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Is it once again a business to buy a property and find a tenant? - Infobae
December 27, 2023
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Specialists offer recommendations on the ideal types of properties and the most favorable neighborhoods for real estate investments in the city of Buenos Aires
By José Luis Cieri
After the repeal of the Rental Law, experts maintain that it is once again favorable to buy properties to rent in a traditional way (Illustrative image Infobae)
With the recent repeal of the Rental Law through a Decree of Necessity and Urgency (DNU) promoted by President Javier Milei, new perspectives are opening up in the real estate market for locations. In this scenario, a crucial question arises for those with savings or dollars in the mattress: Is it once again appropriate to invest in properties intended for traditional rental?
From the sector they maintain that the dilemma is clarified, since the homeowners rejected the previous regulations from the beginning. They did not want to be tied to three-year contracts and preferred to go back to a maximum of two years to more quickly recover their ownership or have a greater rotation option.
Leonardo Rodríguez Nader, CEO of the Investment Community and treasurer of the Association of Housing Entrepreneurs, told Infobae that the repeal of the law is a positive sign for the real estate market: “This regulation did not adjust to the current context of high inflation and variable exchange rate, evidencing failures for both owners and tenants. Now there is a current opportunity to generate a significant supply of quality housing, especially in large cities.”
Experts recognize that, as the macroeconomy and prices stabilize, it will be necessary to establish some type of order and control. However, they emphasize the current opportunity to satisfy the demand for rental housing, responding to the needs of both tenants and those intending to rent.
For those with savings, returning to shorter-term contracts has considerable appeal. The attraction towards projects with mixed use stands out, covering both long-term and temporary rentals. In the city of Buenos Aires, this approach is supported by robust tourism demand, providing a great opportunity in both market segments.
There are developments in tourist areas such as San Telmo, Monserrat, Balvanera or Paseo del Bajo, which are ideal with homes between 25 and 90 square meters.
Verónica Pagola, CEO of Century 21 Argentina, highlighted that “now the acquisition of rental properties is once again a viable option for those contemplating investment opportunities, opening a panorama that had been dismissed due to previous regulations. Faced with an obvious shortage, any neighborhood becomes a possibility, with prominent places such as Palermo, Recoleta, Belgrano, Núñez, Villa Urquiza.”
More profitability
After the repeal of the law, the real estate sector highlights the drop in prices for used (48%) and brand new properties (38%) in CABA in the last 5 years.
Purchasing two-room apartments to rent long-term or temporarily is a good option for those who have savings
According to Mariano García Malbrán, president of the Chamber of Real Estate Services Companies, acquiring a property now provides a double advantage. “On the one hand, less money is invested to obtain a home whose value will likely appreciate when the economy reverses the trend. Furthermore, the profitability of traditional rentals could improve in the short or medium term, making the acquisition of real estate an advantageous investment.”
Currently, the profitability of traditional rentals is around 3.5% in most Buenos Aires neighborhoods, with notable exceptions such as Barracas and Parque Patricios, where it reaches up to 6% annually. On the other hand, temporary rentals offer an average of 6.8%, climbing up to 9% annually and in dollars in select areas such as Palermo, Recoleta and San Telmo.
“The most convenient options are two-bedroom or one-bedroom apartments, generally with prices below USD 80,000, although Retiro, Palermo, Villa Urquiza and Villa Devoto also offer alternatives, but the values tend to be slightly higher in these areas,” García Malbrán added.
What may come
The repeal of the Rental Act opens up the possibility for investors to rent properties without restrictions, allowing them to purchase at current prices that could generate a solid return in the future.García Malbrán stated that “in a short period of time, numerous owners are awaiting confirmation of the DNU by Congress. Should this confirmation materialize, they will likely return to the traditional rental market. This change could also motivate investors to reacquire properties with the purpose of using them for residential rentals.”
Traditional investors will be able to ensure a constant monthly income by purchasing homes at prices that have decreased in the last 5 years
Regarding supply expectations, some observers believe that it will grow in the coming weeks, especially from the owners' perspective.
Since last Thursday, owners began to consult real estate agencies in search of detailed information about the DNU and its implications.
“Although it is difficult to give a definitive opinion, the repeal of the law and free contracting could encourage owners to offer their apartments, gradually normalizing the rental market. The need for additional incentives, such as tax benefits and credits for those who buy and rent, is highlighted as possible factors that would accelerate this normalization process,” concluded Miguel Altgelt, from Altgelt Negocios Inmobiliarios.
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