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Housing for a Song

I was treated firsthand today to a glimpse of the growing housing market on the outskirts of Buenos Aires, and I was not disappointed in its potential.  My gracious host from Pulte Homes Argentina went so far as to pick me up from my hotel early this morning and drive me about 30 miles north of downtown Buenos Aires, to the areas of Tigre and Pilar.  (Pulte Argentina is no longer affiliated with Pulte Homes US - private company Grupo Farallon bought out the division in early 2004.)

We drove in one of the few SUVs on the road, on a smooth highway into the BA suburbs.  Nice shopping centers, complete with McDonalds, Wal-Mart and Home Depot dotted the road.  Still not much sign of the widespread poverty that plagues the country.  When we arrived at the first of several gated community properties of Pulte Homes, I couldn't believe the homes.  I'm not quite sure what I expected, but it sure wasn't this.  Hundreds of beautiful, westernized houses line the streets, with a supermarket, clubhouse, and shopping center right down the block.  Two, three and four bedroom houses, complete with backyard decks, patios, even swimming pools - go for about US$200-$300,000.  Outside of Baltimore, or especially Washington D.C., these houses would easily go for upwards of US$700,000.

An unusual feature of real estate here is that, for the most part, Argentines do not use mortgages and pay cash for the houses!  If they do take out a mortgage, a downpayment of at least 50% is required.  This means the housing prices are not sinking in a sea of mortgage dollars, and prices are more real.  Another interesting fact is that, generally, real estate prices remained in dollars, not pesos, during the devaluation.  That means that prices did not nosedive in 2002, but it also means that to invest in real estate here, in dollars, is a very safe bet.

Though the entire country is much bigger than the US, landwise, it only has about 40 million inhabitants and the vast majority live in or very near Buenos Aires.  The trend now, for those who can afford it, is to leave the downtown congestion and move north to places like Pilar and Tigre, where you can have a lush backyard, quiet atmosphere, yet only have a 20-30 minute commute to the city.  More and more houses, communities, offices and shopping centers are now being developed.

I have much more to say about the real estate situation here in due time, as well as some solid, cheap companies we can play to capitalize on the solid growth here.  Stay tuned!  Hasta manana.

Erin

June 23, 2005 in Erin Beale | Permalink