Previously undermined by high inflation rates and currency controls, the real estate market in Argentina has been undergoing a transformation as a result of the measures taken by President Mauricio Macri’s administration. The Greater Buenos Aires region, for example, is home to a wide variety of residential, retail, office and industrial offers that make up a diversified property market. The sector, referred to by the National Institute of Statistics and Censuses as “real estate, business and rental services”, accounted for 10.2% of GDP in 2017.


Alejandro Belio, COO of local real estate developer TGLT, told OBG that the market had been depressed for the last four to five years as a result of capital controls implemented in 2011 by then-President Cristina Fernández de Kirchner. While most real estate transactions are made in US dollars, preferred over the relatively unstable Argentine peso, buyers generally could not access dollars due to strict currency controls. “The sector has traditionally been a local refuge for long-term dollarised investments. In the absence of a strong peso, Argentina’s historical inclination towards the dollar is reflected in the property market,” Domingo Speranza, CEO of local real estate firm Newmark Grubb BACRE, told OBG. In parallel, indexed peso loans had been unauthorised for several years, which severely restricted liquidity in the property market. The lifting of currency checks in late 2015 and the introduction of acquisition value unit (Unidad de Valor Adquisitivo, UVA) mortgages in 2016 revitalised the market.


The result of the new mortgage loan programme has seen a surge in demand for housing units. The number of mortgage credits increased by 280% in 2017, a new record, and another record was broken that same year with total spending in the construction sector reaching $4.2bn, Ricardo Delgado, undersecretary of the coordination of federal public works told local media in March 2018. “The new credit programme has revived the market for existing homes in particular, and due to a shortage of new dwellings, property prices have risen,” Belio told OBG. According to an Argentine University of Enterprise study in August 2017, units situated in the Buenos Aires’ neighbourhoods of Recoleta, Palermo, Belgrano and Núñez saw the highest increases in both used and existing properties, averaging between $3897 in Recoleta, a 5.9% increase, and $3244 in Núñez per sq metre, up 7.7%. Brand new units cost on average 9.9% more in 2017 than in the previous year, while existing properties’ prices rose by 12.3% during the same time period. Belio estimated that the situation will regularise as the new mortgage credits start to enlarge the offer of brand new units, relaxing the supply side of the equation. Renting prices have also ballooned as a product of high inflation rates and stagnant housing supply.

Until the introduction of the UVA mortgage, renting was the only possible choice for many middle- and low-income families with no access to savings or dollars. Well surpassing the inflation rate, prices for one-, two-and three-bedroom apartments in the capital rose by 32.7% in 2017, according to the General Directorate of Statistics and Censuses of the City of Buenos Aires.

With high levels of mortgage applications, more Argentines are now looking to purchase properties. “Now that the conditions are there, consumers prefer to buy a house,” Belio told OBG. There are, however, still some impediments that create a distortion in the market. Previously, developers refrained from building larger houses because they would not get sold due to currency obstructions, constructing mainly one bedroom apartments instead. “For a long time, building and renting small housing units was an important niche for developers. Now, there is a genuine demand for properties with bigger areas,” Belio told OBG. “The new real estate product will have larger apartments appropriate to the current market’s needs. As a result, there will be a tendency towards more movement in the ownership market, and less operations in the rental market.” The transition to a buyer’s market is expected to become more established by the end of 2018 and into 2019, with private players taking on a greater role. “In order to meet the impending need for housing in Argentina, which stands at some 3m households, the private sector needs to increase its presence in the local market,” Issel Kiperszmid, CEO of local real estate developer DYPSA International, told OBG.


With regards to the retail segment, the second half of 2017 saw an expansion of available retail space in Buenos Aires’ main commercial areas. According to real estate services company Colliers International’s “Retail Report” 2018, total supply stood at 13,235 sq metres in the first half of that year, rising from 6977 sq metres at the end of 2017, an increase of 89.7%.

Over half of vacant retail space is concentrated along the commercial streets of Peatonal Florida (54.2%) and the intersection between Avenida Santa Fe and Avenida Pueyrredón (17.4%). In addition, average vacancy figures of rented retail space increased from 2.1% to 3.1% over the same period. Regarding vacancy rate by area, the highest rate was in Peatonal Florida in the Microcentro neighbourhood, which rose from 3.3% at the end of 2017 to 9.9% in the first half of the following year. By contrast, the area with the lowest amount of vacancies was located around the intersection of Avenida Rivadavia and Avenida Acoyte in the neighbourhood of Caballito, which had 0% availability during the period in question. The distribution of commercial spaces by retail area showed that in line with the recent historical trend, most stores had activities in the “garments and accessories” and “gastronomy” areas, with figures of 49% and 15%, respectively. Monthly rents per sq metre averaged at $44.34 in mid-2018, down from $51.97 at the end of the previous year, a decrease of 14.7%.


According to Colliers International’s “Offices Report”, in the first half of 2018 total office space in the city of Buenos Aires reached almost 1.9m sq metres, a 6% increase year-on-year. Notable market additions were the new Coca Cola building and the Lumina Olivas building located in Vicente López, though 86.5% of the latter’s floor space was unoccupied as of mid-2018. During the same period, 139,672 sq metres of office space was unoccupied, mainly in the areas of Northern Greater Buenos Aires (44.5%), Microcentro (16.5%), Puerto Madero (13.8%), Plaza San Martín (6.6%) and Catalinas (10.5%). The total vacancy rate, meanwhile, was 7.3%, compared to 6.1% during the first half of 2017, reflecting a relatively stable performance.

In terms of demand, in the first half of 2018 there was a positive net absorption of 17,866 sq metres of rented and vacated offices, down from 32,100 sq metres at the end of the previous year, meaning that there was less available space than there was occupied properties. Prices per sq metre per month ranged from $18.00 in Macrocentro South to $32.30 in Catalinas in downtown Buenos Aires. Class-A+ office spaces decreased in value in the second quarter of 2018 registering an average of $28.40 per sq metre, down by 7.8% from $31.20 per sq metre the previous quarter. The class-A segment, meanwhile, demonstrated a 2% increase over the same period, with a price of $23.10 per sq metre in the first half of 2018. In the medium term, an extra 686,000 sq metres of offices are set to be built by 2022, of which 31.4% are under construction.


At present more than 350 industrial parks have consolidated their position in the Argentine market, Ernesto Iboldi, director of the industry department at real estate company Binswanger Argentina, told OBG. The parks offer excellent investment alternatives with industrial companies increasingly relocating to these sites. “Municipalities are participating in these industrial projects to offer a better quality of life to their inhabitants, thus avoiding the circulation of trucks and large vehicles through the neighbourhoods and subsequent complaints from the community,” Iboldi told OBG. “The parks have good access, security, strict environmental rules, and offer a broad array of other services, as well as fiscal and tax benefits,” he added.

In January 2018 the government issued Law No. 27 of 2018 that simplifies and debureaucratises the installation of new industrial centres near public and private ports, which as a result allows for multi-modal transport possibilities, in this case land, rail and river, which are fundamental to Argentina’s efforts to enter the international market competitively.

The largest portion of the 3140 ha of industrial parks is situated in Northern Greater Buenos Aires, with a share of 65%. In this area, the industrial hub between Zárate and Campana is still not exploiting its full potential. Moreover, its strategic multi-modal location with easy access to rail and river transport makes the zone a potentially advantageous option, and this is starting to be observed by a number of companies, noted Iboldi. Another emerging development is located in western Buenos Aires, representing 14% of Argentina’s industrial parks’ by area. Important infrastructure works under way for the West Access motorway, and the finalisation of the highway between Luján and Junin due in mid-2019, will improve National Route 7 connectivity to the zone and leverage the interest that has already been shown by developers.


Real estate agents note that the sector is on track for recovery, but highlight that there are still several obstacles that have to be overcome. Central bank estimates show that rental prices, for example, are expected to rise by 25% in 2018. More private banks need to generate mortgage loan offers to both buyers and developers in order to foment property ownership for the mid- to high-end market.

“The government’s task is to create an atmosphere of visibility and stability to stimulate market activity from potential home buyers, and reducing inflation is an essential prerequisite for this,” Belio told OBG. The construction sector needs to demonstrate that it can supply Argentina’s growing economy without generating inflation and further distorting property prices, which is an issue that is also facing the retail, office and industrial segments of the real estate sector.