What is happening in Argentina’s economy ? Is it a buy or a sell ?
Last week, the official Argentina’s economy exchange rate – went from 6.81 to 8.03 to the USD in a few days. The “blue” or black market rate (a fact of life in any controlled exchange market) was all over the place, probably going from around ARP 9.50 to 13 in the same period. In short a severe devaluation.
Many existing and potential investors are looking to see where this is all heading.
For foreign tourists we have an obvious response, Argentina has suddenly got cheaper – and that’s with the official rate, not the blue rate.
Existing investors are wondering how this will affect their assets. Of course, this will depend on the types of assets. If they have a export-related as a underlying source of revenue, like for example, farming, vineyards, horticulture it means that they will be more competitive as increased peso revenues from sales and a delay in the catch-up of inflation of costs. This means their assets will probably improve in viability, profitability or price measured in US dollars.
Real estate values depends very much on which category they are in as pricing is in US dollars which is the currency of reference in most South American countries. Also, the system is un leveraged in Argentina, with local mortgage loans representing less than 2% of GDP which is unique in the region where some property has become overpriced and in cases over leveraged. ie Punta del Este in Uruguay.
We do not expect a significant fall in real estate prices in USD terms from current levels which in some cases have already fallen considerably.
The current economic conditions make for lower building costs down from $1,300m2 US or more to around $850m2 UD. This is something that foreigners thinking of building would do well to keep in mind.
In other words Argentina becomes “cheap” again.
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. #adp02