By Cathy Brown
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Recoleta is a gorgeous old-money area of town that is one of the more expensive areas in Buenos Aires, but in return you know exactly what you are buying. The prestigious neighborhood is not likely to change much as it is very established. The most popular investments here are 1 or 2 bedroom apartments or lofts that can be rented out at a high price to tourists, students, or locals, and that can also be enjoyed as a vacation home or future retirement option when you want to come enjoy the city. Units are usually very well-maintained, with the architecture of the buildings being very classical. To give you an idea of price, there is a great unit for sale right now for $790,000. It is an almost 3000 square foot two-level penthouse suite in the heart of Recoleta with a large (780 square foot) rooftop terrace and garden area. If you wanted to rent it to tourists when you were not using it yourself, judging by comparative rentals, you could expect to rent it for a minimum of $350-$450 dollars a night.
Barrio Norte is the north part of town, along the Plate River, and is enjoying heavy growth in the office space sector with the construction of large tower buildings with river views. From Vicente Lopez to San Isidro, this part of town is much quieter, away from the hustle and bustle of the heart of B.A., which attracts some people and discourages others who prefer to be closer to the epicenter of the city. Barrio Norte has a history of moving properties quickly, with local Realtors (called inmobilarios) attesting to the fact that many times an apartment in this area is on the market for less than a month before it sells, but time will tell if the demand can keep up with the already rapidly growing supply.
As far as investments go, if what you are looking for is ROI, Barracas is under the radar for now but is expected to be the next hot neighborhood to be renewed. Getting in now might be a smart idea. While some of the other parts of BA have lost their neighborhood vibe or character that they had in the past, becoming any other neighborhood of any other big city in the world, Barracas has retained heart and soul from its roots as a more gritty, arty, and industrial working-class part of town. Urban renewal efforts by the City of Buenos Aires Government, combined with large-scale redevelopment projects that have seen success, like The Moca, both point to the idea that Barracas has a bright future. In the 1800s it was home to some of BA's wealthiest families, and there are millions of square meters just waiting to be brought back to life. Support from the City of Buenos Aires to make this a Design District, and the implementation of the new subway line H will only help to drive up real estate costs in the area in the next 3-5 years.
Foreign Interest in Argentina, and the Condo Hotel Boom
The tourism industry in Buenos Aires continues to grow at lightning speed. The Tourism Board and Ministry of Culture states that tourism in the city accounts for 7.6 percent of B.A.'s total GDP, and is a multi-billion dollar juggernaut that saw its total number of visitors rise by 29% from 2009 to 2010. Much of the visitor increase is coming from nearby Brazil, an overall fairly rich country who sees the favorable exchange rate to Argentine pesos as a great reason to come and take advantage of what B.A. has to offer. In the last year alone, there has been an 86% increase in the number of Brazilians that have visited Argentina.
Healthy tourism numbers and a pro-tourism attitude by the Argentine government make the relatively new concept of condo hotels a very attractive option for investing in Argentina's main city. A condo-hotel means that you basically buy a room of a hotel, to use as you wish when you come into town, but it can be rented out in the hotel room pool when you are not there. Carlos Manzoni of La Nacion says that condo-hotels are "the new boom" property for real estate investors in Argentina. In addition to strong demand and annual returns double those of rental properties, Manzoni says condo hotel investments in Buenos Aires and Argentina offer other advantages like flexibility, absentee ownership, the prestige of established brands, and a monthly income stream derived from the hotel's pool of rental properties.
Boutique hotels Fierro and Palermo Place are among the many condo hotels who have emerged on the scene recently, and have been incredibly successful. Fierro hotel [link to our review], having only been open for a year, has surpassed its investors wildest expectations by maintaining an astonishingly high occupancy rate and by becoming the number three ranked hotel in Buenos Aires on TripAdvisor. Management from Palermo Place have two additional hotels in the works, a second in Palermo and one in the wine country. Nearly all of the investors in their condo hotels have been foreigners; for most it is their first investment in Argentina.
If the idea of owning your own entire boutique hotel appeals to you, there is an established one for sale, also in the Palermo neighborhood, with modern amenities and classic architecture. It has 13 rooms, is listed at $1.8 million, and has more than a 70 percent occupancy rate. If your pockets are deep, another hotel is for sale in the prime Recoleta district for $4.8 million. (contact Patrick through www.investba.com for more details on either of these opportunities).
Managing Income-Producing Properties
If you want to add an income-producing apartment or house to your portfolio, yet do not want to have to deal with marketing or renters, a great option is to work with a reputable property management group such as Oasis Collections in Buenos Aires. With no up-front listing fees, they charge 15-20% of all income made off of the property. They handle marketing, professional photos, reservations, billing, and serve as the renters' point of contact in the city. You can of course black out any dates that you want to personally use your property. Oasis is run by an intelligent investor named Parker Stanberry who is originally from New York City; you can be assured that his manner of doing business is of a very high standard. In the Oasis rental collection there is everything from studio apartments to huge villas, and renters stay for two days up to a year. Rents can go for anywhere from $450 a week to $5500 a week. The only requirement is that your property is in a good location and is kept up well, with standout design. On average, Oasis maintains an impressive 70% occupancy rate for its clients.
All in all, if you can work with someone reputable who can help you get through the sometimes confusing real estate scene, buying in Buenos Aires is a great way to invest while also taking part in one of the most vibrant cities in the world. Prices are on the rise, and with the lack of mortgages there is no huge bubble waiting to burst. While you may not find the killer deals that you could have ten years ago, there are still an abundance of very good values just waiting to be snatched up by foreign investors looking to diversify their portfolio in an ever more volatile international economy.
Story by Cathy Brown, photos courtesy of the agencies.
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