With one of the most iconic capital cities in the world in Buenos Aires, and great potential as a centre for the tourist trade in South America, Argentina has much to offer both travellers and overseas property buyers. The conflicts of the past, and the military leaderships that flourished in the 20th Century, have created a somewhat split society, with a rich upper class acting in many ways like old colonial powers, and a poorer working population. Democracy returned most recently to the country in 1976, and with economic reforms over recent years, conditions for much of the population are beginning to improve.
The continued improvement of economic conditions, resulting in average GDP growth of nine per cent for the period of 2003-2006, has meant that foreign investment opportunities have increased. In the wake of this, opportunities for overseas property buyers have opened up in different parts of the country. While still to be considered an emerging market, there are a number of different types of buyers to which the renting and eventual sale of property in Argentina will be interesting.
As an emerging market for overseas property investors, there are some hurdles to overcome in Argentina. Some of these are practical, such as the lack of mortgage products and issues restricting the transfer of foreign currency as explained below. Other issues have to do with the economic direction of the country as a whole. High inflation rates across the country are holding back development, and government figures cannot be trusted as they have been understating inflation figures since early 2007. Despite attempts by the new president, Christina Kirchner, there is still concern over Argentina’s economic future.
The second largest country in South America, behind Brazil, and the eighth largest in the world, Argentina offers a huge variety of landscapes, though property buying opportunities can generally be grouped into two types: city and country.
City property opportunities for foreign investors will almost invariably be centred on Buenos Aires - the social, political and business hub of the country. Foreign investment in the city has grown steeply over recent years, bringing new industries and practices to the region. At the same time, the capital was traditionally a major trading post both for the huge natural resources that Argentina is blessed with, and later for international trade as the city lies between the major sea lanes of the Pacific and Atlantic Oceans.
Buenos Aires is situated on the Rio de la Plata estuary, and as an established capital city has the advanced infrastructure and transportation facilities that you would expect to find in a far more advanced and wealthy country. The city is made up of the central City of Buenos Aires, which is in fact 48 barrios (or neighbourhoods), accommodating three million residents. The Greater Buenos Aires area, which is made up of 19 partidos (or municipalities), is home to some 13 million people, about one third of the population of the whole country.
Since the last economic downturn in 2002, during which the Argentinean peso lost 75 per cent of its value against the US Dollar, property prices in the capital have increased by some 50 per cent and are predicted to continue to climb. A recent Credit Suisse report into the country suggested that property in Argentina is still undervalued by between 20 and 30 per cent. Rental yields are also good on luxury properties – conservative estimates range from seven to eight per cent return per year up to more than ten per cent on the best properties. With the top-end hotels in Buenos Aires running at occupancy rates of more than 80 per cent, good apartments will continue to be a popular option.
The other property option outside of the capital city is to look towards the countryside and coastal areas – property is available in some other resorts or there are possibilities to purchase packets of land as investments for subsequent development opportunities.
Argentina is a vast and beautiful place — there are the increasingly popular wine producing regions; world class ski resorts; exclusive golf and country clubs; Patagonia’s breathtaking Lake District and the awe inspiring glaciers at the southern tip of the continent — in total there are 19 national parks in the country. With a winter season that drops only to 15 degrees C in Buenos Aires, but offers skiing in the Andes, the possibilities for the tourist market are huge.
There are no restrictions on foreigners buying and owning property in Argentina, and the process is a simple and efficient one for an emerging market. Buyers must obtain a CDI tax registration number from the government to complete their purchase, as well as having and bank account in the country and a representative appointed if they do not become resident in order to pay property tax for them.
Also, every real estate purchase in Argentina must be registered through a notary public or escribano who specialises in dealing with real estate transactions. This is one of the reasons that land title is generally secure and trouble-free in Argentina, and can be expected to cost between one percent and two and a half per cent of the purchase price. The escribano is also responsible for registering the property sale and transfer of ownership with the authorities.
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