Puerto Madero View

Rose Colored Vista? BA brokers make their 2011 predictions, and InvestBA offers some balance.

La Nacion ends the year with a survey of local real estate brokers and developers (B&D) regarding their outlook and expectations for the coming year.

Considering the nature of their business, their collective forecast is predictably optimistic, so we’ll put our spin (IBA) on the list to keep things balanced. (Full Story in Spanish)

Prediction No. 1: B&D: The level of investor demand we have seen for the past year will continue in 2011, even though it is an election year. IBA: The importance of the upcoming elections cannot be diminished, especially given the unrest of the past few weeks. An administration that emulates Brazil and Chile in terms of encouraging DFI, promoting transparency, eschewing populist rhetoric and actually enforcing existing immigration and property laws will go a long way toward restoring confidence.

Prediction No. 2: B&D: The greatest demand will be among buyers looking for units under US$200,000, but there is a growing niche looking for more expensive offerings. IBA: The under-$200,000 market will be strongest in emerging barrios like Villa Crespo, Villa Urquiza and Barracas where that sum actually buys a decent-sized apartment. 2 and 3-room units with good locations/views in the Big 3 are well north of US$200,000.

Prediction No. 3: B&D: Values per square foot will not decrease, because the local real estate market is not fueled by cheap credit, but rather cash and real investment. IBA: The all-cash factor is an undeniable advantage of the real estate markets in Argentina and Uruguay, but no guarantee of a price floor. Cash or credit, if there is an oversupply of units in a given market (e.g., Puerto de Madero, Mar del Plata), prices per square foot will adjust accordingly.

Prediction No. 4: B&D: Land prices will continue rising, especially in Capital Federal where available lots are increasingly scarce. IBA: Agreed. Ditto for construction costs.

Prediction No. 5: B&D: Small units which can be resold quickly will be the most in demand. IBA: Cheaper is not necessarily better, and developers who only build 1 and 2-room units in the city’s most expensive neighborhoods are simply following the herd. The trailblazers will be recycling buildings and developing large units in BA’s emerging barrios with Subte access.

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