Buenos Aires Long-Term Rentals Market Trends for 2010
The supply of rental properties is up 45% over last year, and the property values haven’t changed. Regardless, an increase of 7 to 10% is expected this year; in addition to the lease, service charges and expenses must be raised as well — a heavy load for the tenants.
Due to the short supply of mortgage loans, renting remains the only option for many who have no means of saving and buying property. As the economy worsened and many potential sellers decided to rent, instead, the supply in the rental segment has risen. In addition, many construction projects were finished in the second half of last year. One would think this would drive prices down, but that doesn’t seem to be the case in the Argentine market.
In contrast to this 45% increase, demand has remained relatively stable. Though the figures are not official, about 14,600 units are being offered in the city of Buenos Aires, the majority of which are studios, one-bedrooms or two-bedrooms.
In addition to the aforementioned reasons for this increase, the tourism market has also had an effect on the rental housing situation. As tourism has decreased due to the economy, many apartments that were once meant for temporary rental have now joined the long-term rental sector.
Students are also having an effect on the trends. In the past, those coming from the interior to Buenos Aires to study would each rent their own apartment; now, multiple students are rooming together to save on costs.
As has been the trend, many owners who were once looking to sell are now content to rent, as selling is not easy today. So they put their properties up for rent, and earn some money from them until the market has stabilized and they can sell more easily, and probably at a better price.
If some genuine credit opportunities were offered, the rental demand would diminish, and more owners would go back to offering their apartments to professionals and foreigners. But for now, owners are reluctant to sell at current prices, forcing them to rent, instead, and the biggest rental market, for now, consists of the long-term rentals.
Today, one-bedroom units are the most often searched for according to ZonaProp, making up 37.9% of the searches. Studios come in second with 19%, and 2-bedroom apartments are about 17 percent. Within Capital Federal, Palermo, Belgrano and Caballito are the neighborhoods that are most searched for.
Demand is also often related to where the potential renter is coming from. For example, those from the interior often search most for apartments in the northern zone of the city — Recoleta, Barrio Norte, Palermo, Botánico, and Belgrano — because those areas are known for their safety, and they are central to many universities and entertainment establishments.
Renters look for many of the same things that buyers do when choosing a home: light, size, ventilation, size, services, and then location.
While the demand has remained stable for the most point, the end of 2009 did see an increase of nearly 20% in the number of solicitations and inquiries from potential renters. Of course, the number of units being offered also increased by about 14% in that period, plus those in the recently completed developments.
Values, though, remained about the same, although some owners did see the sense in lowering the lease prices, some by up to 15 percent.
Generally, a studio apartment goes for about AR$1000, a one-bedroom for between AR$1200 and 1500, and a two-bedroom comes in at AR$1800 to 2200. Three-bedroom apartments, though not as frequently searched for, run about AR$2800 to 3200, and these prices can reach even up to AR$5000 if the building offers a variety of services.
Everything indicates that the amount of units offered will remain stable over the next few months, as will the demand. Still, prices are expected to rise about 7 to 10 percent. For now, continuing to rent is the only option for many, no matter how hard it may get.
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