Argentina Real Estate Report Q1 2012

The most prevalent development in Argentina’s overall real estate market in recent months has been the restriction that the government placed on the purchase of US dollars on October 31 2011. In the last month, activity has stalled as companies –buyers and sellers – wait to see what the long-term effect of these restrictions will be. There seems to be a pessimistic view among developers in light of the news, as they believe the effect will be detrimental to the real estate and construction industries.
Construction contributes around 5% of Argentina's GDP, a percentage that is set to increase only marginally in future. Any long-term effect on construction from the currency purchasing restrictions could in time hit the wider economy, to which we have already presented downside risks in 2012. Prior to this news the overall real estate market outlook was fairly clear – in 2011 there has been some stabilisation of yields and rents, and there were new developments under way, particularly of residential space.
Key Opportunities In The Real Estate Market:
?? Argentina’s healthy economy supports infrastructure projects and encourages business activity.
?? Prior to the government’s announcement, Argentina’s national statistics agency recorded that October’s construction index was up 6.6% year-on-year and that the industry had been booming so far in 2011. If the stall in the market is a short-term consequence, this prior period of upbeat activity could hold up the industry.
?? Tremendous commercial activity in Cordoba has resulted in real estate prices increasing, a trend which is set to continue.
Key Risks To The Real Estate Market:
?? There are several downside risks to BMI’s GDP growth forecast for 2012.
?? Argentina’s construction industry has faced high costs through 2011 and it has affected market players’ profitability.
?? The government’s US dollar purchasing restrictions could affect all the potential opportunities in the market, as players stall their activities to see what the outcome of the government’s decision will be.

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Executive Summary 5
SWOT Analysis 6
Argentina Real Estate And Construction SWOT 6
Argentina Economic SWOT 7
Argentina Business Environment SWOT 8
Real Estate Market Overview 9
Real Estate Market Analysis 11
Table: Argentina’s Real Estate Market – Rents, 2009 And 2010 (m²/month, US$) 12
Table: Argentina’s Real Estate Market – Net Yield, 2011 and 2012 (%) 13
Table: Argentina’s Real Estate Market – Terms Of Contract/Lease, Mid-2011 13
Table: Argentina’s Real Estate Market – Available (m²) And Vacant Space (%), Mid-2011 14
Industry Forecast Scenario 15
Real Estate Outlook 15
Table: Argentina’s Real Estate Market – Rents, 2010-2012 (m²/month, US$) 16
Table: Argentina’s Real Estate Market – Net Yield, 2009-2016 (%) 17
Construction Industry Outlook 18
Table: Argentina Construction And Infrastructure Industry Data 18
Table: Argentina Construction And Infrastructure Industry Data 19
Construction And Infrastructure Forecast Scenario 20
Macroeconomic Outlook 22
Business Environment 24
Real Estate/Construction Business Environment Rating 24
Argentina Real Estate Business Ratings 24
Argentina’s Business Environment 25
Introduction 25
Table: BMI Business And Operation Risk Ratings 25
Institutions 26
Table: BMI Legal Framework Rating 27
Infrastructure 29
Table: Labour Force Quality 31
Market Orientation 31
Table: Latin America, FDI Capital Inflows 33
Table: Trade And Investment Ratings 34
TABLE: Top Export Destinations 35
Operational Risk 35
Competitive Landscape 37
Company Monitor 38
Genergia 38
Grupo ODS/Creaurban 39
IRSA – Inversiones y Representaciones Sociedad Anónima 41
Roggio 43
Skanska Latin America 44
Argentina Real Estate Report Q1 2012
© Business Monitor International Ltd Page 4
Techint 45
BMI Methodology 47
How We Generate Our Industry Forecasts 47
Construction Industry 48
Bank Lending 49
Real Estate/Construction Business Environment Rating 49
Table: Weighting Of Indicators 50
Sources 52
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