Buenos Aires Real Estate

As the world economy started to visibly crumble, the Buenos Aires rental market started feeling some slight fluctuations.  The housing market is varied.  Some prices are higher than what renters’ salaries can afford, while a higher vacancy rate is making property owners more willing to negotiate with renters.  Despite these factors, property owners can still enjoy a profit margin of 5% to 6% per month.

There are two key factors affecting the market.  One is the lack of mortgage loans.  The other is that people who have a small amout of capital understand that buying property is a secure investment.  Recently purchased property is not worth selling because there are few buyers on the market and sellers would be uncertain as to what to do with their money in this unstable international economy.  Realtors feel that a lack of housing makes renting an attractive option for property owners, especially since profit margins have kept up with inflation.

Armando Pepe, secretary for the property rights organization, Centro Argentino de Derecho Inmobiliario y Propiedad Horizontal (Cadiph), adds that the amount of properties on the rental market have increased because 20% to 30% of apartment units in newly constructed buildings are purchased as rental property.  Additionally, a 40% decline in international tourism, means that many apartments, formerly rented to tourists on a temporary basis, are now on the 24-month leasing market.

Radamés Marini, president of the Unión Argentina de Inquilinos (renters’ union of Argentina) believes that the number of properties for rent has not varied greatly, but what has taken place is an expulsion of renters, which creates a false sense of an unsatisfied demand.  Marini states that rents have increased 2 to 3 times more than inflation; when renters can’t afford the increased rent, they don’t renew their leases and the units are left vacant.

Marini makes reference to a recent newspaper article published in LA NACION which states that people are sharing housing.  Hostels are opening up, not for tourists, but for married couples and single people who rent rooms.  Marini feels that these cases lead to a lack of independence and a lower quality of life.

In many Buenos Aires real estate agencies they also make reference to these new trends.  Pepe comments that in order to reduce costs, people not only give up comforts by moving to a more modest building or a smaller unit, they also get together to share the rent.  This is especially evident with university students that come from other parts of the country.  Many individual students previously rented a 2 bedroom apartment so that they’d have a spare bedroom for family to visit, now two students share that same apartment.

Realtors agree with the profit margin figures, which were between 6% and 7% monthly, 6% annually in US dolars.  Those figures have dropped to between 5% and 6% due to a high increase in apartment managers’ salaries, and increased costs in utilities, cleaning products and other supplies.

Realtors talk about the difficult situation renters find themselves in, having to accept abusive stipulations given the current rental market.  As property owners try to protect themselves from inflation, not only have they made renters responsible for exceptional property maintenance costs and taxes, they have also indexed the rent.  If a renter does not agree to these stipulations, they are unable to rent.

As far as what the future holds, Realtors understand that if unemployment rises and there are no salary increases, theoretically rental prices should drop.  However, those are suppositions and today property owners still have the upper hand in getting renters’ money.