BUENOS AIRES (Reuters) - Things are looking up for Argentina’s high-end real estate sector after it struggled for years under former President Cristina Fernandez’s unorthodox economic policies, industry leaders told Reuters this week.
Eduardo Costantini has made a name for himself in recent decades with luxurious residential mega-projects, such as the massive Nordelta community north of Buenos Aires.
In an interview on Tuesday as part of a Reuters Summit on Argentina, Costantini, head of real estate and wealth management firm Consultatio CON.BA, said a high-end real estate recovery that began with an increase in sales last year has shown signs of accelerating.
“In our case, there was a strong bump in sales in 2015, and we’re selling more this year,” Costantini said in the offices of MALBA, a modern art museum he founded in downtown Buenos Aires.
“In Puertos as well as Nordelta, we have launched new neighborhoods and up to today, the total value of sales is practically what was forecasted for the entire year,” he said in reference to a pair of Consultatio’s key developments.
Beyond the high-end market, construction in Argentina has so far been largely moribund in 2016, as free-market reforms by center-right President Mauricio Macri have yet to bring a promised economic turnaround.
However, there have been tepid signs of recovery lately.
The square footage covered by construction permits in Argentina rose 11.8 percent and 6.8 percent year over year in May and June respectively, according to the government, and architects are reporting additional demand.
Real estate developer Federico Weil, chief executive of Argentina’s TGLT (TGLT.BA), told Reuters the market is ripe in Buenos Aires for new high-end commercial real estate, as developers lacked a way to finance big projects in recent years due to the nation’s barely existent credit market.
“There’s a lot of pent up demand, gaps, and opportunities, which are very appealing. If you take a look and you compare the absorption of class A office space in Buenos Aires with any Latin American peer, you can see how far behind we are,” he said.
“I think a lot of money will be flowing into real estate,” Weil added.
Costantini said Consultatio had an “excess of liquidity” and was looking at a potential project on a 100,000 square-meter plot of land in the central Buenos Aires neighborhood of Palermo.
He added that a recent tax amnesty program aimed at bringing undeclared funds home could also be a boon.
Real estate has long been a preferred area for domestic investment by wealthy Argentines, analysts say, and Costantini said it is “very probable” Consultatio will put together a real estate-based mutual fund to accommodate amnesty clients.
“We’re receiving rather intense queries as to whether we will create a fund,” he said.
Reporting by Gram Slattery; Editing by Christian Plumb and Tom Brown