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Real Estate: Why Now is the Time to Buy Property in Argentina

Just over a decade ago Argentina spectacularly unraveled with the biggest default in history—$100 billion. Dollar deposits were converted to pesos. Then, overnight, the peg of one-to-one with the dollar was broken. The unpegged currency immediately devalued. Savings were wiped out. Banks were set alight and locals took to the streets in protest.

That crisis created the biggest buying opportunity of a decade. During the fire sales you could have picked up a historic, high-end property in Buenos Aires or a vineyard in Mendoza for a song.

Today, Argentina is back in a bind. There is a strong possibility of another crack-up within the next year. And then we’ll have the same opportunity we had a decade ago. The signs are all there. The streets of Buenos Aires have recently seen the return of the backstreet currency exchange.

According to the official exchange rate, which is subject to capital controls, 4.4 pesos buys you a dollar. But on the street people are happy to pay up to 6.7. Inflation runs at 25%. The purchasing power of an Argentine’s peso savings is going down by one-quarter each year.

The government claims inflation is 9.9% and has outlawed calculating or quoting any other inflation rate. Forty percent of dollar deposits have been withdrawn from Argentina since last October. Now there are capital controls. You need special permission to move your dollars overseas.

To take a foreign vacation, Argentines have to apply to a bureaucrat for permission and explain where they got the money for the trip. And there are rumors that it will be made illegal to talk about the existence of the shadow market exchange rate for dollars.

But a lot of Argentines’ dollars and pesos don’t reside in bank accounts. Property transactions typically take place in special rooms in lawyers’ offices, and they’re a cash deal. There’s that much distrust of banks. They are fine for day-to-day things like paying your electric bill. Not for your savings, though.

And these transactions more often than not take place in dollars…if you pay in dollars you could get 25% off the price of property. The government has outlawed this, making the buying and selling of real estate in dollars illegal. Just one more rule Argentines will find their way around.

By some reports, if an Argentine company complied with all the taxes and tariffs it faces, they would eat up more than the company’s pretax profits. So the shadow economy thrives. By necessity, it seems, rather than greed to pay less tax. Middle-class day-trippers take the ferry to Uruguay to put their savings in deposit boxes. The rich spend millions on condos in Punta del Este, Uruguay (see sidebar below).

For Argentines, real estate is their bank. They understand inflation and expropriation from bank and pension accounts. If they have some spare cash, they’ll buy an apartment. Or a beach home across the Río de la Plata in Uruguay. Or a condo in Miami.

Now fewer Argentines are using local real estate as a hedge against inflation. New construction and permit applications have fallen off a cliff. They just want their cash out.

The government claims that the rate of outflow has slowed. But with every passing week, companies and individuals figure out new ways to get their cash out. For instance, companies buy financial instruments locally in pesos that they immediately resell in New York for dollars.

Argentines have seen it all before. When a government and a banking system take your life’s work with the stroke of a pen, you don’t forget. If you’re lucky enough to rebuild your savings, the next time you will be ready. And the harder the Argentine president, Cristina Kirchner, tries to keep assets in the country, the more they’ll be siphoned out.

Meantime, Argentina is all but frozen out of international debt markets. The government hasn’t reached a settlement with the group of creditors (known as the Paris Club) since its last default. So the country and the banking system desperately need these deposits to stay afloat.

But they continue to do incredibly dumb things. Two years ago President Kirchner seized private pension accounts. Now she is going to lend $4.4 billion of this money, at a rate of one-tenth the inflation rate, to new home buyers. A lottery will decide who gets the loans—not capacity to repay.

Argentina has major competitive advantages in beef production. But land under beef farming is contracting. Beef producers face large and complicated export tariffs and are forced to sell cheaply to the domestic market. Many have moved operations to Uruguay or switched to soya.

It’s one crackpot idea after another. And the cycle repeats. Expropriating your citizens’ savings or international companies like YPF (a subsidiary of Spanish oil company Repsol), which President Kirchner nationalized last April might buy you some time. But not much. The writing is on the wall.

In the last crisis, the trigger event was Argentina’s massive default on its sovereign debt. This time around Argentina doesn’t face that scenario. Government spending has to be funded from printing presses, taxes, and expropriation of personal or company assets. It’s hard to see how the government can collect more taxes. The printing presses are already causing the inflation and the rush to backstreet currency-exchange brokers. There’s a limit to what you can expropriate.

This time around the trigger event for a full-scale crisis will be the country’s running out of hard currency. There will be no money to pay for imports. Argentina can make do without more Porsches and Gucci handbags, but the country will grind to a halt if industry and energy-producers can’t get their hands on crucial imports. The factories will shut. Things will have to get really bad before we’re in a “buy” situation. Pay attention if you turn on your TV and see news flashes of burning banks and of factories that don’t have hard currency to buy raw materials, locking out their workers. If you turn on your TV a second day and see similar reports, then book your flight. Your dollars will go a long way.

Comparisons between the high-end neighborhoods of Paris and Buenos Aires are correct. It’s a world-class capital with a wealth of cultural activities, fine dining, and shopping. Buy when the Argentine capital is in turmoil and you’ll be sitting on prime real estate in one of the world’s finest cities.

If you’ve ever dreamed of owning your own vineyard, I can think of no better place than Mendoza, Argentina’s most famous wine-producing region. Mendoza sits at the foot of the Andes, 600 miles west of Buenos Aires. Soil and climate are perfect here for wine production.

Argentina long held promise. In 1900 it was the world’s sixth-richest country—richer than the U.S. Immigrants flooded from Europe. The British came to build the railways. They brought along Irish and Italians. The Spanish came. What followed is text-book mismanagement. When it comes to a head again, we’ll have a full-blown crisis. And an opportunity to pounce once more.

How the Crisis in Argentina will Affect Real Estate in Uruguay

Real estate prices in Uruguay have raced ahead over the past three years, and Argentines are driving this market. Some have been looking for a beach home…but most just wanted a safe place to store their wealth. Multi-million dollar condo sales in Punta del Este were common.

Argentines are banking on another crack-up. They have seen it all before. Now the Argentine government has bullied Uruguay into agreeing to pass on information about Argentines who bank in Uruguay.

But Uruguay is still the closest haven to store savings and wealth. Geographically and psychologically, it’s close. Many Argentines will figure out a way to get around this. I expect to see a major jump in Panamanian corporations buying real estate there. My legal contacts are already reporting a six-fold increase in inquiries from Argentine clients interested in setting up Panamanian corporations that would circumvent the reporting requirements.

Even so, sales volumes in Uruguay are falling. In Punta I hear they are off by more than half. Transactions and volume were at record levels in the lead-up to Argentina’s latest crisis in anticipation of what’s now happening. Now demand will soften. Few sellers are desperate. They bought here to store wealth. But because buyers will be thin on the ground, if you can find a desperate seller, you’ll get a good deal.



Real Estate: In Argentine Development, Vineyards and Villas – Argentina

New York Times – By NICHOLAS GILL

TUNUYÁN, ARGENTINA — “I’m a Texas boy and love the ranch; this reminds me of that,” said Michael Brochu, a semiretired tech executive from Seattle who is awaiting the completion of his villa at The Vines of Mendoza, a development in the foothills of the Andes.

“Big open spaces,” he said. “It’s like Napa 30 to 40 years ago.”

Mr. Brochu first heard of the development, on 400 hectares, or 1,000 acres, when he purchased eight hectares of vines several years ago through its vineyard estate program.

According to the development’s Web site, more than 100 investors have already planted 280 hectares with 18 varieties of grapes, like Malbec and Syrah. A team of experts is available to help guide owners, and to produce wine at the development’s own facility.

When Mr. Brochu heard that the company would be building villas adjacent to the vineyards, he jumped at the opportunity. “The key for us is the whole concept,” he said. “We can participate as little or as much as we want. We drink wine, but we didn’t want to be in the wine business. It’s more of a lifestyle.”

The one- and two-bedroom residences — made of wood, brick and concrete — range from $350,000 to $900,000, depending on the layout and size of the plot. (Many real estate transactions are done in Argentine pesos, but developments seeking international buyers generally price properties in dollars.) Twenty-two villas are scheduled to be completed by the Vendimia, the grape harvest in March.

But The Vines of Mendoza — established in 2005 by Michael Evans, an American entrepreneur, and Pablo Giménez Riili of a well-known Argentine winemaking family — is far from being the valley’s only new development.

While several projects, like the 310-hectare Valle de Uco, were put on hold in the wake of the 2008 global downturn, most are preparing for their first residents.

At La Morada de los Andes, near The Vines of Mendoza, 83 lots are under development on more than 400 hectares of vineyard. Land prices range from $90,000 to $160,000, with construction costs estimated at $1,600 a square meter, or $150 a square foot. The first structures, including the clubhouse, are expected to be completed by the end of the year.

Title transfers involving residential property are much simpler than those for farmland, said Steve Rosberg, the founding and managing partner of Ushay Investments. “The lots are residential, not agricultural, and this is an important distinction,” he said. The development company owns La Morada, as well as the sleek Fierro Hotel in Buenos Aires and Los Arbolitos, the for-profit vineyard investment trust that owns the vines around La Morada. Its grapes are sold to area wineries, with the trust supervised by Mr. Rosberg’s son Andres, president of the Argentine Sommelier Association.

Homeowners at La Morada may invest in Los Arbolitos, but even if they do not, small amounts of the wine will be allocated to them and sold in the clubhouse to help offset their expenses. Also, the developers say there will be opportunities to defray their costs through rentals.

“We will provide full property management services so that they make revenue from their non-occupancy time,” he said. “We estimate that a gross 8 percent return as a very conservative projection.”

Spanish and Italian immigrants planted vines in the Uco Valley as early as the 1920s, but the valley, which is 70 kilometers long, or 45 miles, was considered too far from Mendoza, the provincial capital in central Argentina. Most of the region’s wine production was concentrated closer to Mendoza, in Luján de Cuyo and the Maipú Valley.

In the early 2000s, when Argentine wine began to take off on the global market, top names like O Fournier, Achaval-Ferrer and Catena Zapata decided the valley had the potential to produce intense wines with relatively low acidity.

Surrounded by snowcapped Andean peaks, the region often draws comparisons to the Napa Valley, north of San Francisco, for its tourism potential, which includes outdoor activities like skiing, biking, and horseback riding.

While wine is a central element to all of the Uco Valley’s developments, some, like Tupungato Winelands and Algodon Wine Estates, are becoming lifestyle complexes, with golf courses, polo fields, boutique hotels, spas and a country-club atmosphere.

“For the Mendoza wine and real estate market, the first thing that has to be said is that it has been growing steadily for 15 years now,” said Andrés Ostropolsky, a Mendoza-based sales associate for Sotheby’s International Realty. The agency lists many properties in the region, ranging from vineyard estates at Casa Palmero to Casa de Uco, a vineyard complex where private home sites, as well as a hotel and spa, are under construction.

According to Mr. Ostropolsky, the asking price per uncultivated hectare ranges from $12,600 to $39,000, while the price per hectare of vineyard ranges from $35,000 to $98,000, depending on the location. In comparison, the price for a prime hectare of vineyard in Napa Valley ranges from $500,000 to $750,000.

“This growth has not been explosive, but continuous over time,” Mr. Ostropolsky said of Uco Valley prices. “The average rate for the appreciation of the land has been around 6 percent” a year.

Foreigners have not been allowed to buy large tracts of land in Argentina. “Recently the Congress has issued a law that allows a foreigner to buy up to 1,000 hectares,” Mr. Ostropolsky said. “In terms of vineyards, that’s a huge number. A big vineyard can be one of 150 to 250 hectares at the most.”

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

Real Estate: Investing in Buenos Aires-Argentina Property

There are many investors in this world, and each has his or her own investment style. That is, some choose to diversify and invest in multiple markets, others choose one market specifically, and still others stay liquid for much longer than the typical investor.

Investing in Buenos Aires Property – Evaluate Prices and Risks

With so many different markets to choose from, and so many different ways to invest, it’s no surprise that there has always been a great debate about the best way to invest. Typically, it comes down to financial assets versus property. This can be a tough debate, and frankly, it usually results in agreeing to disagree.

Many variables go into an investor’s decision. First is the investor risk aversion. Secondly, each investor has a differently structured investment portfolio, which will affect his or her future decisions. Finally, different investments require different amounts of liquidity.

Most experts agree that a good distribution of the portfolio is the best idea, as the saying goes: don’t put all your eggs in one basket. For example, while a bond may be much more liquid than real estate, it also carries certain risks that are not found in property investments. And this is no trivial point when in a country where defaults and seizures have become a regular part of recent history.

On the flip side, many argue that buying property relies too much on finding and keeping good, responsible tenants who not only pay on time, but return the property in the condition they found it in. Upon all that, there are also the costs related to getting tenants into the property, and the standard exit costs.

When investing in a financial asset, many choose to avoid the traditionally volatile Argentine options and set their sights abroad. This strategy can easily be applied to property, as well. For example, Uruguay is a just across the river, and is a great opportunity for an alternate investment.

The other major issue for any type of investment in real estate Buenos Aires has to do with the capital to be gained, and the price of entry. That is, if an asset is unusually low and has a projected rise in its future, it is more than just as asset; it also offers capital gain income. However, the state can often distort the price of entry. For example, 2002 brought many property sales because becoming liquid was the best way to go, as construction costs were unusually low, and liquid assets meant building opportunities.

But the world has changed greatly since then, both internationally and in Argentina. The international financial crisis also affected the cost of property, and locally, relative prices have been greatly distorted. Prices are too low for sellers to be comfortable selling, the market has simply become a more complicated place.

In short, neither financial assets nor physical ones win the battle, but it is important to evaluate the risks of any investment, even property investment, before taking the plunge.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

Growth in the Buenos Aires-Argentina hotel industry

The hotel sector in the Buenos Aires real estate market is attracting property developers. Tourism is on the up and there is a diverse variety of options opening up to investors.

Hotel industry information:

•    Hotels are the real estate sector that provides profit in the long term.
•    Boutique hotels are a new phenomena that is one of the popular options for investors.
•    The location of boutique hotel is crucial in its success. There is already an oversupply in areas like San Telmo and Palermo, with hotels finding it hard to compete.
•    The amount of money required to open a Buenos Aires boutique hotel is estimated at costing between $ 2 million and $ 5 million US dollars.  The expenditure per room costs between $ 150,000 and $ 250,000, including land and fittings.
•    On top of the costs of constructing and fitting a hotel investors also have to consider the costs of launching the hotel on the market. It takes a lot of time, hard work and money to earn a reputation as a reputable hotel.
•    Enterprises in the Buenos Aires hotel market have the best chance of increasing in value.
•    Mid-range hotels make up the part of the market that is growing the most, thanks to corporate tourism and business trips. This sector needs to be standardized so that clients know what services to expect in this type of hotels. Until what is expected in mid-range hotels has been established, larger, hotel chains will perform better as people can trust in what they will receive during their stay.
•    Hotels with limited or selective services are the new tendency for hotel developers, successfully combining quality, basic services and fair prices. Rooms in this type of hotel are smaller but well designed and are awarded three or four stars.
•    Mid-range Buenos Aires hotels withstand the economic crisis and have an income of around 12% annually.
•    The amount of money invested per room should not exceed $ 70,000 US dollars in 3 and 4 star establishments. Luxury hotels are much more risky investments as they require an investment per room of between $ 300,000 and $ 500,000 US dollars.
•    ‘Fractional’ hotel developments allow investors to diversify and lower the risks in investing. Fractional enterprises are typically hotels with timeshare homes, with one room ‘owned’ by 4 to 12 different proprietors. This is a smart investment in places where there is high seasonality.

The Buenos Aires hotel market is expanding, with boutique hotels and fractional, mixed hotels creating exciting and diverse options for investors.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

Buenos Aires Real Estate Lawyers

Buenos Aires Real Estate Lawyers

The Buenos Aires real estate lawyers of Kier Joffe advise national and international industrial, commercial and services companies in drafting, negotiating and implementing real estates. Kier Joffe extensive experience in complex agreements enables the firm to develop pragmatic, cost-conscious solutions, tailored to meet the individual needs of each client. Consult with a Buenos Aires real estates lawyer at Kier Joffe and receive trusted and experienced counsel at very reasonable legal fees.

At Kier Joffe, the firm’s real estates lawyers focus on the following areas of real estate law:

-Real estate planning
-Commercial development
-Realty operations
-Legal counsel to commercial real estate owners
-Legal counsel to real estate developers
-Legal counsel to building companies
-Completion and sale to third parties
-Design and posting guaranties
-Commercial real estate provisions of adequate funding

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Kier Joffe is composed of professionals continuously trained through programs of technical and business management at a national and international level. The firm’s real estate lawyers, practice law as a profession and are aimed at satisfying our customers with an intense dedication. By understanding the needs and requirements of our clients we can provide the proper assistance for the task at hand.

Skilled Real Estates Lawyers in Buenos Aires, Argentina

The Buenos Aires real estates lawyers of Kier Joffe are highly oriented to the practices of business and real estates law. The attorneys of the firm support their clients in all commercial and real estate challenges, and assist them in strategic change processes and business succession. Kier Joffe focus their work on an extensive set of core competencies, with specialties in legal consultation, litigation and arbitration.

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At Kier Joffe, the firm’s Buenos Aires real estate lawyers have a distinct international perspective, with appropriate cross-cultural experience. The firm has proven expertise in arbitration at the national and international level. In addition, Kier Joffe staffs real estate attorneys who are involved in several international legal committees and major arbitration institutions. Trust a Buenos Aires real estate lawyer at Kier Joffe to handle local and cross-border issues competently, reliably and quickly.

Client Committed Buenos Aires Real Estate Lawyers

Clients of Kier Joffe seek quick, practical and expert legal advice about their problems. For exceptional, strategic challenges and processes of change, they want sound legal guidance and professional support.

The Buenos Aires real estates lawyers at Kier Joffe set themselves high standards with a consistent customer orientation. The firm renders customized service to its clients, while emphasizing its core competencies to reflect a high degree of professionalism and experience. Each mandate is assigned to a partner at Kier Joffe who acts as personal contact of the client. By staffing only the most well-trained real estate lawyers in Buenos Aires, Kier Joffe are efficient and creative at resolving the legal issues of its clients.

A Highly Qualified Real Estates Law Firm In Buenos Aires, Argentina

Managing complex commercial legal challenges and litigation is a main expertise at Kier Joffe. Clients of the firm are entitled to tailor-made and practical advice. The firm’s Buenos Aires real estate lawyers concentrate on their core competencies, allowing them to provide effective and value-added solutions. All professionals at Kier Joffe are highly qualified in their areas of practice.

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Loyal Real Estate Lawyers in Buenos Aires, Argentina

The clients of Kier Joffe are decision makers in the economy. Many of them manage their own company or bear responsibility in international, strategic or conceptual environment. They seek fast, practice oriented and competent legal advice to their daily problems.

In times of change and extraordinary, strategic challenges, the Buenos Aires real estate lawyers of Kier Joffe offer professional assistance and create sound legal solutions. The MME Partnership is responsible for the quality of the client relationships. The Buenos Aires lawyers of the firm are delighted to assist and work with businesses and professionals of Argentina.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

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