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Overview of the Real Estate Market in Argentina
Since 2018, the real estate market in Argentina experienced a strong fall, mainly due to the economic recession that added to the growing inflation and devaluation. In this scenario, the Covid-19 pandemic just discouraged any real estate undertaking throughout the country. In addition, this situation directly affected the construction industry, which meant a 75.6% interannual fall.
Taking into account these facts and in order to foresee a way out of the crisis, it is essential to know which tools helped in the recovery from other economic crises that took place in Argentina.
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As leaders in the real estate market in Argentina, InheritEstate is the first international network of duly certified attorneys. We provide legal services in the following provinces, cities, towns, and jurisdictions:
Buenos Aires, La Plata, Catamarca, San Fernando del Valle de Catamarca, Chaco, Resistencia, Chubut, Rawson, Córdoba, Corrientes, Entre Ríos, Paraná, Formosa, Jujuy, San Salvador de Jujuy, La Pampa, Santa Rosa, La Rioja, Mendoza, Misiones, Posadas, Neuquén, Río Negro, Viedma, Salta, San Juan, San Luis, Santa Cruz, Río Gallegos, Santa Fe, Santiago del Estero, Tierra del Fuego, Antártida e Islas del Atlántico Sur, Ushuaia, Tucumán, Mar del Plata, and San Miguel de Tucumán.
Real Estate Market in Argentina
After the chaotic crisis of 2001, the growth of construction was actually exponential to the point that, during the decade 2003 – 2013, it reached 167%. In fact, within the construction industry, the use of real estate trusts covered 85% of the undertakings.
Therefore, within the context of constant inflationary processes, cyclical economic crises, and the scarce supply of mortgage loans, the introduction of trusts adapted to the constitution of real estate developments played a very important role as a tool for a sector immersed in a deep crisis.
In general, in order to start such projects, trustees make contributions of various kinds. For example, land, building materials, or a sum of money in a series of agreed installments to finance the work.
In addition, a trustee is in charge of managing the start, progress, completion, and delivery of the indicated work. The fiduciary may be the builder himself or may be in a separate role. This task can be performed by a third party. This person must control the work from the beginning to the end. Therefore, it is not essential to be an architect, nor to have a degree to perform this task. It is enough to be a real estate professional who is willing to assume the responsibilities of a developer.
Real Estate Market in Argentina
Upon completion of the project, the trustee transfers ownership of the agreed units to the persons designated as trustees. If the finished units are for sale, the proceeds of such sale must be transferred to the beneficiaries designated in the contract. Often, the trustees and beneficiaries are the same. A, since, actually, these roles are intermingled, but it is clear that they may be different people. It is worth mentioning that the separation of assets protects the trust assets. In fact, they are exempt from the singular or collective action of the personal creditors of the parties. Another advantage is the possibility for the trustor-acquirer of financing the final value of the property in installments. This can be either in dollars or in pesos updated to the value of the construction index.
Also, the advantages of the real estate construction trust are becoming more important in the critical economic situation that Argentina is experiencing nowadays.
On the other hand, it is necessary to draw up a specific contract with clauses adapted to each specific case. To be more precise, there should be a clause for cases of unforeseeable circumstances or force majeure. These go beyond the provisions of the National Civil and Commercial Code of Argentina.
In conclusion, the challenge real estate entrepreneurs face post-pandemic implies the adoption of real estate trusts. They play a fundamental role in the recovery of the construction sector.
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