Buenos Aires Real Estate

When the world’s economy was growing, business firms in Buenos Aires’ downtown  found themselves with limited office space available for expansion.  Several real estate developers, expecting that good financial times would continue, built luxury corporate office buildings in a corridor of Zona Norte (northern greater Buenos Aires area) that runs from Vicente Lopez-Olivos to the Panamerican Freeway.  They believed that less traffic congestion, rental rates 30% lower than those in the city of Buenos Aires, and the area’s proximity to many business executives’ residences would be a magnet for corporate businesses.

However, the air conditioning, modern architecture, green spaces and parking facilities did not lure enough businesses and nearly 30% of the office space remains vacant,  almost triple the rate found in the city of Buenos Aires.

There are two key factors the real estate developers did not take into account.  One is that taxes in the province of Buenos Aires are higher than in the city of Buenos Aires.  The other is that the difference in rental rates (USD $30 per m2/month in the city versus USD $22  per m2/month in Zona Norte) for some business does not justify the expenses of relocating their offices.  Moving office installations costs USD $400 per m2.  A firm using 2,000 m2 of office space would have a moving expense of  USD $800,000, an amount to think twice about during uncertain financial times.  Check the latest news in this Buenos Aires real estate guide.

Though the rental market may not have turned out as promising as expected, the international financial crisis did cause several investors who had millions deposited in American and European banks to take advantage of government tax breaks to bring their funds into the country and buy entire floors of office space.  These investors are confident that the value of their property will remain stable.  When they do rent out office space, the rental contracts are long term with an annual return of 9%.