New Zones & BA Real Estate update
New Zones & BA Real Estate update
RE opportunities in and around Palermo for the upcoming years
Welcome Avatar! As Palermo expands throughout the city, so do opportunities. In the upcoming years, there will be an ample variety of businesses serving empanadas from a jar in currently ungentrified zones. In this update we’ll go over the latest trends in Buenos Aires real estate, highlighting some areas to track more closely.
Overview
In general, listing prices are up close to 2% YoY. Average sales price for a studio apartment (monoambiente) in Buenos Aires is now $98,109. In neighborhoods like Palermo, Colegiales and Recoleta, this is closer to $100-105k or more for new developments, depending on the area and building amenities.
Older apartments can be a lot lower than that, depending on the circumstances (deals can still be found in this market if sellers need the cash).
On average, a two-room apartment of 50m2 is closer to $117.5k USD while the average 3-room, 70m2 apartment costs 161.7k USD.
Neighborhoods
When looking at the zoning heatmap for average price/m2, the northern corridor of the city (Recoleta, Palermo, Belgrano, Nuñez and Puerto Madero) saw an increase of 4.4% YoY and MoM of 1.1%.
The northeastern corridor (Villa Crespo, Chacarita, etc), is closer to 3.6% YoY and 0.9% MoM.
For the detailed prices per m2 per neighborhood, the bars look like this:
Since these are average listing prices/m2, the reality is that older apartments can be found at significant discounts depending on the circumstances (I have seen $2k/m2 in Palermo), while new developments will be 10-15% above that average listing price (closer to the $3,200-3,700/m2, and in some cases closer to $4,000-4,400/m2 for Palermo Hollywood with special amenities or a better location for example).
The zone that tends to pump the fastest is the northern corridor, but also barrios adjacent to Palermo like Villa Crespo are gentrifying quickly.
The average price/m2 in the city is still hovering around $2,220/m2, with a close to 2% YoY change:
This will continue as credit becomes more widely available, and also now that international demand is starting to grow.
Read more about the mortgage credit dynamics and the impact on prices in the short to medium term:
Looking at sales, Buenos Aires remains a fairly illiquid market, with only +18% in sales compared to the same period last year:
Opportunities
Now where are the empanadas en frasco, you might ask. In this section we’ll go over some of the less developed areas in and around Palermo:
Some of these zones are best for new developments, called pozo developments, since many of the current buildings are either too old and some zones are simple uninhabitable (Palermo Green).
If you want to know what pozo developments are and how to invest in them, read more about here:
The potential zones of interest highlighted in the map above are meant for different time frames, from short to long, or from most developed to least developed.
1. Las Cañitas
Las Cañitas is officially part of Belgrano, but since it’s only a 10 minute walk away from Palermo Hollywood, often times it is listed as a Palermo neighborhood.
It almost has a small town feel to it, with a lot of small shops, bars and restaurants around Báez street particularly.
Keep in mind that this neighborhood is already popular and relatively more expensive but has room for growth, potential flip and STR potential since close to Palermo Hollywood.
Timeframe for investment: now-5 years
2. Chacarita / Colegiales / Palermo
This crossover area of Chacarita / Colegiales / Palermo is also called the Triple Frontera and is gentrifying very quickly, especially the areas adjacent to Palermo. The area closer to the Mercado de las Pulgas will tend to be priced at a higher m2 price.
There are some very nice homes / phs available besides many new developments that are popping up left and right. The great thing about this zone is that you are at a relatively short distance from all the hustle and bustle of Palermo, but the restaurants and bars in this zone mix more with a residential profile vs Palermo which is almost exclusively nightlife at this point.
This area has recently been highlighted in this New York Times article, and still has room for a lot of growth.
It still maintains the air of a quiet neighborhood but with a large number of new gastronomic proposals and promising urban development.
Timeframe for investment: now-10 years
3. Villa Crespo / Palermo Queens
The part highlighted in this article is not the conventional part of Villa Crespo, which is basically a large section between Av. Córdoba and Corrientes, and stretches up to Avenida Warnes.
The part of Villa Crespo in the blue quadrant here bordering Avenida Córdoba is interesting, and the part that is most “risky” with most potential future upside is highlighted with the dotted lines.
The part we’re talking about here is technically the extension of Palermo Green, and has the same layout (following Avenida Juan B Justo).
This is what most of that section looks like today:
These properties used to be located below the Juan B Justo bridge, before lifting up the train tracks and bringing the avenida back to street level. This is the before/after, seen from the Palermo green side looking towards Villa Crespo:
Around Darwin and on the other side of Juan B Justo (Jufre etc) you can find some potential existing properties, but right on Juan B Justo your bet will be 100% new developments.
Timeframe for investment: 2-10 years
4. Palermo Green
Currently a wasteland, many abandoned terrains or illegally occupied properties. Will take time to play out, but is a guaranteed banger, not if but when.
The most developed part is in the upper left corner with the dotted lines:
The rest of this area around Avenida Juan B Justo is only for new developments and slowly but surely they developers are buying up the terrains (the lower blocks inwards are more developed and more part of Palermo Soho, but the closer you get to the main avenida, the less developed).
One downside is that the train runs next to Avenida Juan B Justo, and the lifted tracks cross the Avenida in the lower left corner. Because the tracks used to be on street level, this area has been neglected for a long time. After lifting the tracks a couple of years ago, this a completely different story.
The upper area right next to the tracks already has parks and green space, and the lower part will look similar once some old gas stations and discotheques are removed:
Especially the lower part from Gorriti to Avenida Córdoba closer to Juan B Justo has a lot of potential for new developments.
Timeframe for investment: 2-10 years
Autist note: you can find some additional articles below that shed some more light on Argentina’s real estate market:
Conclusion
My assumption in the previous RE update about a potential June/July devaluation came early: the first week of June is still ongoing and with the latest devaluation (from $1,020 to close to $1,300 per dollar at the time of writing), my peso installments have become a lot more affordable in dollar terms.
With mortgages now in full play (yesterday another bank started offering mortgages, which brings the total to 15), I expect m2 prices to keep increasing steadily, especially in more popular areas.
If you can get in early on a new development in the zones of Palermo Green / Villa Crespo around Juan B Justo, that could be one of the best bets in terms of return on investment.
You will have to be patient however, because from buying the terrain to finishing a building, you’re looking at 4 years from plans to permits and construction, and potentially longer if it is a landmark building.
In the upcoming weeks I will share some investment options in some of these areas, so stay tuned.
See you in the Jungle, anon!
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