Where are the opportunities. Why buying in a well can be a better deal than a used apartment
2020 started with renewed expectations in real estate. Beyond the adversity that drags the market, crossed by the instability of the dollar and inflation – which hit real estate sales hard – the real estate sector is betting on flourishing with well projects. In view of the scarcity of savings instruments that beat inflation, the brick is once again an attractive and safe place for savings.
Despite the drop in prices of the sale value of used apartments – the estimate is that the properties that enter are 20% or 25% below pre-pandemic values– and the oversupply, the soaring dollar and the lack of credit makes it almost impossible to access a home. Reason why developers and real estate companies put all their creativity into play to sell well projects.
“The wells are going down faster than those used in many neighborhoods, including Recoleta, Palermo or Belgrano. It is easier to negotiate with a developer for a unit that they have underway or is finishing than it is to negotiate with an owner who has a used property. Today the developer lowers more because he understands that it is a business and takes into account that it has a cost that is cheap. On the other hand, a person who has a property that belongs to the family or has to sell to buy another is less contemplative of a better offer, ”explains Daniel Bryn, head of Inversión Real Estate, to LA NACION.
In the neighborhoods where the largest number of properties for sale is currently concentrated, 70% of the departments in stock are used and 30% brand new or in well.
For this reason, either through discounts for advance payments or the possibility of choosing to advance more cash – in general pesos – and reduce fees, brokers design strategies for projects that, they ensure, ensure that there is a sales boom from the end of 2021 and which continues in January, especially in the large units, that is, with more than three rooms.
Of course, in such an unstable scenario it is difficult to establish how much a project can vary from one year to another. The variation of the CAC index from November 2020 to October 2021 (12 months) was 54.4%; this means that a fee in pesos and adjusted in this way would have increased by that percentage.
“The value of the well projects did not vary much in dollars, it is still US$3,000 per m2. What is changing is the internal balance point, which is the ability to negotiate a little lower than the list price, either 10% or 5% depending on what we call the breakeven point, which is where the construction cost remains at the time I analyze the price taking into account CAC, dollar and inflation”, he told THE NATION Diego Rybka, director of the Uno en Uno developer group.
The executive compares the construction cost with a photograph. “The cost of construction is a photo and one only knows the price when the film is finished, which is the union of all the photos that make up the process of the work. Unfortunately, in our country it is often very changeable.”
Most projects follow the same logic: an average advance of the 30% of the value and fees in pesos adjustable by the CAC. The price variation of the units depends on the characteristics of the unit, the location and the amenities.
Another characteristic that makes prices fluctuate is at what stage of the project is entered. In the project Casa Living – developed by THE NATION-, a condominium located at 2000 Tomkinson Street, offers 1, 2, and 3-bedroom apartments with amenities and lots of green – two characteristics that became essential post-pandemic requirements – at different values and installments.
Ignacio Colombo, one of the developers of the project, which is being built on a 17,000 m2 plot of land where the offices of a German laboratory used to be, says that there are currently two investment possibilities. In the first place, to buy units from the first stage of the project – there are 76 apartments of which 57 have been sold – and whose delivery date is in December 2022. In this case, The form of payment is an advance of 30% in cash and 12 installments, which are the ones that are missing until the delivery date. “The apartments that remain available are those with the highest sales value, with values of US$230,000, with 70 m2 covered rooms on the ground floor and with a garden. It would be an advance of US$65,000 and installments in pesos, installments and adjustable by CAC”, indicates Colombo.
In addition, the option to buy a second stage unit that will be available in September 2024, includes the advance payment and 36 installments. The cheapest units are the 65 m2 studio apartments that have a sale value of US$160,000.
“All well projects are a promise to deliver an apartment, on a certain date and of a specific quality and that is why it is very important who is behind that promise that is made,” says the developer.
For his part, Rybka considers that in recent times The commercialization of projects in the well stage has demanded a great openness when it comes to attracting clients.
“You have to be creative in sales right now. If someone wants to want to pay a larger advance and fewer installments, or on the contrary prefers to save bills and increase payments, in any case, the client must be helped to tip the balance to buy”, he assures.
To give an example of the benefits, the commercial director of the One in One group states that if someone paying cash in advance has a discount, which will depend on the unit you offer and the layout. “There was a case of someone who offered to pay 40% in tickets in August 2020 and the installments began to be paid only in December, 8 months after the start of the work. His first installment was $490,000 per month and today it went up to $730,000. The CAC has been increasing strongly, accompanied by inflation, today even more than the dollar”, recognizes the developer who advances with two projects in which he enters with a fixed adhesion of 35%. While the Yardvert Nuñez venture – a four-story complex – offers a plan of 30 installments adjustable by CAC, Departs – a 9-story building with apartments with up to 5 rooms – has 36 installments. “We never stop selling throughout this process. Especially in housing for the final consumer. We had and continue to have a boom in the sale of 3, 4 and 5 room units. In both projects we sold 90% of the large units”, adds the developer.
In this sense, he maintains that between December 2021 and January 2022 “we had many inquiries above the average and we closed 3 operations,” he adds.
From the Toribio Achával real estate agency they have a large number of projects, which offer apartments from a advance of between 35% and 40% in dollars and the remaining balance in 24 installments in pesos. As an example, they cite the Lafinur 3183 project, located in the heart of Palermo Chico, a few meters from Boulevard Cerviño, the old Zoological Garden and only 200 meters from Avenida Del Libertador. It is a premium building with 17 housing units, with semi-floors with 3 main rooms. “The most interesting thing that the market presents today is that the dollar values of ventures like this have temporarily adapted to the current situation in the country since 2019 and in particular since the 2020 pandemic,” he tells THE NATION, Eduardo Bagnato, director of Enterprises of Toribio Achával.
Wet if you refiere a que the current sales values have registered a significant drop of more than 35% of their prices in dollars compared to the historical ones of the area. “In that part of Palermo Chico until In 2019, the price per m2 was valued at around US$4,400 in the well and currently prices for the same type of property are around US$3,200, and this in an international context of unusually high inflation rates in dollars. All this suggests that as soon as the pandemic is overcome and the local situation becomes somewhat more stable, prices will recover their historical values,” he adds.
Also Daniela Pérez de Graffe, commercial manager of the Coria Group, detailed the values to enter a well project with an advance of 30%. For example, for a 3 room unit in Altos de la Cañada that costs US$73,000 are paid at the signing of the ticket US$21,900, then reinforcements up to US$14,600 and possession US$7,300 The day the owner receives the key, one month after possession, installments of $82,108 begin to be paid, adjusted by the CAC index.
“At the launch of the neighborhoods, significant discounts are usually made for cash payment, so many investors prefer to pay 100% at the signing of the ticket and obtain a better value that in the long run is for them a better return for each unit” , says Pérez de Graffe to THE NATION.
For his part, Hernán Nucifora, CEO of Global Investments, points out that you can enter with 20% and then installments. We have projects of up to 120 installments. For more advanced projects, such as the Camino Building, you enter with 50% and then 24 installments adjusted to the CAC. Also, in case of paying in cash, They offer between 5 and 10% discount.
Juan Manuel Tapiola, president of the developer Spazios, is also committed to long-term financing: he devised plans to buy apartments at rates lower than the average rental value. Has a flexible payment plan which consists of an advance in dollars or its equivalent in pesos –which the buyer can pay in up to one year-, an amount that the developer allocates to the purchase of land. The rest is paid in 360 installments in pesos updated by the Argentine Chamber of Construction (CAC) payable in 30 years and an additional optional “bonus bonus” every 6 months, which translates into reducing the price of the rest of the monthly installments. details the businessman who in 2020 billed $3 billion and plans to close 2021 with $10 billion.