Abstract
Despite better-than-expected growth in real GDP in late 2008, 2009 is likely
to be remembered as a
challenging year for the Argentine economy, with
forecast real GDP growth sitting in the range of -1.0%
to 0.6%. Prevailing
global economic conditions, a cooling of private consumption and a
paralysing
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 and
create 400,000 new jobs, which should shield the public
sector to an extent. Public sector spending will
also be buoyed by a raft
of stimulus measures introduced by the government, but these measures may
turn
out 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 difficult
economic position, particularly with respect to
reduced private investment spending. The real estate
market, however,
stands to gain from new sources of funding entering the economy, such as the
stimulus
measures 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 global
property
consultancy giant Knight Frank notes that the average vacancy rate in Buenos
Aires is below
2% in certain parts of the city, a figure on a par with
Santiago, and well below vacancy rates for Mexico
City and Sao Paulo.
Over the coming months, the key issues to watch will likely be the coming
online of a significant amount
of new space, which will have the effect of
driving up vacancy rates. This will be observed across all of
Latin
America, not just Argentina. Knight Frank predicts that this will lift vacancy
rates across Latin
America to about 15% over the next two years from the
2008 figure of 6%. Second, the efficacy of
government stimulus measures
will be watched eagerly over coming months. As the year progresses it
should become clearer just how the real estate market has been affected by the
measures. The third issue
to watch is whether the broader economic
conditions cause developers to delay projects, as is currently
expected.
| 
View Cart
