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Last Updated: Aug 22, 2016




Argentina’s property market is now rapidly emerging from a prolonged and painful crisis.

The country is still struggling with inflation, and property buyers still find banks extremely reluctant to grant mortgages, but the new government is injecting optimism into the real estate market. Three months after being sworn in, President Mauricio Macri has already devalued the currency and lifted tight exchange controls – largely blamed for Argentina’s property market debacle.

House prices in Buenos Aires rose 14.5% in May 2016 compared to May 2015.

Looking at average prices in upscale Buenos Aires neighbourhoods during the year to May 2016:

The average price of new dwellings rose:
  • 5.2% in Palermo
  • 4.9% in Recolata
  • 6.7% in Belgrano
  • 7.1% in Núñez

The average price of old dwellings rose:
  • 14.5% in Palermo
  • 9.9% in Recolata
  • 11.3% in Belgrano
  • 12.0% in Núñez

The new government has ushered in a dramatic recovery. A little more than four months since the change of government, agents have seen a surge in the number of requests for property quotes. “For the first time in years, homeowners want to exchange properties instead of sitting on their assets,” says Alejandra Bugna, a property lawyer at Baker & McKenzie.

Property sales, which have contracted 50% since capital controls were introduced in 2011, have inched up in recent months. Purchases in the capital rose 10.91% in 2015 to 37,381 total closings.

President Macri has also ended Argentina’s 15-year long default status by repaying the so-called “vulture funds” that sued it over nine billion U.S. dollars in defaulted bonds. Putting an end to the debt saga to regain access to global credit markets was a key campaign promise in elections last year.

However, economists say much has to be done. A key problem is inflation, estimated close to 30%.

“Inflation is the big cancer of the real estate sector in Argentina because it does not allow the financing of mortgages like in any other country in the world where you buy a house over 30 years,” Nordelta Commercial Director Matias Terrizzano said.

Reporte Inmobiliario's founder, Jose Rozados, says just 4% of property purchases in Argentina are facilitated by a mortgage, compared with 80% on average elsewhere.

Analysis of Argentina Residential Property Market »


RENTAL YIELDS
Last Updated: Oct 20, 2016



No strong movement in residential apartment prices has taken place in Buenos Aires, Argentina, over the past 2 years. If anything, the trend is toward some upward movement (following some increase in rents). The average apartment in the centre of Buenos Aires now sells for around US$2,468 per square metre.

Rents have been rising. During 2009 they fell significantly in terms of US$, but now they are stronger again. Average apartment rental yields are around 6% to 7%.

House prices have been a little weak, and US$1,100 per square metre is a typical price now. The result is that gross rental yields of Buenos Aires houses is rather attractive from the perspective of landlords, at over 9.5%.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Nov 04, 2016



Rental Income: Rental income is taxed as regular income. For nonresidents, the tax is 14.70% of the gross annual rent. In addition, rental values exceeding ARS1,500 (US$100) per month are assessable for VAT at 21%, except for rentals of residential properties, properties rented to the Argentine State or rural properties affected to farming activities.

Non-residents also pay a tax on Personal Assets, Real Estate Tax and other charges.

Capital Gains: Capital gains earned by nonresident individuals are not considered as income, and are not taxed at the standard income tax rate. However, capital gains earned by companies are subject to corporate income tax at the rate of 35%.

Inheritance: There are no inheritance or gift taxes in Argentina. except for an inheritance tax levied on properties located in the province of Buenos Aires.

Residents: Individuals who are residents of Argentina are liable to tax on their worldwide income at progressive rates.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Nov 07, 2016



The total roundtrip transaction cost is between 9.93% and 11.64% of the property’s value. This includes notary fees (1% to 1.50%), stamp tax on property sales (3.60%), and the real estate agent’s fee (3% to 4%, plus 21% VAT).

For middle to high-end real estate, property transactions are done in US dollars with the amount paid in cash. However, getting US dollars is costly. It is possible to lose 1% to 2% of money value going through the official conversion process.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: May 14, 2015



Argentina’s rental market is pro-tenant.

Rents: Rents can be freely negotiated. Rent must be payable on a monthly schedule and cannot be indexed for inflation during the lease term.

Tenant Eviction: Amendments approved in 2002 have greatly shortened the time for landlords to recover property from non-paying tenants. Tenants can only be evicted through judicial proceedings, even at the end of the lease period.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Aug 22, 2016


Controlling inflation requires a negative shock to the economy

Argentina gdp inflationAlthough Argentina's economy defied expectations in the first quarter by growing 0.5% year-on-year, it likely contracted 0.9% in the second quarter from the same period in 2015 and 0.3% from the first quarter, according to Central Bank President Federico Sturzenegger.

Private economists and the International Monetary Fund (IMF) expect Argentina's economy to shrink this year followed by modest growth in 2017. The government has not yet published an official gross domestic product forecast for 2016 or 2017.

Consumer price rises are expected to slow to 1.5% per month in the fourth quarter and annual inflation is expected to cool to 17% in 2017, the official inflation target.

“We're maintaining our inflation targets for next year, and we're very close to them,” Sturzenegger said.

President Mauricio Macri’s administration, elected four months ago, has begun to reverse the economic legacy of populist former president Cristina Fernández. The administration has removed subsidies on utilities and public transport, as Marci seeks to close the largest fiscal deficit in two decades, causing some bills to rise by as much as 300%.

The economic changes have coincided with an overhaul of the statistics agency, leading to the launch of new, more accurate economic series. In 2013, Argentina became the first country to be censured by the IMF for publishing inaccurate data.

The inaccuracies were most pronounced during years when, according to the new series, the economy had in fact contracted. For example in 2009 the revised calculations show that the economy contracted by 6% compared to an estimate of 0.1% growth under the previous government. The economy shrank 2.6% in 2014 even though the previous government said it grew 0.5%.







  • High yields for luxury units
  • Pro-landlord rental market
  • Low to moderate transaction costs
  • High GDP growth
  • High rental income tax
  • No mortgages possible
  • To buy: Full amt paid in cash
  • Foreign exchange restrictions
  • Very high inflation rate - official numbers not credible
RESIDENTIAL PROPERTY FACTS
Price (sq.m): $3,327 For a 120 sq. m. property, usually an apartment.
Rental Yield: 4.48% For a 120 sq. m. property, usually an apartment.
Rent/month: $1,490 For a 120 sq. m. property.
Income Tax: 14.70% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 10.79% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

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