It is a rare commodity. And therefore more and more expensive. In the City of Buenos Aires alone there are 163,000 properties for sale, of which 40,000 were units that were previously within the rental market. This translates into an unavoidable consequence: the constant increase in the value of rentals.
Those who signed a contract in July 2021 today have a cumulative increase of 61%; In turn, according to a monthly report by Zonaprop, in GBA, in the north, a two-room apartment showed a rise of 3.7% in the month, while in West and South GBA the increase reached 5 .8%. In this way, the location of a property in the north zone with two rooms (50 m2) is located at $68,687 per month, while one with three rooms (70 m2) amounts to $97,691 for the same period. On the other hand, in the western and southern zones, the cost of a unit with the same characteristics is $47,272 every 30 days, while one of three rooms is rented for $63,961.
What is the trigger for this scenario? What drives homeowners to contract the offer? There is a before and after of the so-called “Lipovetzky law”, which established contracts for three years and the annual update of the values of the location. Mariano Garcia MalbranCEO of Keymex and president of the Chamber of Real Estate Services Companies (CAMESI)sets out three reasons:The failed new Rental Law, the convenience due to greater profitability and predictability of temporary locations, and the fact that many owners stopped offering their property to put it on the market for sale”. For its part, Paula Margareticresearcher at University of San Andres (UDESA)indicates that “lhe main factors focus on uncertainty about the contractual framework, the volatility of the economy, price increases and the fall in purchasing power”. From his point of view, “for the owners, the uncertainty about the continuity of the rental law could be generating incentives not to sign new contracts while waiting for a possible new law with more favorable conditions.”
Context. The macro situation appears on the scene with unusual force. With the current levels of inflation, agreeing to contracts at a fixed value for twelve months puts the hand brake on those who have a unit to rent. “The increasing rise in prices in recent months, together with the indexing framework of the law, which is updated every twelve months, makes it more attractive to think about selling the property than renting it. All of the above could be explaining the existence of unoccupied units”, argues Margaretic. “The owners have incentives to postpone any decision until economic uncertainty is reduced, nominal volatility decreases and the situation regarding a possible new rental law is clarified,” he says. Sebastian Einstein, from the University of San Andres. For García Malbrán, “it is necessary from the State the immediate repeal of the current rent law, a fiscal accompaniment that encourages owners to rent for a legal term and state incentives for developers to build buildings destined for rent for a predetermined term”.
To this is added a no less important fact: the fall in purchasing power. To exemplify, According to UDESA calculations, in 2021 it took 25 years to buy a 60 m2 apartment in AMBA, while in 2018 this number was 13 years. “These numbers arise from considering the average salary of formal workers, the average price per meter of the AMBA extrapolated to a 60m2 property and the blue exchange rate”, explains Margaretic.
The specialist believes that “the national economic recovery would generate a positive effect on the real estate sector.” “An improvement in the purchasing power of the population, together with a framework of less volatility that facilitates medium- and long-term decision-making, are two factors that can improve the market situation. As long as the high uncertainty about the main macroeconomic variables, the restriction on access to foreign currency and speculation about possible changes in central laws for this market continue, it is likely that no changes will be observed.he adds.
No credit. The non-existent offer of financing to the sector is another of the factors that play against it. “The stabilization of the economy could allow access to mortgage credit, which would have a positive effect on the real estate sector. The development of the credit market would lead to better financing conditions to access a property, thus allowing more Argentines to have their own property”, says Margaretic.
Finally, Puerto Madero is the area that seems to live another reality. “Not only is there no vacancy of homes or offices for rent, but we are in a moment of historical occupation, in which demand exceeds supply, with a very good income compared to the rest of the market,” he highlights. mercedes ginevraCEO of Geneva International Realty. There, temporary rentals or contracts in dollars are the preferred options. German Gomez Picassoof Real Estate Report, complete in closing: “The trend points to rentals between friends or acquaintances, to total informality. In these conditions, no one rents”. A market in which everyone loses and in which the law of the empty nest rules.
by Marcelo Alfano
