Real Estate in Argentina
Real Estate in Argentina
We live in
a global economy which means we can live, invest and earn
where it is
best for us, not just where we live or were born. It makes
sense to diversify outside our place of residence especially
before the economy goes south. In many parts of
the industrialized world, a weakened economy is now cause
because so much of the global economy has been lifted by
rising US real estate prices.
A recent article in USA Today entitled “New-home sales plunge 9.9%,confidence
drops” by Martin Crutsinger, explains that this may be changing.
Here are excerpts from that article:
“Sales of new
homes plunged 9.9% in August, biggest drop in nine months, as
the nation's housing industry continued to flash mixed signals
about whether the boom is starting to fade.
the biggest fall since October 1990 when the index fell 23 points
to 62.6 in the wake of the recession. The September reading was
also the lowest since October 2003, when it registered 81.7.
drop in new-home sales could be an indication that the nation's
red-hot housing market is beginning to slow, but reports so far
“The 9.9% decline
in new-home sales was more than double what analysts had been
expecting. The government also revised the July sales pace lower,
to an annual rate of 1.37 million units, still a 5.3% increase
in sales in August was the biggest drop since a 10% fall in November
believe rising mortgage rates finally are starting to have an
impact on the booming housing market. They are still forecasting
that sales for all this year will set all-time highs, the fifth
straight year that sales of both new and existing homes have
are forecasting a slight decline in sales for 2006 with prices
moderating and possibly even declining in some of the hottest
Chairman Alan Greenspan has been raising concerns about what
a cooling housing market might do to the country's banks and
We should all be concerned
because US consumer spending (which has been driving the
global economy) has been fueled by rising US property prices. A
drop in the prices could create all types of economic problems.
This is why we are
reviewing real estate opportunity around the word this week and
today’s review looks at the Ushay forestry project in Argentina. Our
friend Steve Rosberg reports:
“I am pleased
to bring you up to date. For those of you who have invested and
those who have considered it, here is some very positive news
on La Negra:
“We took possession
of La Negra on schedule on August 31st., and have completed the
preliminary survey of the property, marking off the future water-level.
We are satisfied that all is according to expectations.
“We also met
extensively with the sellers, who are gradually clearing the
old eucalyptus stand. We reached an agreement whereby we
limit their activities to a sector of the property until year’s
end or early 2006, and then move on to another sector. They also
handed over a portion that they are not interested in clearing,
which allows us to do this ourselves and create some non-budgeted
income. Which means that we are modestly better than budget both
on the expenses and on the income, the way we like it.
“We are in the
process of negotiating with several yerba mate (the typically
Argentine green tea) packers so that they collect all the firewood
lying around for their drying kilns. This will allow us to clean
up the large amounts of wood without burning it on the premises,
and possibly with a small income (instead of budgeted cleanup
(September 24th) we sign the lease agreement with Dr. Antonio
Armanini, a prominent lawyer and cattle rancher of Posadas. He
will build a house for his manager, overhaul the existing cattle
management installations and start the cattle grazing operation
as we gradually release surfaces for this purpose.
weeks we have been negotiating with the "Bolsa de Comercio
Confederada" - a stock exchange in Corrientes (www.bolsanor.com)
- to appoint them private placement agents. We expect to sign
our agreement before the end of September. This is important because
they have important placement capacity locally and through their
agency of European Union cooperation agencies and because
having passed their due-diligence procedure is a valuable endorsement.
“We met for dinner
with José Oricchio, our neighbor to the north-east. Aside
from sharing a memorable evening, it was very positive in that
Mr. Oricchio has a firm stance on conservation matters that we
share. In this way, the monkeys, swamp-deer, foxes and other
endangered species that survive in the small portions of native
rainforest on the properties will continue to thrive. Fly fishing
of the world-famous doradowill continue to be done on a catch-and-release
basis. We will not have police rights (nor will we want them),
but will invite everyone to respect these policies.
“This week we
started advertising locally, with a very positive initial response.
At the time of writing, of the 50 units, 17 have been signed
and paid, three are in signing process, and 5 more are reserved.
"All the best, Steve
We have received many
raves about Argentina and have long recommended investing in forestry. There
is more on forestry.
Until next message,
good global investing!
Estate in Argentina written by Gary