Investor attention has recently been focussed on Latin America. Rapid economic growth and increased stability has brought fresh prosperity to the region. As property there is predominantly bought in cash, the region has also been sheltered from the global credit crunch, leading MoneyWeek.com to comment that: “Easy credit and excessive leverage do not make up the foundations of the Argentine real estate boom. In other words, it’s almost bubble proof.” Our new investment opportunity comes from one of Argentina’s most reputable developers, KAS. Located in the first band of residential districts outside of Buenos Aires’ city centre, Torres Caballito Nuevo is a high-spec apartment project in the popular Caballito neighbourhood.
We have been able to secure 39 units in the Caballito Nuevo development at a 23% discount to market value. Caballito is close to the hip Recoleta and Palermo areas, meaning rental demand in the district is high, as residents of Buenos Aires, known as porteños, aspire to live as close to the city’s energetic heart as they can afford. As domestic let periods are usually long, potential net rental yields of 8% per year are achievable.
The developer has already sold 70% of the units in the development to the local market - proving that there is demand for this type of property, at this price, in this area. High demand and limited supply means plenty of growth potential and a strong exit market when you choose to sell.
We feel the timing is right to enter a market that is stabilising both politically and economically, but thriving in growth and demand. Apartments start from approximately £29,000 and we expect them to sell out quickly. Don’t miss the potential for profit in this exciting market.
To view our due diligence pack please click on the icon to the left below. You can also download our PDF brochure of the development by clicking on the icon to the right below.
Call us on 01273 627 900 to get your questions answered and to reserve your property.
Price List
Below is a list of prices for available apartments in Torres Caballito Nuevo.
To encourage local sales, the developer is offering the units at a discount to the local market (see ‘List price’ column). On top of this Ready2invest has been able to negotiate a further discount of 15% for our buyers. Prices increase with floor level in Buenos Aires and we believe these units offer the best balance between price and desirability. Property transactions in Argentina are carried out in US dollars.
Under market value
Buenos Aires is one of the most vibrant cities in the world and has solid potential for capital growth. With nearly a third of Argentina’s population living in the capital, demand for top-quality properties is high. Yet prices remain relatively low.
The list below represents a broad selection of comparable properties in Buenos Aires. Wherever possible we have sourced properties in a similar location, building type and floor range. For examples in the more in-demand areas such as Palermo or Recoleta we have conservatively adjusted the prices down by 20% to make the properties comparable to the Caballito neighbourhood. Our comparables research indicates a discount of 23% below average market value on our apartments in Torres Caballito Nuevo.
Buying with a discount provides upsides such as instant equity and leverage. It also covers your downside as your property would have to drop by the full amount of the discount before you would lose equity. In the same way, the discount also protects you against currency fluctuations.
Rental Comparables
As in most capitals cities across the world, the inhabitants of Buenos Aires are a mixture of those able to buy and those looking to rent. Both categories apply the same search criteria – such as locality, amenities, quality and price – when looking for property.
The apartments at Torres Caballito Nuevo come unfurnished, which caters to longer-term tenants who are more likely to want to use their own furniture. This should encourage higher occupancy rates, which would deliver a more regular income.
Current rental rates in the Caballito district vary widely depending on the condition of the property. Apartments in Torres Caballito Nuevo have the potential to generate high yields thanks to their high quality. The table below lists the letting rates for a number similarly high-spec properties in and around Caballito. We have broken the rates down to a monthly amount per m2, as they are linked to apartment sizes.
8% net yield
 | A unit at Torres Caballito Nuevo could produce a gross yield of around 11%. After paying letting agency fees (normally 10% of income) and maintenance costs, an apartment could deliver a very healthy net yield of 8%. As a cash purchase, there are no mortgage payments to cover, which means your rental income goes straight into your pocket. Should you wish, Ready2invest will source and vet a selection of local letting agents in Buenos Aires closer to completion on your behalf. |
Investment scenarios
Midterm
Here we have compiled a typical investment scenario to illustrate the potential of buying an apartment in Buenos Aires on a mid-term basis. By investing over four to eight years, buyers could capitalise on future high growth and still exit the market before supply catches up with demand. While you own the property it is likely that the finance market in Argentina will expand, meaning more people could be able to afford the property when you choose to exit the market.
We have indicated potential returns based on three conservative growth rates below.
Short term flip
In this second investment scenario we have illustrated the potential of buying an apartment using the ‘quick flip’ strategy. When buying property in this way you are using the under market value discount to boost equity in your purchase, with a view to sell it to on the domestic market at the time of completion.
Payment Timetable
We include a broad payment timetable below.
Ongoing costs
As with all property purchases there are monthly and annual running costs to be considered in Argentina. The maintenance fee for Caballito Nuevo is approximately $1.80 per m2. For an average 60m2 property this would equate to $110 per month. There is also a token annual levy for gas, electricity and water connection.
If you choose to rent your unit, rental agents can charge anywhere between 5-15% of your rental income. Utility bills are normally paid by the tenant.