Discounts on Buenos Aires Real Estate
Buenos Aires realtors and sellers are facing a real challenge at the moment. They want to sell their properties in US dollars, as they have traditionally done, yet this is no longer permitted. The Kirchner government has implemented restrictions on exchanging foreign currency, which has had a damaging impact of the sale of property in Buenos Aires. Despite this, Argentines are used to adapting and evolving according to government policy, finding ways round the official obstacles. Realtors are now resorting to offering substantial discounts off the price of properties as long as the buyer is willing to purchase the property in US dollars.
Before the AFIP, which translates as ‘Federal Administration of Public Income’ (Administración Federal de Ingresos Públicos) introduced the controls on exchanging dollars realtors were only prepared to offer miniscule discounts of up to 2%. Thanks to the dollar restrictions buyers can now ask for discounts on property of up to 15%. The reason for such drastic measures is that the number of real estate transactions has dropped by 50% since the government measures were introduced. This huge drop is a real concern for an industry that is an important pillar of the Argentine economy and employs thousands of people.
Other methods being used include accepting 50% of the payment of a property in US dollars and the rest in pesos. In the past, purchasing property in pesos was virtually unheard of. However, being flexible and accept lower profit margins is the only way for developers and vendors to survive this dip in the Buenos Aires real estate market. One solution would be for vendors and developers to simply accept pesos and not offer large discounts. This system works for property developers who can use the Argentine pesos they receive from the sale of a property to buy building materials such as cement and bricks. They can easily convert these pesos into real estate: a commodity that is unaffected by ups and downs of the economy.
Nonetheless, this system does not work for private vendors who are caught up in the property ladder and are selling a property in order to purchase another one. These vendors need US dollars from the sale of their property in order to purchase their next home in dollars. Private buyers do not have an easy solution and so the catch 22 situation is forcing them to accept a lower asking price and receiving a mixture of dollars and pesos, which is something that is bound to put off small time investors.
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