Real Estate News, Reviews and Investment
Article: Impending currency depreciation and inept economic management weigh down Argentinean property markets.
The aggressive intervention by the government in the economy has caused many experts to revise GDP growth forecasts downwards and to expect a significant devaluation of the peso sometime in 2013. A sharp deceleration in the construction sector is expected, with growth dropping from 9% in 2011 to 2.8% in 2012.
In Argentina, it appears that political opinion is turning against President Cristina Fernandez de Kirchner, her government and policies, and it is more than likely that seats would be lost in the next election.
The possibility of a large loss – if the opposition exploits the economic situation effectively – could shackle the government and play a decisive role in the 2015 presidential election.
Real estate activity in 2012 in Argentina
2012 has been the worst year in the real-estate market since 2002.
Argentinians have become accustomed to crisis and responding swiftly. The obvious solution to the lack of supply of dollars has been to denominate real-estate transactions in Argentine pesos – and this has happened in a big way with listings before construction.
However, the high rate of inflation would require adjustment with the help of an acceptable index.
Affordable property in Argentina
Some new numbers have become available that provide information on affordable real estate outside Buenos Aires. The nationwide survey concentrated on the average price per square foot for existing 2 and 3 room houses in cities in the interior.
The bottom line
The Argentine government is compelling insurance companies to invest in infrastructure and this raises further doubt about the business environment in the country. The move will however inject liquidity into a sector that is badly strapped for cash.
The government has made a number of policy adjustments to boost investment in infrastructure, which should be positive for the real-estate market. I believe that Argentina is best avoided for the moment as an investment destination until there is clarity about the political and economic situation.