When Cueto Met Amaro: In the works for 7 years, the Latam merger will shake up the regional landscape.

When Chile’s LAN and Brazil’s TAM, two of Latin America’s most efficient and profitable carriers, announced plans to combine operations, the headlines trumpeted the superlatives: the region’s largest fleet, 115 destinations in 23 countries, $8.5 billion valuation, $400 million in annual cost savings, and the list goes on. But the combined operations and creation of Latam Airlines Group (LAG) trumpeted in the global financial press has been downplayed here in Argentina, and Carlos Manzoni of La Nación tells us why. “The merger will be a blow to Aerolíneas Argentinas (AR), because Aerolíneas will have to compete with (Latam) in the two most important routes they have: Chile and Brazil. They are going to lose market share when they should be gaining ground.” If Argentina decides to makes life more difficult for Latam, Manzoni says, the new carrier can retaliate in a few different ways. TAM could stifle the flow of Brazilian tourists to Bariloche during ski season by routing flights to Valle Nevado in Chile instead. Likewise, LAN could opt to shut down trans-Atlantic service from Ezeiza to Europe, and channel those flights in and out of São Paulo instead. Either way, it will be a new airline landscape where Latam dominates as the big continental carrier, while small regional airlines like Gol and Pluna continue to gain market share exploiting the low-cost niche.

In closing, Manzoni says the courtship between the Cueto (LAN) and Amaro (TAM) families has been ongoing since 2003. Now that the nuptials are pending, let’s see if old regional flames try to spoil the honeymoon. (Full article in Spanish)

Shopping centers like Dot Baires are packed with locals and tourists in a buying mood. (Photo: E. Gallelli)

When we look back on 2010 in Argentina from an economic standpoint, the year will be remembered for some key trends that helped lift the country out of the doldrums of 2008/09: consumer confidence, retail spending, housing demand and the record influx of tourists, both domestic (notably BA for the Bicentennial) and international. And while we’re still months away from closing the books on 2010, Alfredo Sainz of La Nación says all of these factors are peaking simultaneously to send winter out with a serious bang of discretionary spending. “The combination of low temperatures,good macroeconomic signals, purchases delayed for two years, the lack of saving alternatives and a massive flood of Brazilian tourists all combined to make the perfect recipe for winter vacations and winter 2010 in general,” writes Sainz adding, “From the shopping centers, the multiplexes, the clothing stores, the tourism agencies and the airlines, this winter season has been the most successful of the last three years.” Retail sales are up 20-50% at Dot Baires, Alto Avellaneda, Paseo Alcorta, Abasto and Unicenter; box office ticket sales are up 65%; and the 20% bump in tourists has pushed average hotel occupancy rates to 90%. On the transportation side, Aerolineas Argentinas just announced a 30% increase in July traffic and a whopping 240% increase in traffic from Brazil. And in a clever case of making limonada out of limões, the country’s early exodus from the World Cup prompted TAM to divert some originally-scheduled South Africa routes down to the ski slopes of Bariloche. (Alredo Sainz’ full article in Spanish)

For more information on local housing demand, retail strength and tourism trends, check out our archives and download the latest edition of InvestBA Privada.

Crescente: Bovespa President Edemir Pinto & Banco do Brasil CEO Aldemir Bendine at this month's offering.

With the 2014 World Cup and 2016 Olympics on the horizon, there’s no question about all eyes being on our neighbor to the north. With the world poised to descend on Brazil in the coming years, it is interesting to note how Brazil is beginning to look beyond its borders and engage with foreign countries. Right now, for example, the slopes of Bariloche are teeming with well-heeled paulistas and cariocas, and lilting Portuguese accents can be heard around BA’s finest restaurants and gallerias. But the Brazilian Foreign Investment Experiment (BFIE for short) is starting to expand well beyond tourism and into the boardroom with Argentina being the logical first step, says the Latin Business Chronicle. “The country’s corporate sector has embraced globalization,” writes LBC, “and many Brazilian companies have chosen neighboring Argentina for their first foreign venture. To date, over 400 Brazilian companies have done JV’s or outright purchases of Argentine companies in sectors ranging from cement to beverages to auto parts manufacturing. Now many olhos brasileiros are focusing on opportunities in the banking sectors. The analysts and professors interviewed by LBC describe the phenomenon of “follow sourcing” as a logical pattern where Brazilian banks are increasingly following their best corporate clients into Argentina to fund the growth and expansion of their Argentina subsidiaries. University of Palermo professor Rodolfo Rapán puts the importance of Brazil’s FDI in context: “Since 2003, an average of about $4 billion in foreign funds has flowed into Argentina each year, and 40 percent of those funds have come from Brazil.”  (Full article in English)

From ultra-luxury to fractional ownership to upscale boutiques, hotel opportunities abound in BA.

Foreign buyers. Global brands. Mega-deals. Few sectors of the local economy can compete with the luxury hotel business for headlines and superlatives. Coveted parcels are the object of bidding wars, while others are selling for as much as $21 million. Today Cronista gives a sweeping analysis of el sector hotelero in both Argentina and Uruguay while highlighting emerging trends like condo-hotels, green projects and fractional ownership. Brazil may be hosting the World Cup in 2014, but by then Argentina will have a leg up in terms of luxury properties. Alvear will christen—not one—but two new BA hotels, a St. Regis will rise in Puerto Madero, Nordelta will welcome an InterContinental and, as discussed in April, several new luxury boutiques will open in Palermo and Recoleta. Major chains are also capitalizing on the sheer beauty and natural amenities in destinations like Iguazú (Hilton, Loi Suites), Bariloche (Sofitel), Córdoba (NA Concepts), Brandsen (HoJo) and Tandil (Mülen). And while the four and five-star projects generate the most PR, the most active sector in terms of units under construction and fractional units for sale is the Sub-4 (star) sector. Projects like La Defensa, Hollywood Suites and Dazzler San Telmo are prime examples of the type of in-demand condo and fractional opportunities awaiting foreign developers today and foreign travelers tomorrow in Buenos Aires, Montevideo and other regional tourist destinations. For more information on local sector opportunities, download a free copy of our premium newsletter, InvestBA Privada.

A suite at the new Algodon Mansion hotel being built by New York City developers in Recoleta.

While new hotel construction slowed in Argentina in 2008-09, the sector is starting to come back to life thanks to a more favorable peso/dollar exchange rate and the determination of international investor groups, according to Ellen Hoffman of Hotel News Now (HNN). The current 3.8 peso/dollar exchange rate, about 20% higher than two years ago, has helped New York-based developers like DPEC Partners get new hotels across the finish line. Their project, a beautifully restored 1912 property in Recoleta called Algodon Mansion, is a prime example of the type of ultra-luxury boutique hotel opportunity awaiting foreign investors in BA. Private investor groups continue to target the high-end by renovating historical in-town landmarks, while large international chains like HoJo and IHG continue to explore new opportunities in the suburbs and surrounding provinces. According to government sources, hotels under construction in Argentina represent US$1.7 billion of investment; HNN says 59% of those funds are for new hotels in Buenos Aires, while the remainder are going toward new projects in cities like Mendoza, Cordoba and Bariloche.  Hotel research firm STR Global says 690 guestrooms are currently under construction in Buenos Aires, while HVS reports a 71% occupancy rate (1Q10) for BA’s 5-star hotels, an 11% increase over 1Q09. In other BA hotel news, the Park Hyatt Buenos Aires will play host to the 2010 Masters of Food & Wine three-day event next week. Click here for more information.

Howard Johnson S.A., the largest hotel chain in Argentina features luxury projects with polo fields.

As the wave of new developments and gated communities grows in Buenos Aires, Clarín reports on the simultaneous growth in the number of local projects featuring luxury hotels and resort-style amenities. “The goal is to offer a value-added service to the property owner,” says Clarín, “giving them benefits within the development (assorted discounts) and enhancing the overall comfort level of the project. Several of these mega-hotels are located in the interior of the country (the majority in the Patagonia), taking advantage of the benefits and natural beauty in this part of Argentina.” But BA residents don’t have to travel all the way to Bariloche or San Martín de los Andes to find these types of luxury developments. In fact, several hotels are being built in the surrounding Province of Buenos Aires, and U.S. investors will recognize one of the names behind some of the most high-profile projects. Located in Brandsen, roughly 60 miles from downtown BA, the Howard Johnson Finca Maria Cristina features a 40-room hotel, Spa, Convention Center and Polo Fields. A HoJo with PoLo? That’s the level of style and sophistication the chain has  achieved in Argentina where the Master Franchisee, H.J. Argentina S.A., has become the largest hotel chain in the country with 23 completed hotels and 18 under construction. In addition to professional polo instruction and a helicopter transportation option, the Finca Maria Cristina project features a variety of accommodation styles including large,  six-person Boutique Villas. The developer currently plans to build 15 of these upscale villas and make them available to the public.

A team of surgeons in Argentina where doctors are typically well-trained, confident & knowledgeable.

When most foreign journalists return home from a trip to Argentina, they often pen glowing reviews of their gastronomic conquests down south…Newsweek’s Howard Fineman is not one of those journalists. On a recent visit to see his daughter—who currently lives in Argentina—Fineman had a nasty bout with food poisoning. The illness and his subsequent 3-day stay in a private hospital in Bariloche opened Fineman’s eyes to the cost and quality of care advantages for expats and foreign visitors in Argentina. “My hospitalization included continuous intravenous fluids (to counter dehydration); IV antibiotics; an EKG, two blood tests and a chest X-ray; special meals; a private room; and even satellite-TV access to what seemed to be every obscure soccer match on the planet,” Fineman writes, “The doctors, nurses, aides, and others were all uniformly excellent. Total cost: about $1,500.” Considering that similar treatment in the U.S. would have cost roughly $12,000, the NBC political analyst was impressed by both the quality of care (“The doctors were clearly well trained and knowledgeable, and inspired confidence with their touch of Argentine cockiness.”) and the resourcefulness he witnessed first-hand. (“Perhaps they can’t always afford the latest in technology, but they strike me as doctors who don’t dwell on technology for its own sake.”) While most Argentine medical tourism coverage to date has focused exclusively on elective procedures in BA, InvestBA believes Fineman’s anecdote sheds important light on the non-elective, year-round quality care awaiting  expats, transplants and foreign travelers in Argentina. (Full article)

You can't spell Bariloche without "BA" and you still have to fly through BA to get there.

As the name of the site implies, we try to keep the focus on the City and the Province of Buenos Aires which includes Argentina’s portion of The Tango Coast. Still, there are times when foreign media outlets put the spotlight on other corners of this amazing country, and InvestBA readers should explore the opportunities that exist beyond BA. The New York Times gives readers such an opportunity today with the Great Homes & Destinations section showcasing San Carlos de Bariloche, a beautiful resort town at the base of the Andes in Argentina’s beautiful Lakes Region. The House Hunting home in question is a 4 bed/3 bath lakefront house on half an acre for $1.3 million, and the slide show is available here. The article offers a wide range of useful information for anyone contemplating real estate investment in Argentina. The majority of buyers today are from Argentina; however, “buyers from Europe and the United States are also common.” “There are no major restrictions for foreigners buying property in Argentina,” the Times notes, and home prices in this corner of Patagonia range from $100-$190/square foot compared to approximately $160-$280 in Palermo or $230-$460 in Recoleta. And while home buyers in Argentina typically pay a 3-4% commission, that is more than offset over time by low property taxes relative to the U.S., Canada and Europe. The tax bill on the 4,300 square foot home featured here is around $600/year. For those planning their initial exploratory visit, the Times recommends the Llao Llao as an ideal Bariloche basecamp.

Party Time: The strength of the Real makes BA and other Argentine cities a bargain for Brazilians.

With the 2014 World Cup and the 2016 Summer Olympics on the horizon, Brazil has the high-profile task of welcoming the World to its doorstep for, not one, but two major sporting events in the coming decade. But where do Brazilians go when they need a little D&R (Descanso e Relaxmento)? Well judging by the Portuguese-speaking throngs on the slopes of Bariloche or in the trendiest parrillas in Puerto Madero, Argentina is a safe bet. An article in Brazil’s Primeira Edição newspaper confirms Buenos Aires’ popularity for a variety of reasons including diversity, proximity and bottom-line affordability: “For many, Buenos Aires is the most European city in the Southern Hemisphere, most resembling cities like Paris, Madrid and Rome. Her intense cultural life, beautiful architecture, and excellent dining and leisure options make the Argentine capital a favorite destination for many Brazilians who want to visit a metropolis that is vibrant, cultured and, most importantly cheap.” The article notes that a Brazilian real is today worth 2.2 Argentine pesos (Current rate is actually 2.22), thus making cities like Buenos Aires extremamente acessível. So Congrats, Lula…enjoy your little Games. While you’re busy entertaining politicians and IOC officials, BA will be entertaining your people…and they’re a hell of a lot more fun. (YouTube)