Currency conversion controls that have cooled the purchase of new and existing residential units in Buenos Aires are also forcing some developers to rethink breaking ground on new projects or expanding existing buildings, according to new data from the Ministry of Urban Development.
Clarin’s Gustavo Bazzan says Buenos Aires new construction permits in the first quarter of this year were down 34% compared to the same three-month period in 2011. Currency controls in force since last November have 1.) curbed the ability of local investors to purchase properties and 2.) placed several new real estate projects, in Bazzan’s words, “en el freezer.”
“Sales price per unit can’t fall below US$200 per square foot in the most sought after neighborhoods, and prices go from there upwards depending on the value of the land,” he writes adding, “The question that developers face now is whether they will be able to sell all of the units in a new building.” In addition to lower visibility regarding future sales, rising construction costs are the other factor prompting the pullback in new construction in BA.
While the number of new construction permits issued was down 34%, there has been a similar drop in the number of projects that broke ground in Buenos Aires: 312 in the first quarter of this year compared to 436 in the first three months of 2011. (Full Story in Spanish)
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