South America has been a special part of my life for four decades. I have lived many years in Brasil and Peru. I am married to an incredible lady from Argentina. I want to share South America with you.
Peter Haller made a tidy profit when he sold his Argentine property in 2010 — now the Austrian entrepreneur is looking to reinvest in the real estate market in Buenos Aires.
Like many international buyers, Haller’s love affair with the Argentine capital’s grand concert halls, leafy boulevards and café culture soured under the rule of the Kirchner family. But, he says, properties are again worth a “very hard” second look.
The city’s mayor, Mauricio Macri, former president of one of the country’s biggest football clubs, Boca Juniors, won the presidential election in December last year, turning the page on 12 years of the Kirchners. His new pro-business government is already setting Argentina — and its capital and surrounding districts of about 13m people — on a different path.
Throughout much of the 20th century the city that used to be known as the Paris of Latin America flip-flopped between financial crises and periods of prosperity. Steely-nerved investors such as Haller pocketed big gains from the cyclical property market. Having purchased apartments in the early 2000s just after Argentina’s cataclysmic economic crash, he sold up nine years later when populist episodes made property transactions “a headache”.
Three months after being sworn in, Macri has already lifted stringent exchange controls and devalued the currency — moves that should make buying property easier. He has also ended Argentina’s 15-year debt blockade. A longstanding dispute with the US courts over debt rescheduling plans hampered the country’s access to international capital markets. Putting an end to the debt saga so Argentina can borrow again was a key campaign promise in elections last year.
“Many [foreigners] started fleeing when the business environment became unmanageable, ” says Adriana Massa from Sotheby’s International Realty in Argentina.
Economic policies implemented by Néstor Kirchner and, from 2007, his wife Cristina Fernández, made it difficult for overseas buyers to enter. In a bid to prop up the Argentine peso, the government introduced restrictions on ownership of foreign currency. But prohibition simply fuelled a dual exchange rate. At times it felt like the metropolis was held together with gaffer tape.
Buenos Aires fell 10 places in the Mercer Quality of Living survey at the end of last year, to 91st position, as the city experienced electricity blackouts, food shortages and price increases for goods and services. Owners such as Marianne Aubane from Paris were worried about offloading their homes after 2009 because dollars were scarce. Although the country abandoned the link with the US dollar 14 years ago, most property is still priced in this currency.
But the phones have started ringing again at high-end estate agents after President Macri’s policy shake-up.
Aubane is one of the would-be buyers who returned to the capital in January to scour the market. She is looking at a six-bedroom apartment in Retiro, close to the city centre, for $600,000 through Sotheby’s International Realty. Dating from 1931, the building has high ceilings and oak floors, and overlooks the bustling Plaza San Martín.
It is on sale at a knockdown price — almost 25 per cent cheaper than a similar property the same agent had for sale in 2014 for $795,000. Also in Retiro, a refurbished, two-bedroom apartment is on the market for $1.2m.
Current prices for higher-end properties, say agents, while slowly starting to recover, are not back to pre-exchange control levels. At the same time, the real estate market is set to benefit from the easing of transactions. “It’s the first time in six years that buyers and sellers can transfer money from an Argentine bank account abroad, and vice versa,” says Iuri Izrastzoff, who runs Izrastzoff Agentes Inmobiliarios.
Haller is pondering a modern two-bedroom pied à tierre in the waterfront financial district of Puerto Madero for $690,000 through Izrastzoff. The apartment building, which has a gym, pool and sauna, is a short walk from a nature reserve where personal trainers and picnickers flock at sundown. “Your capital is safe again,” says Haller, “and it’s not expensive.”
New research by Knight Frank places Buenos Aires 99th on its prime international residential real estate index, or Piri 100 — just above Lagos in Nigeria. Average prices are down 8 per cent since the previous survey in December 2014. Step across to Brazil, and São Paulo is at number 38. Prices for prime real estate in the Brazilian megalopolis climbed 3 per cent in 2015.
Yet unlike many of the skyscraper-lined cities of South America, Buenos Aires enjoys green spaces that border its grid plan. Wide avenues and Haussmann-style architecture became symbols of the city’s sophistication in the late 19th century.
A few blocks west of Puerto Madero in San Telmo, outside chess tournaments take place near streets where local children play football until the early hours. Here a two-bedroom, 120 sq metre apartment is available from $150,000 through En Buenos Aires.
Another area of interest for potential buyers might be Avenida Alvear in Recoleta where large neoclassical-style houses can be found alongside embassies, art galleries and Viennese-type cafés in which writers such as Jose Luis Borges used to savour sweet medialunas, a doughier version of the French croissant.
Family homes can also be found in the plush northern suburbs of Olivos and Vicente López, a 15-minute train ride from the terminal in Retiro. A modern three-bedroom house with skylights, floating staircases and asymmetrical terraces is on the market for $3.7m through Sotheby’s International Realty.
Locals are curious to know how much their homes are worth. Agents have seen a surge in the number of requests for quotes since the change of government in December.
“For the first time in years, homeowners want to exchange properties instead of sitting on their assets,” says Alejandra Bugna, a property lawyer at Baker & McKenzie. But she stresses that Buenos Aires remains a local property market with some foreign buyers, not an international one. Selling in the city can be difficult when local demand slumps.
Property purchases in the capital are up slightly: 1.9 per cent of Argentines bought there in the final quarter of 2015, compared with 1.5 per cent six months previously, according to FT Confidential Research, a unit of the Financial Times.
Yet with fewer than 3 per cent of Argentine nationals able to access a mortgage, Buenos Aires for the time being looks ripe for foreign pickings.