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Tuesday, December 06, 2022

With US property prices rising, Argentine investors are also now looking to Europe

With US property prices rising, Argentine investors are also now looking to Europe

US home valuations begin to decline marginally

The “real estate bubble” registered in 2022 with property value records in the United States where USD 400,000 The average per unit seems to be slowing down.

Some real estate agencies in this country say that after a steady increase, home prices have declined in some cities, especially on the West Coast, with the California cities of San Jose, San Diego and Sacramento being Seattle (Washington State). started. , and in Las Vegas, Nevada, according to the portal Week,

Another significant change is that the volume of mortgage applications in the United States has increased to 50. decreased more than, this year. For a few months, new home sales have declined compared to last year.

These factors have created Argentine investors with savingsAllocate their investments to properties located in Europe, especially abroad.

On why housing prices fluctuate in the United States, he said infobae mariano capellinoCEO of INMSA Real Estate Investments: “The year 2007 is remembered as the year of the great real estate boom in this country, so much so that it is named the expression bubble of 2007, While these values ​​seemed unbeatable, a combination of some variables made possible another exceptional situation that began to become apparent in the second half of 2021 and began in 2022, but the situation shows signs of risk. ,

The graphs presented below show the value realized by properties in temporary cuts in September 2020 and 2021, much higher than the maximum value reached in the bubble of 2007. These values ​​are a clear expression of how inflated the current market is.

Source: Inmsa
Source: INMSA

The percentage of commercial property (office, industry, retail, multifamily and hotel), varies from 52,8% on an annual average of 16,1%, Housing, for its part, reached a percentage variation of 16.8% in 2021 (see below).

Source: Inmsa
Source: INMSA

“This phenomenon was due to the fall in rates in 2019, resulting in a wave of investments, which added to the impact of the pandemic (savings). Compelled Somehow) and the huge currency issue (25% of the total currency), generated an extraordinary inflow of capital. Lower rates as well as purchasing power caused a boom in real estate and property grew in unusual proportions annually. As the charts show, well above the previous bubble,” Capellino said.

Today in the United States, housing prices are located 55% Above the maximum bubble in 2008. ads are located 52,8% on average compared to 2008. And, with differentiation, multi-family homes up 118%, logistics 60%, offices 23% and retail and hotels located equally and were the two most affected in the pandemic. Due to which it is very difficult to find out the value there, they maintain by segment.

Can this bubble burst? Given the current rate hike, it is highly likely that there will be brakes on an increase in market prices and even a possible downside.

In Detroit, Property Values ​​Haven'T Fully Recovered Yet, Which Is Why Argentine Savers Usually Bet On This Market.
In Detroit, property values ​​haven’t fully recovered yet, which is why Argentine savers usually bet on this market.

Capellino elaborated: “As rates go down, real estate goes up because there’s more intention to buy because of amenities, when rates go up, real estate goes down because there’s more to compete with other options.” Returns are required, and the investor can focus on other assets such as bonds. Rising rates are clearly a variable that corrects prices. Those of us who dedicate ourselves to analyzing market cycles They are looking for indicators that warn that a big bubble could burst at any time.

reference value

In Miami, a destination that Argentina chooses, prices generally vary based on quality, age, amenities, location, among other aspects. Currently in the category of apartments for the middle class area USD 2.500 One USD 5.000 per square metre, in high-end properties they range from USD 5.000 above it USD 10.000 lm 2.

What types of properties do Argentines buy in the United States today. “Mostly they acquire residential properties in New York, in Miami (Brickell and the Beach) and Manhattan, but also in other cities like Atlanta, Orlando, Detroit for example. Unfortunately today is not a good time to invest in the United States of America. That is, except in the city of Detroit, where prices are still more than 30% from the 2007 boom, while in the rest they are on average 55% higher than in 2008″ Expanded Capellino.

old world emerges

Because of this the opportunities are more in Europe. In this continent, they caution from the sector that rates are still too low and this creates the potential for a very attractive return not only on the capital invested but also on the loans taken. Profitability of Rent Grant a 6% per annum on Iberian soilFor example.

In Spain, most of the previous year’s indicators were records, surpassing most recent or 2008 cases that did not surpass them. Transaction volume increased by 27% over 2008 volume. Investment volume, which was a record last year, was up 80% in the first half of 2022. Pledge volume, up 27%, surpassed 2007’s historical high.

As a type of real estate, investors are very interested in commercial properties, logistics properties and commercial complexes for supermarkets and hotels.

Be Lagom, A Project On The Costa Del Sol In Málaga, Spain
Be Lagom, a project on the Costa del Sol in Málaga, Spain

However even in homes, such as in the Costa del Sol near Málaga, where they invest in brand new units.

In Spain, the price of middle class units varies between USD 1.000 One USD 4.000 M2, among high rise properties starts USD 4.000 and they come until USD 10.000 lm 2.

Apart from Spain, they also recommend investing in Italy and Greece, two markets that have never recovered since the 2008 crisis. I mean, they’ve lowered their prices for 10 or 12 years and they’re starting to rebound. When they began to recover, the epidemic arrived.

“Thus, they are two very attractive opportunities, as they are at the ideal moment of the cycle”, concluded one expert in the real estate sector.

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