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"Few economic revivals have been quite as stirring as Argentina’s.
Little over five years ago the country’s massive external debts brought
on a full-scale depression, the peso became virtually worthless and millions
of Argentines saw their banked savings disintegrate. Much has changed since – Argentina’s
economy has rebounded strongly with annual GDP growth of around 5%, and it has
been given the all clear from the IMF for the next decade – but general
mistrust of banks remains. This has served to back up by an age-old Argentine
conviction that true wealth lies in a tangible asset such as land, not money.
In Latin America’s second largest country you truly are what you own.
By this measure Michael Koh of ApartmentsBA.com is one of Buenos Aires’ major
players. Originally from the US, he has been at the forefront of the capital’s
property market for the last five years, securing properties in BA’s emerging
locations, renovating and reselling them for excellent profit as small-scale
rental businesses. “Back in 2002 when I started looking at bringing money
into Argentina people told me I was crazy,” says Mr Koh, “but I saw
the potential of the economy, the real estate market, the exchange rate and tourism.
All my forecasts have been spot on.” He cites as an example an apartment
he purchased for $90,000 (£44,200) in 2004, which recently sold for $200,000
(£98,300).
Since late 2006, property values have continued to rise across the city. “While
rates are plummeting in the USA due to sub-prime mortgage problems, prices in
Argentina are soaring,” explains Mr Koh. “Just about everyone buying
real estate is paying with 100% cash over the table so interest rates aren’t
a concern.” Fast-growing areas include Recoleta, known as BA’s Mayfair,
and Palermo Soho, Viejo and Hollywood. “These neighbourhoods continue to
see strong demand and price growth as well as growing numbers of boutiques, restaurants
and cafes,” says Mr Koh. “They’re trendy areas that attract
tourists and locals alike and are a developer's dream. You can buy property for
under $2,000 (£980) per m2 and I believe a ‘double’ could happen
in Palermo within five to six years. Recoleta, meanwhile, will always be the
safest and most affluent part of the city.” Apartments in the latter
can cost in excess of $200,000 (£98,000) but see high rental demand. The
renovated docklands of Puerto Madero are a former hotspot and one of the most
expensive places in the city. With an average property price of $4,000 (£1,960)
per m2, Mr Koh thinks the area is unlikely to match its past growth rates."
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