An increasingly open market and policies to boost inclusivity are benefitting construction in Argentina. For example, a more transparent measure to subsidise mortgages for homebuyers has replaced supply-side stimulus packages, which should help disadvantaged populations. Meanwhile, efforts are being made to bridge the infrastructure gap and formalise labour.

Sector Performance

Following a challenging year in 2016, the sector rebounded to a 10.3% expansion in 2017, significantly outpacing GDP growth of 2.9%. While construction accounted for 3% of GDP that year, it was the second-fastest growing sector, behind only fisheries with 14.3%. According to the National Institute of Statistics and Census, in the first quarter of 2018 this continued, with a slightly slower 9.6% year-on-year (y-o-y) increase. Meanwhile, the synthetic indicator of construction activity – a key performance metric – rose by 12.7% y-o-y in the first five months of 2018.


Gustavo Weiss, president of the Chamber of Construction (Cámara Argentina de la Construcción, CAMARCO), told OBG that the construction and renovation of single-family housing is the backbone of the sector, accounting for approximately 50% of activity. Although the public and private sectors both participate in this segment, the country has faced a persistent housing deficit in recent years. Ricardo Delgado, undersecretary of the coordination of federal public works, told OBG that there was a 3.5m-unit shortage in 2018, with 1.4m homes needing to be built and 2.1m unfit for habitation. “The government of President Mauricio Macri is making notable efforts to address this, with public investment for lower-income groups nine times higher than during the previous administration. However, it is not enough to bridge the gap,” he said.

Several initiatives aim to alleviate the housing shortage, such as the National Housing Fund, Provincial Housing and Urbanism Institutes, and the Federal Housing Plan. The main goal of the housing fund, for example, is to meet housing demand from families with insufficient resources, facilitating access through urbanisation, infrastructure and community equipment works.

In early 2017 President Macri announced the 100,000 Houses and Jobs Plan, an agreement between companies, banks, unions, and city and provincial governments. As the name indicates, this will entail the building of 100,000 houses, requiring AR150bn ($7.8bn) of investment, as well as the creation of 100,000 jobs. “Just two months after launching the agreement, projects to build more than 60,000 new houses had already started,” Delgado told OBG. “The private sector is stepping in to augment the strong public investments in infrastructure, which is causing a substantial rise in input sales and sector employment.”

Public Finance

Previously, these programmes worked through public tenders, with the government awarding subsidised permits to construction companies to provide affordable housing. This scheme was highly inefficient, as it lacked transparency, and mortgages were still not affordable for the majority of the target population. As a result, the current administration is overhauling this, with plans to subsidise mortgage credits for families rather than the construction firms. This gives apartment or housing buyers access to loans with low and long-term monthly instalments for up to 30 years. However, this means that construction companies need credit, which is often relatively difficult to access, to develop projects. Weiss told OBG that this transition is not likely to be easy, and it will take some time and effort to be successful.

Various government measures, as well as robust economic growth, have increased demand for construction projects, resulting in construction firms seeking new sources for funding. While private banks are still relatively hesitant to provide long-term credit, shortterm loans are widely available. Several public banks are breaking this tradition to help solve the housing shortage. The National Bank of Argentina (Banco de la Nación Argentina, BNA), for example, agreed to provide capital for the construction of housing projects, with 70% of this for units that can in turn be financed through credit lines also offered by the bank.

The BNA aims to ensure developers, construction companies and pre-qualified interested buyers have access to credit. In order to qualify for the loan, developers must presale 100% of units and act as a guarantor until the sale of the properties. For buyers, mortgage credits may cover up to 80% of the sale price, with a 3.5-4.5% interest rate to be paid back over a maximum of 30 years. To launch this initiative, the BNA worked with the central bank, Ministry of Finance and Ministry of Interior’s Secretariat of Housing. These players analysed obstacles to investment in and financing of housing construction during meetings and roundtables with construction companies and developers.

Public & Private Works

The other half of the sector is relatively evenly split between public and private works, with each accounting for around 25%. These include the private commercial, office and industrial segments, as well as the public electricity, telecoms and gas networks. In line with President Macri’s poverty reduction goals, the government launched the National Plan of Potable Water and Sanitation in June 2017, aiming to provide all urban dwellers with access to potable water, and 75% with a proper sewage system by 2019. In 2015, 87.1% and 58.4% of city residents had access to drinkable water and sewage systems, respectively, marking significant progress to be made.

With more than 3000 construction projects in various phases of completion throughout the country in 2018, the government is working to offer inclusive and long-term solutions for infrastructure gaps.

Sector Employment

The boom in construction has had positive effects on employment in the sector. Driven by public works, by the end of 2017 employment began to rebound after previous underperformance. The recession in 2016 hit construction particularly hard, with a 10.3% contraction in employment that year, according to the Statistics and Registry Institute of the Construction Industry. After recording positive growth throughout 2017, early 2018 brought an acceleration in this. In May 2018 there were 426,000 registered construction workers, with employment averaging 8.4% growth over the first five months of the year.

CAMARCO estimates that the actual number of employees in the sector is much higher, at 1.5m, comprising 500,000 formal labourers, 500,000 monotributistas (self-employed workers and professionals), and 500,000 informal workers. Labour reform legislation is addressing this by regularising some 300,000 workers per year. The plan includes tax amnesty, requiring business owners to pay a one-off fine for the amount of workers to be registered, while forgiving the taxes that were previously not paid accordingly.

Moreover, the digitalisation of income registration will enable more workers to enter the formal sector. “Formal companies do not employ any informal labourers; instead, they tend to work in temporary housing refurbishments and other non-registered construction projects,” Weiss told OBG. “However, even there, it is getting harder for their clients to manage cash. As a result, they will have to oblige workers to become registered, self-employed taxpayers.” Formalising labour will benefit employees, as they will be included in the social security and pension systems, which in turn can be enhanced when the state collects more tax.


Public works and other construction projects are expected to continue throughout 2018 and gather pace in 2019, with government investment in infrastructure reaching AR13.7bn ($709m) in 2018. Efforts are being made to develop public-private partnerships, and as they start rolling out, sector performance is set to ramp up further (see analysis). Increasing foreign inflows could also attract more local private investment. Nevertheless, the availability of financing for developers and construction companies will be a key determinant of growth. The authorities are also working to normalise the investment framework, with changes aiming to eliminate double taxation of foreign funds and introduce more favourable conditions.