The Market, Since late 2004, the sales property market was stable and kept the same prices until the second quarter of 2005. We started seeing a slow but steady increase in property prices. Rental properties in the lower segments are still scarce, so prices have recovered substantially during the last year. We do not foresee any more significant increase in rental values, since workers have not had that much of a salary improvement.
As it is customary during December, January and February, specially in the sales market, the demand was clearly met by the existing offer. Once Argentines came back from their summer holidays, we noticed strong demand for lots in gated communities and country clubs, and 15% to 20% hikes were not unusual in the best locations. Recoleta and northern suburbs property had an approximate 10% price increase during the last 9 months. We foresee stable values, with a slow increase, but this will be slow since mortgages, although widely available for locals (not available for non residents), and with better rates than prior to the devaluation, are difficult to qualify for. Some areas like Recoleta and Puerto Madero have already reached pre devaluation values, although still have some room (about 15%)to go before reaching 1997 high values.
Regarding investment opportunities, we see lots of opportunity in areas in the south of the city of Buenos Aires, like San Telmo and Barracas. In these areas, the demand is strenghthening, and due to its great proximity to all the better areas, they provide a great alternative. The other appeal these southern areas have is that there are plenty of character buildings, which are in the process of being renovated. One such property is the Barracas Central project, where the biggest local designers exhibit will take place early October. Prices here range US$ 65-75 /sqft, although one must allow 20 US$/sqft for refinishing. The city of Buenos Aires is taking an active role to improve the whole area.
Some other areas that are drawing attention are Patagonia, the Mendoza Wine region and Punta del Este in Uruguay. Patagonia is a brand in itself; Mendoza concentrates the best regions for wineries and vineyards, with prices starting as low as 75,000 US$ for a 30 to 40 acre property. And Punta del Este has the best seaside lifestyle in South America, with a very busy high season, where one can get a 5-7% return on just two months (January and February), and then one has the property to enjoy the rest of the year.
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