at the annual LA NACION sector event in early August.
The “Huergo” phenomenon has its explanation: it is an area of the city that has benefited from the development of Paseo del Bajo, where the two emblematic developments that sell the most apartments in this recessive scenario are being built. Huergo 475, the Consultatio y Criba project and the Quartier del Bajo project, owned by Argencons add up to more than USD 200 million in investments. The latter is a USD 160 million investment project: two 36-story twin luxury towers, with one, two and three-room units, with surfaces ranging from 37m² to 86m², with views of the City and the river , where Property prices are almost half what they are in Puerto Madero, with sales values around USD 2,500/m², compared to almost USD 6,000/m² in the most expensive neighbourhood in the city, located just a few meters across the canals.
While Huergo 475 will be a 38-story tower that seeks to replicate some aspects of the Tigre gated community format that proposes “new ways of living in today’s world.” The project has 1,500 m² for common areas designed to promote social gatherings: with amenities and a square of 2800 m². “The best views and spaces of the building are democratized. In other words, whoever buys 30 meters on the first floor can go for a run on the terrace of the sixth floor, study or work on the 11th floor, share a meal on the 36th floor, or take a bath and sunbathe in the pool on the 38th floor. explains Gonzalo de la Serna, CEO of Consultatio. who details that the value per square meter averages US$3,350 and clarifies that when they launched, in the midst of a pandemic, it cost USD 2,700/m2.
Another novelty that the project incorporates has to do with the public space that the tower incorporates into the neighbourhood. It is a square of 2,800 square meters, which for its creators functions as a kind of ‘crowning’ of a series of parks that unfold from the CCK to the tower. The idea is that these green spaces, along with a series of commercial premises on the ground floor, are open to the public to connect residents with the whole of society and “activate” life on the street.
In short, those who market properties in the Huergo corridor recognize that “there is a revaluation of the area benefited by the Paseo del Bajo. The square meter six years ago was close to USD 1,900 and today it ranges between USD 2,500 and USD 4,500 for the highest floors”.
The area went from being an area of trucks, heavy traffic and container walls to becoming one of the most coveted corners of the City of Buenos Aires for real estate developers. From infrastructure works such as the Metrobus, and the renovation of the Parque del Bajo -which demanded more than USD 650 million- this new pole emerged at the southern head of the route that aims to attract new residents and tourists. In addition, it promises to be an attractive investment for temporary rental with rents that could exceed 5 per cent per year in dollars.
“The change of area is a fact that is happening in Huergo, which began to be generated with the Paseo del Bajo and that was adding important projects, first with Quartier Madero Urbano, and now with the Consultatio tower and the two in Quartier del Bajo. offering almost 2000 new units. When we started our first Quartier in the area-a development located in Azopardo and Independencia, the view was a wall of containers and trucks. Today with the Paseo del Bajo, the landscape is completely different, with the dams and the river in sight”, indicates Spina who has 270,000 square meters under construction, a record figure in the developer’s history. Currently, it is advancing with two other projects: Distrito Quartier in the Retiro area and a condominium in the Bajo Belgrano area.
The location with privileged views of Puerto Madero is another of the strengths of the “new neighbourhood” and another of the reasons for the success of sales, according to the developer. “It has very good views from very low floors to Puerto Madero. From the third floor they already have a panoramic view that is usually seen on the highest floors”, he explains.
A striking fact is about the age segment of the buyer. “We have an interesting group of buyers under 35, many of whom are making their first real estate investment,” he adds.
Regarding the demand, the data of the market in general is that the three-room apartments were the most sold during the first three months of the year and are positioned as the most demanded typology. The data that emerges from the Survey of Real Estate Operations (ROI) carried out jointly by several real estate companies. However, in the case of the sales registered by Argencons, the developer points out that they register a balance between the units offered, which correspond to studio apartments, and one and two-bedroom units.
“Because of the variety of buyer profiles. Studio apartments, for example, are highly sought after for students, in an area that has several universities nearby. First, the sale of apartments overlooking the river skyrocketed. It also has a very open view on all fronts, because the distance between the towers is very wide and you have views of the City that are also very beautiful”, concludes Spina, referring to the semi-public square located in the centre of both towers. , which will have commercial premises on the ground floors.
Source: La Nacion
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Post available in: English Español