The country’s economic situation has Argentines on edge. In a month and a half, the dollar blue climbed over $100. Forced to go on the defensive, each business reacted to the instability as best it could. Most merchants posted signs in their businesses stating that they would charge merchandise until they had time to re-label it, while others closed their doors until they had new prices or saw signs of stability. In the real-estate marketthose who see a business for rent also showed different reactions, although the impact is always slower than in other areas.
Such is the case of temporary rentals in the face of the frantic rise of the dollar, of which today there are 11,200 published in the City of Buenos Aires. “Today a temporary rental if it is well located can be occupied 63% of the time of the month and achieve a total of US$420 gross profit, when a traditional rental offers only US$270. Clearly, in a macro environment in which Argentina will continue to be cheap for international tourism, the trend will be for a greater increase in this type of temporary real estate,” says Daniel Bryn, head of Inversión Real Estate, about this market unit.
Its short-term contracts, which real estate agencies usually handle from one month to a maximum year while other platforms handle deadlines per night, allow prices to be quickly adapted without being tied to the Central Bank’s Lease Contract Index (ICL) such as rents of traditional housing. The reactions of the owners to the lack of exchange control are disparate and, even so, the only thing they share is the desire to increase prices to protect themselves against the devaluation of their income. What are they doing?
In the first place, there is a portion of homeowners who reacted by raising the rental price of their apartments without waiting to hear the verdict of monthly inflation or to match the soaring dollar. “Many ask me to upload the publication between $15,000 and $20,000, but no more than that. Meanwhile, those who are in dollars did not tell me anything”, says a real estate salesman with experience in the City of Buenos Aires.
He agrees with this other real estate agent who works in a company specialized in temporary contracts, and details that the updating of prices does not follow the rhythm of the dollar. “The studio apartments deluxe in buildings with mod cons they began to charge a base price of $90,000 and $100,000 a month, which used to be their ceiling,” he says. He explains that the reference was US$500 for one-room apartments and US$600 for two-room apartments, per month, so those prices in pesos were validated when the dollar was at $200 and today it still is. they were not updated. “Today the prices have not changed much, unless the owner says that this number does not work for him and asks for a specific and exceptional amount”, he concludes.
As for the rest of the typologies, he points out that a two-room unit was rented between $140,000 and $150,000 per month, when before the average was around $110,000 or $120,000. The three environments can raise the amounts to an average per month of between $160,000 and $180,000, while the four environments exceed the $200,000 barrier and can reach $220,000.
In the meantime, some owners wait quietly waiting for some definition. This case is illustrated by a real estate salesperson consulted who handles temporary rentals and acknowledges not having received requests from owners to increase the value of the publication in pesos so far.
Despite the fact that rental contracts cannot legally be made in dollars, there are owners who convert publications from pesos to the currency. These use the value of the foreign currency as a reference and then charge the equivalent in pesos at the exchange rate. blue. In this way, they avoid the need to change the value in pesos permanently according to the volatility of the dollar. For those cases, the second agent detected “considerable increases”, since they were updated proportionally to the increase in the dollar in recent days. “For example, an owner who charged $100,000 asked me for change for US$550 and today that is much more than what was charged in pesos.”
Although changing the currency in the publication can be a measure to protect against the devaluation of the peso, does not mean a rental guarantee. “Since I changed the publication of a department from pesos to dollars, I have not received a query”, says the agent about one of the properties he manages.
On the other hand, there are those who split the difference between the parallel and the official and others, outside the real estate agencies, charge them in dollar bills. The public of temporary rentals for minimum periods of one month are usually tourists or foreigners with stay in the country, exchange students or expatriate businessmen. It is common for those who opt for this type of contract to have the currency, so they do not find any obstacle when disbursing foreign currency.
The situation is clearly atomized. The lack of stability does not leave a common parameter for the rise in rents, which are left to the will of the owner. These will decide to increase or not according to their need and rush to rent.
This year, real estate agencies specializing in rentals with contracts from one month to one year indicated that the profitability in the City of Buenos Aires was 5% per year. But what happens with it in a context of absolute instability? Lady Siebenhaar, head of Nativa Real Estate Solutions, says that “looking at the numbers of expenses and rent increases, rent rises from 4.9% to 5.56% annually in dollars. But if costs go up and you can’t increase rents any more, these values are going to change.”
Finally, it stipulates what would happen if the owners continue to raise the publication prices to match the dollar: “I think if we increase the rents more, the apartments will be empty. For me we are almost at the maximum acceptable”.