Real Estate in Buenos Aires

2007-01-09T05:35:00.000-08:00

The real estate market in Argentina is BOOMING

2006 was another strong year for appreciation in virtually every part of Argentina. In Buenos Aires, prices have risen over 20% in areas such as San Telmo, Palermo, Barracas, and Recoleta. Development has also continued at a rapid pace although all of the new housing is beginning to put constraints on the city infrastructure. Utilities such as water and electricity need time to catch up with the rapid growth. In November, the city government put a moratorium on new development in certain areas just for this reason. Regardless, investment continues. Both domestic and foreign investment is flowing. On December 26th, Merrill Lynch announced that it had partnered with the Pegasus Group in raising a U$S 200M fund that would focus only on commercial, residential, and tourism-based real estate investment:

http://www.bloomberg.com/apps/news?pid=20601086&sid=aqeWpsy79TcY.

Merrill is not alone, it appears as though investment in Argentina is becoming trendy with the institutional investment community. Early reports are predicting that this trend will continue through 2007. Inflation is being controlled, and exports are surging.

2006-07-06T15:10:00.000-07:00

Wow! It's been awhile. How's everything? We've decided to clean up our act a little bit, and have gone professional. Take a look at our new site:

www.luxba.com

With the way US real estate is headed, you might want to consider an investment in Argentina - - I am continuing to see foreign investment flow into real estate in Buenos Aires and greater Argentina. Is Argentina actually becoming a mainstream vacation destination? With all the press, it will be soon enough. Hotels continue to hang the "no vacancy" sign, and short-term apartment rentals are really filling the void. Drop us a line when you check out the new site -- we'd love to hear what you think.

2006-04-23T06:13:00.000-07:00

www.vrbo.com

Ultra Luxury 2 Bedroom Apartment With Buiness Center for Rent

We have finished the extensive renovation of our flat, and it is now available for your stay in Buenos Aires:

Above is our building from the street, the street entrance, and the building's original lobby -

Above is the original 1926 wood-carved elevator, our apartment entry hall, and the living room.

Above is the living room, fully equipped business center, and bar seating area.

Bar seating area (view from kitchen), view into living room, and the chef's kitchen

Another view of the kitchen, travertine marble bathroom, and master bedroom. Secondary bedroom is below.

A detailed property description, and prices will follow, if you have any questions or would like to reserve the room, please email me at briantown@gmail.com

A 5-star property. Located in the Recoleta district, considered by most to be the safest and most upscale neighborhood in Buenos Aires. This stunning apartment offers all of the amenities expected by the luxury traveler. An original wood elevator takes you up to the apartment which is situated on the 8th floor of an 80 year old building. The building/apartment is of Parisian architecture and features 12 foot ceilings, original French balconies/doors, 8th floor city views, and period detailing. The Slovenian Oak floors have been restored to their original beauty. The apartment boasts a spacious 75 square meters (over 800 square feet) with 2 bedrooms. Completely renovated with the finest materials and hand made furniture, this property blends modern convenience with the class of old world architecture.

The apartment has an extremely quiet and sunny location on the back of the building and shares a floor with only one other space. There is a separate service entrance in the kitchen for laundry/food delivery and cleaning staff. Close to all transportation, fine restaurants, and nightlife this location leaves nothing to be desired. There was no expense spared in the complete renovation of the apartment.

The living room has an atmosphere that is warm and relaxed and the ambiance embraces the uniqueness of the local culture. It is richly designed with leather furniture and custom lighting. Featuring a 30” flat screen television with DVD player and 5.1 surround sound, the living room is poised to play the latest Hollywood thrillers. Just off the living room is a library and reading space complete with spot lighting.

The apartment has two bedrooms. The principal bedroom is furnished with an amoire and a King size bed with luxurious high thread-count linens. The original french doors open to a city view. The second room also retains it’s original french doors and has a King size bed (two twin beds upon request). All mattresses are Four Seasons Presidential Suite mattresses.

The business center is completely equipped for today’s business traveler. This room includes a custom desk/work area, a color printer/scanner/copier, and a cordless phone with voicemail. High-speed Internet and Wi-Fi is available throughout the apartment.

The bathroom has been completely renovated with travertine marble, sleek fixtures, and hand made furniture. The gourmet kitchen is furnished with all the items you would find in your own home. It includes custom wood cabinets, a commercial grade oven, and other stainless steel appliances.

This space is perfect for either the longer term stay in Buenos Aires or just treating yourself to an ultra luxury experience for a few short nights. Additionally, this property offers three times the space of a normal hotel room, with all the charm, at half the price.

The renovation of this apartment spared no expense with goal of providing our visitors a world class lodging experience. The money, effort, and time spent on this property is something that we hope helps you remember your stay in Buenos Aires.

Maximum Capacity: 4 people
Please no children, smoking, or pets

This property is of the highest caliber and includes the following amenities:

Living Room

· Panasonic 5.8 Ghz cordless telephone with voicemail (up to 3 mailboxes)
· Luxurious leather sofa, sitting chair, and banquette
· Stereo CD/DVD/MP3/Karioke player with remote control
· 30” RCA flat screen television with cable
· 5.1 Surround Sound System
· Library with spot lighting
· Air conditioning and heating system with remote control
· Custom designed mood lighting
· Bar seating for four

Bedroom #1

· King sized bed with Four Seasons Presidential Suite luxury mattress
· The finest bedding, pillows, and down comforter
· In-room electronic programmable safe
· Incredible period chandelier
· 8th Floor View
· Period French doors and French balcony
· Individual air conditioning and heating system with remote control
· Custom designed closet

Bedroom #2

· King sized Four Seasons luxury bed (2 twin beds available on request)
· The finest bedding, pillows, and comforters
· In-room electronic programmable safe
· 8th Floor view
· Beautiful period chandelier
· Period French doors and French balcony
· Individual air conditioning and heating system with remote control

Business Center

· Dedicated room for business activities
· Custom designed work desk
· High-speed Internet and Wi-Fi system is available throughout the apartment
· Hewlett Packard color printer, scanner and copier
· Custom illumination
· Wireless Panasonic Phone with Voicemail

Bathroom

· Luxury marble bathroom with shower/bathtub
· Modern bathroom design with high-end fixtures
· Hair Dryer
· Full length mirror
· Custom lighting

Kitchen

· Fully remodeled kitchen with marble countertops
· High-grade stainless steel appliances
· Gourmet industrial stainless steel oven
· Compact, integrated refrigerator
· Stainless steel microwave oven with integrated toaster
· Fully equipped with dishes, silverware, glasses, coffee maker, pots and pans, wine opener, and all cooking utensils

Other Amenities

· Air conditioning/heating in each room (Individual temperature control for maximum comfort)
· Wi-Fi high-speed wireless Internet access
· Local phone line with unlimited free local calling
· Weekly maid service complimentary (stays over 7 days)
· Extensive cable featuring CNN, BBC, Fox, E!, MTV, ESPN, Fashion TV, Cartoon Network, Disney Channel, Discovery Channel, TNT, WB, Hallmark, National Geographic, Film Zone, Animal Planet, Globo, and local programming

Check In: 2 PM
Check Out: 12 PM

Prices: Nightly U$S 150 Weekly U$S 900 Monthly U$S 2700

2006-04-14T07:20:00.000-07:00

Living Large in Buenos Aires

For the people interested in this site, I thought that I would post a project I am working on putting together in Buenos Aires. The following offering is very unique (to date, the only in BA) and is aimed at providing a low cost, 5-star lodging experience for the person who spends a portion of time per year in Buenos Aires. The market I am focused on is the high-end traveler/family or business traveler. The numbers make sense even for the sideline investor. I am confident that there is an undeveloped market/opportunity in this area of real estate in Buenos Aires. I am also confident that there is no other world-class city that can offer an opportunity like this at a similar price point. I am also very interested in your feedback. Please email me with what you think at briantown@gmail.com --- Now on to the business!

1)The Front of the Mansion 2)Ground Floor Carriage House - Planned cafe 3)Presidential common area

Summary and highlights:

A recently renovated, turnkey building
4 floors and a basement- main floors are over 2000 sq/ft of spacious luxury.
Meticulously restored 1910 original detailing
Excellent location - 10 blocks to the World Famous Recoleta Cemetery.
Fully furnished with 7600 sq/ft in total usage space
Original, restored elevator
Museum quality furniture, fixtures, and architecture.
A building of the highest caliber - comparable to the Ritz Carlton or Four Seasons Hotel.
Amenities will include a concierge, daily maid service, personal security, gourmet chef, ground floor cafe, and therapeutic masseuse.
A comparable building in structure can be found in New York for a $31,000,000 price tag. See here NYC comparable

The offering:

We will be selling Ownership Units (OU's) in the property. An Ownership Unit will:

entitle the investor to a 1% percent ownership position in the proposed hotel.
Allow the investor usage of the hotel for a period of time per year.
Allow the investor to participate in any property appreciation in the event of a sale.
Allow the investor to trade or rent their annual hotel usage time.
Provide top quality services and amenities found only in the worlds best hotels.

Entry level Ownership Unit's will initially cost around U$S 50,000 with a U$S 3,000 annual fee. The annual fee will be used to provide employee salaries, pay property taxes, and maintain the building.

We also have plans to add the following facilities:

The Lower Floor

- a small day-spa/therapeutic massage room
- a possible gym
- a storage "locker-room" for charter members (nice wooden lockers to keep personal belongings or store wine with charter members name).

The ground floor

- A fully functional business center including a computer, copier, printer, fax machine, scanner, and phone system.
- Upgraded living area for the staff
- Outside sitting area

The first floor

1) Common entertainment area 2)Common reading room wih fresco on ceiling

- Bathroom renovation

The second floor

- Bathroom renovation
- Ultra Luxury Four Seasons King bed mattresses
- Flat screen televisions in each room
- Extensive cable featuring CNN, BBC, Fox, E!, MTV, ESPN, Cartoon Network,Hallmark, Disney, TNT, WB, National Geographic, Discovery Channel, Animal Planet, Globo, and local programming

1) First floor foyer 2)Original 1910 skylight 3)Second floor foyer 4)Presidential reading room 5)Second Floor bedroom

Rooftop Terrace
- Possible Jacuzzi
- BBQ area (Parilla)
- Landscaped garden area

Throughout the entire property

- Wi-Fi wireless high-speed Internet throughout the mansion
- Vonage phone system with free unlimited calls to the US and Canada

Additionally, we will hire a staff that includes a chef, daily maid service, 24-hour security, a concierge, and a therapeutic masseuse. These services will be provided to all guests for a nominal fee. This will be a 5-star ultra luxury property.

The secure investment

Currently, there are no other comparative properties like this in Buenos Aires. Percentage ownership interest property structuring is unheard of in Buenos Aires, making ownership in spectacular buildings also extremely affordable. Simply researching the cost of a timeshare in Mexico will show the value provided in this investment.

Timeshare Comparative:

Up front cost for a two-week annual usage = U$S 50,000
annual membership fee = U$S 2000 - 3500
What you get = a 2 bedroom casita in Mexico, 1500 sq/ft, non-ownership 30 year usage right with a partial view of the ocean.

Income Potential

Each owner will have the flexibility of using, trading, or renting out their annual time in the building. While using the property is a treat in itself, renting the property can be equally rewarding. With tourism surging at 25% a year in Buenos Aires, the 5 star hotels can not keep up with demand. It is increasingly becoming more and more difficult to find luxury accommodations in the city. Today, we estimate a 7-10% net cash ROI on the rental of your time after paying the $3000 annual fee*.

* I used a very conservative comparison to come up with a $3250/week rental price for a ½ floor and building. Please see comparison here: Less than comparable comparison Please note that the property in comparison is less than ½ the size of our proposed property, and includes none of the amenities. The property in comparison has an 85% on average occupancy rate throughout the year.

We are offering a 5-star lodging experience along with ownership in a 1910 fully restored and furnished mansion in the heart of Buenos Aires. I am the first person to identify this market in Buenos Aires and I am sure that an investment with this quality cannot be found anywhere else in the world at this price.

Membership

½ Floor Membership Includes:

Two Luxury Bedrooms, One Private Bathroom
Usage of over 7000 square feet of Mansion space
Access and usage of all facilities
Ownership = 1% of the building
2 weeks a year usage
Prices starting at $50,000 and $3000 per year membership fee

Full Floor Membership Includes:

Private Usage of the entire facility
Four Ultra Luxury Bedrooms, Two Private Bathrooms
Usage of over 7000 square feet of Mansion space
Sole access and usage of all facilities
Ownership = 2% of the building
2 weeks a year usage
Prices starting at $95,000 and $6000 per year membership fee

Charter Member - Only Two Available:

1 Month a year full facility usage
Private Usage of the entire facility
Four Ultra Luxury Bedrooms, Two Private Bathrooms
Usage of over 7000 square feet of Mansion space
Sole access and usage of all facilities
Ownership = 4% of the building
2 weeks a year usage
Priced at $150,000 and $24,000 per year membership fee*

*This membership is for a limited time only, and can be owned between four separate entities.

If you are interested in investing, or have any additional questions, please contact me at briantown@gmail.com

2006-03-27T16:18:00.000-08:00

Excellent article on the investment climate in Argentina:

Property Investor News Magazine - UK

By: Mark Hempshell

April 2006

Argentina was sparsely populated until Europeans arrived in 1502 and the country was colonized by Spain - from whom independence was declared in 1816. Over the next 160 years centralist and federalist, conservative and radical, and civil and military administrations traded power. In 1983 after decades of political turmoil, plagued by terrorism and oppression under which countless numbers of opponents 'disappeared', the last military dictatorship was ousted and democracy was restored. In the 1980's and 1990's the Government introduced measures to take civilian control of the armed forces and permanently establish the country as a democracy.Despite, at times, having suffered from political and economic turmoil República Argentina is still the most developed country in South America, and to all intents and purposes a 'first world' nation, not a 'third world' one. It has the highest GDP per capita, the highest levels of university education and an infrastructure comparable with industrialized nations.

The Economy

Foreign investment and immigration from Europe shaped Argentina into an advanced economy during the 19th century. From 1880-1930 the country was one of the ten wealthiest nations in the world. But years of political problems contributed to economic decline, leading to massive public debts and severe hyperinflation by the late 1970's. In 1991, under President Carlos Menem, the Government embarked on a program of trade liberalization, deregulation and privatization with the aim of rejuvenating the economy. Most significant of these, as we will see later, was the 'Convertibility Law', which pegged the value of the currency, the peso, to the US dollar on a one-for-one basis.Initially the economy improved but falling exports, growing imports, unemployment and the impact of the Asian economic crisis eventually took their toll. By 2001 GDP had plummeted, inflation exceeded 1,000% and unemployment reached 25%. The peso-dollar peg was ended in 2002 and the currency lost 70% of its value. Argentina defaulted on its international debts, public employees went unpaid and bank accounts (an extremely unpopular measure known as corralito) were frozen, leading to street rioting.

In 2003 strict fiscal measures including revaluing the currency, import substitution policies and increasing exports contributed to a sudden surge in GDP. Internal consumption increased, foreign investment returned and the so-called 'Tango Revival' began. The economy grew 8.8% in 2003, 9% in 2004, and 9.1% in 2005 by which time unemployment had fallen to 10%. The Government completed restructuring of the national debt in February 2005, which now stands at 69% of GDP and is slowly decreasing. According to INDEC, the National Institute of Statistics and Census, GDP expansion for 2006 could be 7%.

State Of The Property Market

As in other developed nations property here was always considered a rock-solid investment. But the economic collapse of 2001-2002 shook that belief to its foundations. During this time people lost the majority of their savings and their pensions. The breaking of the peso-dollar peg caused the currency to lose 70% of its value against the dollar by December 2002 - making previously-attractive dollar mortgages cripplingly expensive. People were desperate to sell their property to salvage something and, burdened by many sellers and few buyers, the property market collapsed. The rental market was also severely affected : According to 'Reporte Inmobiliario', which reports on trends in the market, average residential rents dropped by 74% from US$29 to US$7 per m² during 2001 alone.But with the economic revival the market began to move again. By the end of 2003 residential property had, on average, recovered to 67% of its pre-crash value. By January 2006 prices in many areas have recovered to their pre-crash levels, and in some have increased by as much as 34% in a year. Property transactions, together with new build completions, reached a new record in November 2005. Some outside observers wonder how, given recent events, confidence has returned to the market so quickly. One key reason is that, after the corralito, many Argentineans do not trust the banks and still regard land and property as a more secure investment.Another factor which bodes well for the property market is that buying property here is straightforward. Foreign investors may buy without permission. Once you have found property the title is checked, the escritoire is signed and the purchase is registered. There is no capital gains tax.

Buenos Aires

Argentina is divided into 23 provinces and one autonomous city - Buenos Aires, widely known as capital federal. The city itself has a population of 2.7 million and the city plus the greater metropolitan area 11.5 million, making it one of the largest conurbations in the world.Buenos Aires has a modern high-rise centre with thriving commercial districts, yet is notable for its quality of life with extensive green spaces, good public amenities and transport and - as the name suggests - a pleasant climate. It is gradually becoming recognized as something of an undiscovered gem compared to most overcrowded international cities. In a recent article 'The Washington Post' proclaimed 'Forget about Europe, go instead to beautiful Buenos Aires - the city with everything but without the high costs of European cities.' Living costs are indeed low for any city, although rising : A good meal for two with wine costs US$20, a cinema visit US$4 and domestic staff can be hired for US$2 an hour. Not unsurprisingly, therefore, it is proving a major draw to expatriates, migrant workers, entrepreneurs, retirees and students from Argentina, the rest of South America and, increasingly, the USA.Property prices here have been rising briskly since 2003, but are still extremely low by capital city standards. It is still possible to buy a studio apartment in a good central area for US$50,000, although these are becoming rarer. Across the city generally new build property tends to be more expensive than old, and floor area tends to be more generous than in most European cities.

Recoleta, north of the centre, is regarded as the most desirable and fashionable residential district and is also popular with tourists. It is very much the 'Fifth Avenue' or 'Mayfair' of the capital, home to deluxe hotels, fine restaurants and designer shops. Current apartment prices range between US$1,500-US$3,000 per m², with one bedroom apartments typically selling for US$90,000 and two bedroom apartments starting at US$135,000. Prices were already high by Argentinean standards so showed a relatively modest 15% price rise in 2005.Palermo is another good quality residential area, with a reputation as a 'trendy' district. Current prices in Palermo range between US$1,300-US$2,800 per m². Puerto Madero is a newly developed area, similar to the London Docklands. Prices are already at a premium here, at around US$2,200-$3,000 per m² and only a few sites are left for new development.Of course, as elsewhere, the greatest price appreciation is often found in the up-and-coming districts. San Telmo to the northwest of the centre is a bohemian area of pavement cafes, bistros and antique shops, still showing signs of its working class roots. A regeneration programme to improve security and enhance the street scene is currently underway. Also up-and-coming is La Boca on the southern edge of Buenos Aires at the mouth of the River Riachuelo. These districts are home to the city's famous Tango clubs. Prices are currently in the region of US$800 to US$1,200 per m² and these areas are tipped by many commentators for growth.

Michael Koh, President of ApartmentsBA.com, has made extensive real estate investments on behalf of his own company and as a consultant to investors, and firmly believes in Recoleta despite its relatively high prices. He says 'Recoleta will always be Recoleta. The best investment is buying in a good area like Recoleta but not on a posh street like Avenida Alvear where prices have already gone over US$3,000 per m². You can go just a few blocks away in a very nice part of Recoleta and pay US$1,500 per m².' He points out 'Many investors are buying for short-term rentals (serviced apartments). So it doesn't make sense to pay US$3,000 per m² when you can pay half of that in a good part of Recoleta. The average tourist that comes down and books an apartment won't know the difference of 5 or 6 blocks.' Michael is also very confident about the Palermo Soho/Viejo/Hollywood areas which he believes will be transformed, particularly as tourism increases. He tells us 'I predict these areas will explode with growth within the next 3-5 years' and he has started to purchase up plots of land in this area in anticipation of building luxury houses and boutique hotels.

Tourism, Agriculture And Land Investments

An important issue to factor in is the part tourism could play in the property market. Tourists dwindled to almost nothing when the peso-dollar tie made it prohibitively expensive to visit. But today's bargain living costs saw visitors rocket to 3 million last year. Tourism Secretary Carlos Enrique Meyer recently predicted 4.1 million tourists and US$3.5 billion of tourist income for 2006, with 10 million visitors projected by 2010. A number of airlines are restarting or launching new routes.Major draws for tourists are Buenos Aires, the Iguazú Falls and Patagonia. There are several good quality ski resorts in the Andes (the season is June-September) such as Bariloche, Las Leñas and Villa Angostura. Hotels in these areas are frequently fully booked, fuelling the demand for short-term house and apartment rentals. Investors are also active in buying land with future residential development potential in tourist areas. Argentina has always been a major and well developed agricultural country. As well as being self-sufficient in food it is the world's fifth largest agricultural exporter, and agriculture accounts for 60% of all exports. Agricultural land is very cheap by international standards and there has already been notable foreign investment in agricultural land. International investors such as George Soros, Kerry Packer, the Sultan of Brunei and Ted Turner are already believed to have bought up large tracts of land, particularly in Patagonia. Analysts agree that, should the USA and EU eventually agree to remove or reduce subsidies for their own agricultural sectors countries like Argentina could benefit considerably.

Future Prospects

So what are the prospects for prices in 2006 and of course rental yields? Michael Koh reports 'Prices have drastically risen all over the city in good areas like Recoleta, Barrio Norte, Palermo, Palermo Soho/Viejo/Hollywood, Puerto Madero. Areas outside of those areas were not as drastic. Property prices went up by as much as 25%-30% last year in some areas of the city. However, much depends on the kind of apartment, building and location.' On rental yields he says 'The rental market has exploded. There are a lot of apartment rentals on the market for tourists. Hundreds if not over a thousand. The typical average rental probably yields about 6-8% per year on the total investment.' However, he advises that high quality, well equipped properties can yield much more. I offer luxurious furniture, high-tech electronics, local cellphones, USA phone lines, high-speed Internet and many other features. Most locals aren't willing to make this investment. However, it enables us to make a much higher rate of return. Many of my clients have yielded as high as 11% - 16% a year on the rental income alone.' Michael is extremely confident about prospects for the market, stating 'I've always said that real estate here in Argentina is one of those once in a lifetime opportunities. I still maintain that property rates can easily double in good areas from today's prices.'

2006-02-04T12:57:00.000-08:00

Furnishing your property

What an adventure! I have spent countless hours walking the streets of Buenos Aires looking for the right furnishings to put in our apartment -- For me, it's never a simple task. There are several challenging factors involved with buying furniture here.

Furniture stores

For one, almost all furniture stores do not have inventory. Some have floor models that you can see and touch, but when it comes to buy, you'll need to wait 30-45 days for the item to be constructed. Some stores only have pictures to look at, and others simply draw you a sketch of what you'll get. Almost any way you slice it, it turns out to be a long process. The benefit of this process is that there is a lot of flexibility in what you can order. Most stores will make items to exact measurements, and some will even build a design you give to them. Many furniture stores are built around a specific furniture designer. Some of these designers have experience with creating the look for local 5-star hotels and restaurants. One of our designers helped design and furnish the Faena Hotel www.faenahotelanduniverse.com . Before purchasing anything these designers will usually offer to come to your house and help you build a design plan. They don't charge for this visit, but they do hope that you will furnish part of your house with their product. Generally, payment is 50% up front, and 50% upon delivery. Never pay everything up front unless the furniture is already built and you have had a chance to inspect it. Once the money has exchanged hands, you're on your own -- don't expect a follow up call.. I learned this one the hard way.

I found that the furniture stores here are of four varieties:

1) Modern
2) 1985 style (light oak)
3) Antique
4) Upscale French (Louis 14th)

For me, it was very difficult to find a reputable store that had good quality furniture at a reasonable price. Prices always tend to be on the high side when a foreigner walks through the door. Nevertheless, I did find a few stores that met the above criteria.

Personal carpenter

Never a bad option, and it sounds cool to have a personal carpenter. There are some extremely talented woodworkers in town. I decided to get creative a couple times and I designed a few pieces of furniture. These pieces probably won't show up in the Guggenheim anytime soon, but it's not because of the craftsmanship. This option is usually cheaper and of higher quality (given you have a good carpenter), but one man can only work so fast, and they usually don't work with leather or fabric.

Furnishing your place with antiques

Buenos Aires is filled with old antique furniture. If you look hard enough and in the right place you can find some really good deals. In our apartment, we decided to purchase period lighting to go with our 1920's architecture. We blended the period lighting and other antique details with furniture that was more modern. There are entire warehouses of antiques in Buenos Aires. These warehouses also act as turnkey refurbishing factories. At one shop you can buy a couch from 1919 -- pay an extra fee, and the store next door will completely restore it for you. We bought our lighting at one of these places and had them rewired for a total price of around U$S150 each. One section of the warehouse is filled with the old relics from torn down mansions. These items consist of ornate entry doors, gigantic stained glass windows, grand staircases and wrought-iron pieces. In my opinion, it's only a matter of time before these warehouses are discovered by the masses and plundered. Until then, half the fun is finding something that fits in your house, and half the fun is in negotiating the purchase. The people that work in these places are pretty well versed in the art of negotiation -- I think they are part salesperson, part actor. Every time you offer a lower price than what is marked, they act like the offer is unattainable. Usually a price is settled upon somewhere in between --- however, just as often, they will let you walk away.

We took our time buying furniture and tested out all of the above options. With some we had more satisfying results than others, but all in all we were very pleased with the quality of work and products. As soon as everything has arrived, we'll post some pictures of the place.

2006-01-18T07:40:00.000-08:00

The benefits of investing in Buenos Aires

As I have stated before, one of the major reasons I invested in Buenos Aires was to capture the upside appreciation of the real estate market. Prices of property are just now reaching the levels they had attained before the currency devaluation of 2001. Wow, if I could buy real estate today in California at 2001 prices! In most major US cities nationwide, housing prices have come close to doubling in that same 5 year period. In my opinion, the depressed real estate prices in Argentina are a short term phenomenon. Why do I say this? Yesterday, a 74 square meter apartment on our street, two blocks up just sold for $140,000. The apartment was in a 60 year old building and needed a complete renovation. I purchased my 75 square meter apartment in late October for $103,350! If you believe in comparables, that is a pretty exceptional return for 2 1/2 months. In my neighborhood (Recoleta), properties in the range of 75-100 SM are being snapped up the day they are put on the market -- Demand is very high. But why? I've noted before that Buenos Aires is an excellent city that has all of the amenities of any large capital city. Tourism numbers for Buenos Aires seem to validate this -- a 8% increase over last year. The upscale hotels are at capacity and have nearly a 85% occupancy rate. There is a need for short-term rental apartments to keep up with the swelling tourism and business travelers. We will rent our apartment for $150/nt, which is 1/2 the price and twice the size of a comparable hotel room. I believe I will make my total investment back in less than 4 years. In four years I also believe I will see an average of 20% appreciation per year.

Taxes

Annual property taxes in Argentina run about .75% of the fiscal value of your property. Unlike the US, you are not sent an annual property tax bill. As a foreigner, it is up to you to remember to pay this. Annually you need to have an accountant prepare your tax bill. Then you need to assign a local resident to go down to the tax office, stand in line, and pay this tax bill for you. This is where it helps to have a friend living in Argentina ;)

The capital gains tax in Argentina is 0%, yes 0%. Whether you choose to roll your profits into another property investment in Argentina or wire it out. There is a 1.5% tax called the "Transfer tax". It is 1.5% of the sales price. However, you can get this waived if you are using the proceeds and purchasing another property here in Argentina.

Labor Prices

In my last post, I discussed the work that was done to my apartment. Labor here is cheap compared to the US. The people I work with are very skilled tradesmen that take pride in what they do. To completely renovate a 1200 sq/ft apartment including a new kitchen, bath, walls, floors, electrical, plumbing, appliances, and even floorplan configuration plan to spend between $20K and $30K. Obviously, it is difficult to provide a rule of thumb, but generally, work is about 1/3 the cost of similar work in the states. I would also say that in my experience the quality of work is similar.

In my next post, I will be discussing a project I am considering -- Construction of a 10 story building in downtown Buenos Aires! Stay tuned.

2006-01-06T10:04:00.000-08:00

Building renovation

My main purpose of purchasing a piece of property in BA was the exceptional rate of return that the investment would spin. I invested in a piece of property that would make me money, not a piece of property that I would live in. The short term rental business in BA is a very lucrative proposition. Besides investing in luxury mattresses, bedding, furniture, and electronics, I wanted to provide a first class apartment with twice the space of a hotel room. Additionally, I wanted to provide all the amenities and luxury of a 5-star hotel at the price of 3-star hotel. The apartment features:

Ideal location in the Recoleta District
High-speed, wireless Internet
Cable with over 50 channels (both English, and Spanish)
Unobstructed city views
French balconies
Remote controlled air conditioning/heating in each room
Business center with integrated fax, color printer, copier, and scanner
Four Season Luxury Mattresses
The finest bedding and linens
Wireless phone with Voicemail system
Flat-screen television
5.1 home stereo system
DVD player with Karioke capabilities
Finest grade leather couches
Fully equipped kitchen with all stainless steel appliances
Microwave with integrated toaster, and coffee-maker
Extra modern marble bathroom
Custom designed furniture, artwork, and lighting throughout the apartment

Sound great? Well, let's just say that the apartment needed a lot more than the above when I purchased it. The apartment I purchased is nearly eighty years old. I have 12 foot ceilings and all of the original detail of a French-style apartment from that period, but I also inherited 80 years of use when I purchased the property. I renovated from ground up sparing no expense.

Painting, Wall reparation, and various other things

Carlos and his crew are the best in all of Argentina. Carlos knows everyone in the city, and was my best resource for finding just about anything I needed. He runs a very tight operation, and is focused on meeting deadlines without compromising the quality of his work.

El Jefe

Carlos and his team literally transformed the look and feel of our apartment in 10 days. He completely replastered the walls, repaired windows, stripped and restained doors, and more or less acted as a general contractor for all of the other workers. Carlos introduced me to all of the people below. It is very important for me to work with responsible people who are on time. In Argentina, you work with all types, and Carlos was of the highest caliber.

Electrical

On all of the electrical needs and woodworking, I worked with a pair of brothers, Roberto and Pablo. Although the previous owner had upgraded the electrical system in the 80's, I decided to completely rewire the apartment. Here's a picture of my electrician Roberto and my carpenter Pablo:

Roberto, wondering why he ever stepped foot into my project

Prior to working in the electrical trade Roberto was a very accomplished systems analyst who worked for a major Argentine conglomerate. One day, he decided to go into business for himself and he started a partnership with his brother, Pablo. Both are very talented people who decided to give up corporate life to work in a trade they enjoyed. Roberto and Pablo assisted with:

The complete upgrade of my electrical system
The design and implementation of my lighting scheme
The installation of high-wattage outlets for the air-conditioning systems
Lighting in the kitchen, bathroom, bar-area, and livingroom
New outlets and dimmer switches in the business center and kitchen

Carpentry

In addition to all of the electrical work, the brothers helped design and install most of my custom furniture. This includes:

Knocking down a wall and hand crafting a lighted bar/table area
Turning a useless corner into a business center complete with a custom desk/lighting
Hand making all of my kitchen cabinets in both wood, and glass/aluminum.
Designing and implementing an ultra-modern bathroom vanity and mirror.
Installing period matching floorboards throughout the apartment.
Lowering a ceiling and installing lighting/wiring for a home stereo system.
New wood frames for the old aluminum windows in the livingroom and kitchen.
Ultra-modern custom made shelving furniture for TV, stereo, and DVD.
Custom made coffee and end tables.

In Argentina (as in every other country), finding trustworthy, honest people to work with is of chief importance. The brothers worked through the entire holiday season to meet my timeframes, and provided excellent work.

Bathroom work

An 80 year old building has 80 year old pipes in the bathroom. Before I laid any marble down, I wanted to make sure that I had new, reliable pipes in place. The floor was ripped up, and the plumbing was replaced in 3 days.

Philipe thinking "Feliz Navidad A**HOLE!!!!!"

Once the plumbing was done, an excellent albinir, or tiler, named Philipe came in and installed my travertine in 3 days. He worked on the 24th and 26th of December to get our bathroom finished.

Floors

We had both wood flooring and a nasty raised cement area in the apartment when we purchased it. We refinished the antique slovanian oak floors and chipped out the old cement and replaced with polished, colored cement. This all took about 4 days with my team.

Coming here, I had been warned about the length of time it takes to do work in Argentina. I was told it was risky and expensive to work unassisted. I received several quotes from "architects" who said they would manage the apartment renovation for me. In Argentina, everybody is an architect, but the term appears to be used very loosely. I found that these architects generally tried to charge me a 60-70% premium, and really only acted as a general contractor! I was also quoted a 3 month timeframe for the work that I accomplished in under 5 weeks. I was extremely satisfied with the team of people I worked with, and the results they delivered. If anyone is interested in renovating property in Argentina, I would suggest consulting with Carlos and his team first. I can put you in touch with them.

If you're interested, our apartment will be available to rent in March 2006.

Buying real estate in Buenos Aires, Argentina

2005-12-29T11:05:00.000-08:00

In October 2005 we purchased our first apartment in Buenos Aires, Argentina. Since then, I have had many people ask me about the process of purchasing property in Buenos Aires. The intent of this blog is to answer some of those basic questions and provide a fundamental framework for other foreigners looking to invest in this beautiful city.

Our story

In April of 2005 my wife and I decided to make some changes in our life. For six years I had been a salesperson for BMC Software, a large systems management firm, located in San Francisco. Life and work were good, but everyday was the same. Wake up, read the paper, go to work, work out, come home and play with the kids and go to bed. Life was all about the weekends. We decided that life was just too short. We had visited Argentina three years before, and the exchange rate was still around 3 Peso's to the dollar. Our Spanish was pretty poor, but the city had everything we loved in San Francisco - Culture, nightlife, restaurants, entertainment, and interesting people. There were excellent Spanish/English immersion schools for our kids during the school year and a kid's country club complete with organized sports and creative activities for all ages during the summer months. Once our decision to move was made, it was unbelievable how quickly things came together. We wrapped up our life in San Francisco in about 6 months. Sold our house, resigned from work, put everything in storage, had several goodbye parties, and in October we boarded our plane. 17 hours later we landed and started life in Buenos Aires for a year.

Searching for a Property

I wasted no time in my search for an apartment in BA. The real estate market in BA is definitely hot with properties priced right lasting only a couple of days on the market. Initially, I contacted a real estate agent who was eager to show me the properties she had for sale. In Argentina, there is no MLS, so real estate agents only have computer access to properties that their company is selling. This makes it difficult to get relevant market information, and in my experience, incents the agent to only push you towards the properties that are in their computer. Most people rely on the weekend edition of the classified ads in "The Clarin" or "the Nation" (http://clasificados.lanacion.com.ar/IndexInmuebles.asp?Rubro=852), both local newspapers. If your Spanish isn't perfect, I've added an index of abbreviations:

Two bedrooms = 3 ambientes (3amb)
Dormitorio = bedroom
Listed prices are in argentinean pesos even if they have $ in front (if it is priced in dollars it is stated specifically like D, USD or u$d)
Safe family-oriented neighborhoods: Recoleta, Barrio Norte, Palermo, Las Canitas, Belgrano
City of Buenos Aires is referred to as "Capital Federal"
lum = luminosity scale; basically telling you the property has a lot of natural light
baul = baulera; a storage room usually located in the basement of the building
cochera = parking space
balcon = balcony
P# = Piso or floor number
M2 = square meters - 1M2 = 10.76 square feet

Every real estate company (or property owner) publishes their listings in the weekend paper, and on Saturday morning, there is usually a rush of people to the desirable listings. In Argentina, the real estate industry is unregulated therefore you come across all types of people who are mainly interested in making as much money for themselves as possible. If you purchase a property through a real estate agent, you will be pay a commission of 3% of the property purchase price. Real estate commissions are usually 3% for buyers and 3% for sellers. When making an offer on a property, always demand to meet face to face with the owner of the property as well. This ensures that the owner understands the price/terms directly from you. I have heard of multiple cases where the real estate agent will simply negotiate a price or turn away an offer without even consulting the seller. If possible, always work as closely as you can with the seller/owner of the property.

Escribano

An escribano is both a real estate attorney and notary public and is necessary in any real estate transaction. The job of an escribano is:

1) Draft all legal documents associated with the purchasing transaction (Sena, Boleto, Escritura)
2) Do all of the due diligence needed to insure that the property title is clean and free of liens
3) Assist the buyer (if foreign) in securing a CDI number which is required for purchase
4) Look out for the best interest of the client (something I have yet to find with the real estate agents)

Obviously, a good, trustworthy, escribano is a critical part of any real estate transaction in Argentina. I have been warned never to rely on a real estate agents referral for an escribano. Try to find a reputable escribano who is interested in protecting his/her reputation. Argentina has a sophisticated and complete title registry that allows for the easy tracing of property ownership. It is the job of your escribano to trace an validate the title of your property. The Escribano will typically charge a fee of 2.5 - 3.5% of the property purchase price. If your Escribano is trying to charge you more without good reason, I would look for another.

Securing a property

There are some spectacular properties in Buenos Aires. Buenos Aires has a huge European influence that is very evident in the french style architecture. High ceilings, crown molding, white marble entries, and walk-out terraces are the norm rather than the exception. The apartment we purchased still had it's original bathroom from 1922 - fixtures and pedestal sink included!

Once you find a property that is right, it is important to make a solid offer and secure it quickly. Negotiating the purchase price is common and usually expected, but as with anything, final price will depend on a number of factors. For instance, the property I purchased was priced on the higher side, however, it was in exceptional condition, and in a great old (well maintained) building. I purchased directly from the owner avoiding real estate commissions and the additional risk associated with working with a real estate company. At the end of the day, I was able to negotiate a 3% savings. Not bad considering there were two other offers at and above asking price. The fact that I didn't use an agent made the difference for the seller -- saving us both an additional 3%.

Typically, you want to place a deposit with your offer. This deposit can vary but is usually around 1% of the offer price. If it's a really expensive property they will ask you to put more. Keep in mind the seller isn't getting that money. It's held in trust by your realtor, and shows that you are a serious buyer. In my case, since I didn't use a realtor, I skipped this step and went straight to signing a "boleto", (which I will describe soon). Once you make an offer the seller can accept, reject, or counter your offer.

Once a price is agreed upon, the next step is to set a date for the signing of the "boleto". The boleto is probably one of the most critical steps in the purchasing process. In order to sign the boleto, the buyer must put down a non-refundable deposit on the property. This is not a trivial amount of money, typically 30 - 40% of the agreed upon sales price. This sum is paid in cash to the seller, and unless the escribano finds an undisclosed lien or title dispute on the property, it is non-recoverable. Conversely, if the seller decides to back out after a boleto is in place, a sum equal to twice the amount in the boleto must be paid to the buyer. This discourages sellers from accepting other offers before the sale is finalized. Once you have a signed boleto in place the property is locked up. At the signing of the boleto, any relator fees are paid, and a mutually agreed upon date is set for the signing of the "escritura", or closing document.

The time between the boleto and escritura is used by the escribanos to validate title of the property, check that all bills are paid and no liens exist, and give ample time for the seller to move belongings. In my case, it was 18 days. There is nothing standard here, just a mutually agreed upon date for settlement.

Once all is validated by the escribano, the parties meet, sign the escritura, and pay the remaining property balance in cash. It is important to meet at a mutually agreeable spot (such as a bank) for the signing of the escritura. All cash is laid out on the table and hand counted by both parties before the escritura is signed. Once signed, keys are handed over, escribano fees are paid, and work on your new property can begin. I will go into building renovation in my next post.