Fixed term, stocks or housing?

The purchase and sale of real estate became the traditional investment with higher return in the country in last three decades, according to an analysis prepared by the consulting firm Fernando Marull y Asociados, which placed second place to sovereign bonds and third place to fixed terms in pesos.

“The bottom line is that there is a clear winner in the last three decades: the brick. If in 1993 US $ 100 was invested in real estate, today we have US $ 350, yielding about 10% per year in dollars“the report stated, based on the analysis of the performance of four traditional assets in the country.

“After the steepest decline in the 2002 crisis (fell 50%, reaching a price of US $ 380 per m2), from there property prices have maintained the upward trend: they avoided the international crisis (2009), stabilized during the 2011-2015 stocks and resumed the upward trend from 2015 to the beginning of 2019, “he added.

According to the analysis, which was based on the prices of the properties In the city of Buenos Aires, in the last three years, statistics showed a moderate drop of 10%, to US $ 2,500 per m2, although when compared to the rest of the assets, “the market sounds resilient” . Likewise, The consultancy estimates that the properties “operated” today could be between 20% and 30% less than a year ago.. “Equally, they would still be the best investment in decades, “he remarked.

The analysis indicates that after the “brick”, the second investment with the highest returns during the period studied are the Sovereign bonds. In this case, the consultant calculated a “theoretical” bond of US $ 100 with annual interest of 8% per year and adjusted it for the 2005 and 2020 swaps (assuming a 45% current value discount).

Thus, with this investment today you would have u $ s180, that is, 3% per year in dollars, which is obtained as a result of the annual interest of 8% less the loss due to the reductions in the restructuring.

In third place, with losses, are the fixed terms in pesos. For the analysis of this investment, FMyA was based on the thirty-day peso rate converted to the dollar with settlement (CCL). With the same initial investment (US $ 100), after almost thirty years, today we would have US $ 53, that is, almost half.

In the case of the Actions, who were in fourth place, and that the consultant took as reference the Merval in real dollars (adjusted for US Inflation), the returns were even more negative: today there would be $ 36, starting from the same initial amount as in the investments mentioned above.

After quarantine, the initial priority is the continuity of the works, experts say

Investment in bricks: a unique opportunity?

FMyA not only affirms that the properties were the best investment of the last three decades in the country, but also foresee that they will continue to be. Likewise, the analysis concludes that the current one is a good time to build. Even, consider that it is the best moment to do it from at least the exit of the convertibility.

To reach that conclusion, compare the property price against the cost of construction.

“Until 2018, construction prices represented half of property prices, stably accompanying their price increases. But from 2018 there is a strong decoupling between both series, which was exacerbated after the result of the 2019 PASO and the current coronavirus crisis, especially due to the sharp rise in the CCL dollar, “he said.

Investing in a property will continue to be the most profitable

According to the report, currently the cost of construction nationwide barely exceeds $ 400, representing less than 20% of the value of property prices. “Or, in other words, the property price is six times the construction cost, when the historical average is three times, “he explained.

“If we assume that the property price drops 30% from the current one, the ratio would give close to four times the cost of construction, still above the historical average. In other words, even assuming a drop in sales prices, currently building is still a very good investment, “said the consultant.

This is a perspective in which sector analysts agree, who agree that it will recover soon after mandatory isolation if there are investments, and that that will be the time to invest.

In the virtual seminar “New Real Estate Developments post Covid” organized by Real Estate Report, the architect Hernán Gimenez pointed out that the building of a 160 square meter house In a closed neighborhood in the south, today 130 thousand dollars with land included.

“There is a unique opportunity because the square meter of construction with medium-high category materials is less than 600 dollars and registers a 41% decrease compared to June 2019 “he assured.

While the general manager of the housing project development company Eidico, Mateo Salinas, said that the sector “will quickly recover, Covid stole three months of work but brought us an opportunity with this dollar difference to those with dollars on hand or can build soon”

Brick is still the best investment

How much longer will the opportunity last?

For his part, the CEO of the Criba construction company, Santiago Tarasido, stated that “I do not remember another time with values of building at these levels; those who have known how to take advantage have made big business, there is a great opportunity, we need to get going. ”

“Nor I think we have another opportunity to build as cheaply as today, it is necessary to see how we take advantage of this moment of a very low cost measured in dollars, “he observed and affirmed that in many cases materials are collected” to ensure prices. ”

In this context, the president of the Entrepreneurial Chamber of Urban Developers (CEDU), Damián Tabakman, assured that “we have a chance to boost investment in bricks in Argentina; there is a countercyclical opportunity to do a project that will be at a very low cost and that later turns in a dollarized asset“said the president n.

“We’re going to have low cost in dollars for 12 or 18 months, it will not liquefy in the short term; We have a long enough horizon to start works now “and assured that” the sector has an intrinsic solvency that allows it to face the moment and also take advantage of the low production cost, “said the manager.

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