Joined: Dec 2007
Posts: 272
   Argentina
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 Oct 26, 2009, 10:52:42 PM | #1 |
Despite unexpected growth in real GDP in late 2008, this year 2009 is likely to be remembered as difficult for the Argentine economy, with forecast real GDP growth sitting in the range of -1.0%to 0.6%. Current global economic conditions, a cooling of private consumption and a horrible drought are all factors in the stagnation of the country’s economy.
Fixed investment spending, particularly spending by the private sector, is on the decline. On the upside,however, investment figures are receiving support from an ARS71bn plan to boost infrastructure andcreate 400,000 new jobs, which should shield the public sector to an extent. Public sector spending willalso be buoyed by a raft of stimulus measures introduced by the government, but these measures may turnout to be imprudent in the long term.
Clearly, the fate of Argentina’s real estate market is, to some extent, at the mercy of the country’s difficulteconomic position, particularly with respect to reduced private investment spending. The real estatemarket, however, stands to gain from new sources of funding entering the economy, such as the stimulusmeasures and the characteristic ‘bounce’ which they deliver if well targeted.
So far, it is fair to say, the real estate market has fared surprisingly well. A recent report by globalproperty consultancy giant Knight Frank notes that the average vacancy rate in Buenos Aires is below2% in certain parts of the city, a figure on a par with Santiago, and well below vacancy rates for MexicoCity and Sao Paulo.
Over the coming months, the key issues to watch will likely be the coming online of a significant amountof new space, which will have the effect of driving up vacancy rates. This will be observed across all ofLatin America, not just Argentina. Knight Frank predicts that this will lift vacancy rates across LatinAmerica to about 15% over the next two years from the 2008 figure of 6%. Second, the efficacy ofgovernment stimulus measures will be watched eagerly over coming months. As the year progresses itshould become clearer just how the real estate market has been affected by the measures. The third issueto watch is whether the broader economic conditions cause developers to delay projects, as is currentlyexpected. |
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