Latin Fever

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RTE House Hunters in the Sun Magazine – Ireland’s Leading International Property Magazine 

 June 2006

 For many, South America seems just to far away and to untested to be suitable for a property purchase, but for the more daring investors among you, Argentina, Brazil and Chile could really get your temperature up. And as, Ben West reports, with growing property markets, now is a great time to buy.

Today’s property investor is embracing ever more adventurous locations. Where, 20 years ago, purchasing a villa in Italy may have seemed daring, now exotic countries that many of us would be hard–pressed to locate precisely on a map are becoming the order of the day.

The incredible continent of South America, with its breathtaking geographical extremes of volcanic mountain ranges and huge and huge unspoiled beaches, vast rainforests and majestic plains, is attracting a growing band of European buyers. When you look at the fabulous opportunities on offer combined with the low price tags, it’s easy to understand why.

But although the property markets of many South American countries are in their infancy and show great potential, it is important to bear in mind that the continent generally remains afflicted by economic volatility and political instability. Therefore any location being considered for a property purchase needs to be thoroughly researched.

 

ARGENTINA

Argentina is packed with attractions for the foreign investor, including the vibrant world-class capital city of Buenos Aires and huge tract of stunning, varied scenery. Although property prices have always been very low here, the economic crash and currency devaluation in 2002 reduced them further.

The economy is gradually recovering, with demand exceeding supply of quality properties and enlarging local mortgage market, prices are now steadily rising. According to Maria Reynolds of Reynolds Propiedades, rental yields in good locations of Buenos Aires typically range between four and eight per cent, although Michael Koh of ApartmentsBA.com is more upbeat, claiming that investors in areas such as Recoleta could see a net rental return of 12 to 16 per cent per year.

“There have been three straight years of appreciation in property prices in Buenos Aires”, he says.  “Many foreigners are buying real estate as an investment”.

Like Recoleta (where prices range from € 1,540 to 2,530 per square meter) another current hotspot is the newly developed neighborhood of Puerto Madero in the old dock area of Buenos Aires (€ 2,160 per square meters). A rented 67,000 euros one-bedroom apartment in the Recoleta neighborhood would net about € 755 per month. Lands with coast or lakes in Patagonia, vineyards at Mendoza and farms, land and hunting lodges at La Pampa and Buenos Aires province are also popular.

“My rental clients compare the price they pay to stay in a hotel versus a five-star apartment”, says Marcela del Campo of Settle Business. “People pay at least € 251 a night to stay at nice hotels.  “The tremendous potential for rental income is just the icing on the cake for investors. Tourism is booming here in Argentina and I see no slowdown for the foreseeable future”, says Michael Koh.

But if living in the capital doesn’t appeal, Cordoba is a popular province attracting buyers. Its landscape of rolling hills, mountains and rugged cliffs is reminiscent of the south of France and although 500 miles west of the capital, its undeveloped land prices are very tempting, being from around € 170 per hectare.

To buy in Argentina, purchasers are required to obtain a tax identification number (CDI), which is done by granting a power of attorney to a resident so that they can get it for you. You then appoint a notary public (Escribano) to handle the sale for you. There are no purchasing restrictions for foreigners and buying is simple, usually lasting around six weeks. Fees, based on a percentage of the sale price, are made up of around two per cent notary fees and costs, estate agency fees of around three per cent, 21 per cent VAT, and stamp duty of around 2.5 per cent but varying in different provinces. Property taxes are set locally and depend on the property value. Buenos Aires is exempt.

   

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