Small Housing units in Buenos Aires attract Real Estate Investors

Small housing units of one, two or three rooms are the most popular investments in the Buenos Aires apartment market. These smaller units usually cost around USD 60,000 and USD 150,000 to purchase. After the crisis last year, the slow recuperation of the market generated an interest among investors in smaller housing units.

In May, a survey was done with professionals and executives of different career fields. This group was identified as a profile of potential buyers from the upper middle class. On of the questions on the survey read “How much are you willing to invest to buy an apartment in Buenos Aires?”  The majority of the professionals and executives that took the survey claimed that they would invest up to USD 60,000” to buy an apartment. Another factor that encouraged the movement and interest in cheap properties is the lack of credit availability. There are only 5% of legal, documented workers that have sufficient income to qualify for a 20 year mortgage loan for USD 70,000.

The price pressure is bigger for smaller housing units. There is no difference between the older and newer units in regards to this heightened level of price pressure.  This year the housing market in Buenos Aires experienced an increase between 8% and 10%, which is a little less than the increases experienced last year. The situation varies depending on the location of the housing unit.  For example, housing units located in the neighbourhoods of Barrio Norte or Recoleta experienced a price increase of 7% this year. Other neighbourhoods experienced a higher increase, such as the neighbourhood of Caballito, which increased to 12%, prices for housing units in the neighbourhood of Villa Urquiza increased to 10 percent. Apartment units in the Parque Centenario neighborhood increase by 3 percent.

The heightened interest among investors in these smaller property units is causing developers to take on building ventures that are USD 1,500 or less per meter. Today the most profitable strategy is to build housing units that are more economical by choosing areas that provide inexpensive land for building. Most of the inexpensive land can be found in the neighborhoods of Barracas, San Telmo and in the outskirts of the capital. According to some Buenos Aires real estate analysts, today’s buyer understands that it is more profitable and convenient to have four apartments of housing units that cost USD 50,000 than one apartment that costs USD 200,000, this is due to the potential to obtain more of a profit yield from rent. Investments of this nature diversify the risk involved in investing in real estate and may take less time to sell.

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