Housing IPO Highlights Pent-up Real Estate Demand in Argentina

Wealthy Argentines prefer cash when buying high-end properties like TGLT's Forum Puerto Madero.

It’s been almost two years since the Argentina stock exchange celebrated an IPO, but local homebuilder TGLT is ready to end the BA Bolsa’s offering drought.

The Wall Street Journal’s Matthew Cowley reports, “TGLT plans to raise between $50 million and $70 million from an initial public offering of shares, equivalent to about 30% of the company’s total capital. About half of the shares are expected to be sold in Argentina and the rest to foreign investors.”

TGLT and other Argentine real estate companies have waited patiently on the sidelines while private developers in Brazil, Chile and Mexico have raised close to $3 billion in equity capital since 2003. Cowley says TGLT “seeks to emulate the considerable success that home builders have had in (these) Latin American countries…meeting the massive pent-up demand for housing.”

Brazilian firm PDG Realty referenced this “pent-up demand” in a PowerPoint presentation back in 2007 when they purchased a stake in TGLT. Explaining the high-end preferences of the BA market, Jose Rozados of real estate journal Reporte Inmobiliario says, “Wealthy Argentines often eschew the banking system and financial investments, and instead buy property.

They aren’t highly speculative investors nor are they looking for quick returns. That makes them fairly solid.” Another bullet point worth considering for foreign companies contemplating joint ventures with Argentine homebuilders: 90% of high-end homes bought in Buenos Aires are cash transactions. A nice change of pace from the mortgage meltdown landscape abroad.

For more information about Buenos Aires real estate opportunities, download the new issue of InvestBA Privada.