Better days still not good enough

Since the 2001 economic meltdown, Argentina has been quickly getting back on its feet. Foreign investment is also growing as the Argentine peso is currently pegged 3-to-1 with the US dollar.

Property investors will be happy to know that one of the flourishing markets in Argentina today is real estate. Particularly in Buenos Aires, the real estate market has been a big help in the economy's recovery from the 2001 crisis. The low cost of living and cheap peso attract foreigners into the country.

Despite higher house prices, Argentina is still a much less expensive alternative. According to Global Property Guide research, a 300-square metre (sq. m) house in the suburbs of BuenosAires is being sold in the market at around US$1,500 per sq. m.

Even luxury apartments in Buenos Aires have seen increased prices. An apartment in downtown Buenos Aires can be in the market for about US$470,000 with a floor area of 250 sq. m.

Tourism boosts the rental market

The rental market is also recuperating, but still not back to pre-crisis level. According to Maria Reynolds of Reynolds Propiedades and Relocation, tourism is the main factor for its growth. The increasing number of tourists makes short-term rentals more popular than other terms of tenancy.

Yields in Buenos Aires are considerably high. Buenos Aires luxury apartments yield an average of 9.285%. It can even go as high as 10.2% for a 250-sq. m apartment. Furthermore, a yield of 8% can be expected from 350 to 450-sq. m houses in the Buenos Aires suburbs. These houses only have selling prices of around US$700,000-US$880,000.

Relatively cheap houses and apartments, together with high yields, make property investment in Argentina profitable. Foreigners can very well acquire property without restrictions, and moderate costs for property purchase ease the buying process. It must be noted, however, that real estate transactions in Argentina are usually done in cash. This is the only significant burden because bringing US dollars into the country is not free, and should be withdrawn in Argentine peso. It is possible to lose around 0.8%-1% of the money value when going through the official system, says Maria Reynolds.

Still plenty of room for improvement

While the situation now is much better than five years ago, the Argentine economy and people still face many problems. One of the biggest sores facing the locals today is the high inflation rate.

Argentina is seen with double-digit inflation rates, while the rest of Latin America is successful in alleviating inflation. The IMF published an estimated inflation rate of 11.4%. Some blame President Kirchner's price control policies for causing rather than preventing the rise of inflation.

Soaring prices are greatly hurting the locals. Aside from expensive consumer goods, more Argentineans find it difficult to buy their own houses. While real estate is affordable to foreigners, the prices are still very high for the locals. Credit is not easy to obtain and mortgages are very expensive.

Continued growth

The Argentine peso used to be pegged with the US dollar 1-to-1 in the 1990's until the economy collapsed again due to recession and excessive government spending. By January 2002, the Argentine currency was unpegged from the US dollar, which allowed the extremely devalued peso to fall freely.

Argentina was clearly at the bottom, hounded with poverty, chaos, and an inflation rate of more than 1,000%. Since then, Argentina has been cleaning up its act. Now, it is one of the fastest growing countries in Latin America and its GDP continues to rise.

During the crisis, Argentina had an 11.8% drop in its GDP per capita from 2001 to 2002. Since then, its performance has been admirable. It registered an estimated GDP per capita growth of 40.6% from 2002 to 2007, which is the largest in the region. From 2006 alone, the approximate growth in its GDP per capita is 4.8%. Argentina's GDP per capita last year was still impressive at US$5,497.

First lady president

Argentineans are set to go to the polls this year to vote for a new president. There are speculations that instead of President Kirchner running for re-election, his wife, Senator Cristina Kirchner, will replace him as the party's presidential bet.

Regardless which of the couple runs in October, a Kirchner in the office will definitely mean continuance of current policies. Foreign investment will still be warmly welcomed and the real estate sector will be pretty much left alone by the Government.

President Kirchner is being criticized for the price controls he imposes. However, despite the critics, the people feel the country is now more consolidated and there is wide support for their President.