Argentina: Striking performance

The Argentinean team enters the World Cup as one of the favourites.

With a glut of world class players we’ll be hoping to add to our 1978 and 1986 titles. After only reaching the group stages in 2002, we at least hope to improve on that performance. Argentina’s economy is also bouncing back from its financial crisis of 2001 and 2002, with around 9% growth a year since the collapse.

Property prices are also recovering, but compared with the US and Europe, housing in Buenos Aires is cheap. Modern apartments cost less than $1,500 per square metre, and bargain-hunters can buy older properties in middle class areas for a third less. Luxury apartment towers are sprouting up across Buenos Aires as demand rises.

The improved property market has boosted the construction sector and fuelled Argentina’s economic recovery. The sector accounts for about one-ninth of Argentina’s GDP.

The market for high-end properties is attracting wealthy Argentines and foreign investors, helping to spur more than $850m in new developments across Buenos Aires’ wealthiest corridors. Foreign buyers prepared to wade through the red tape can find attractive, affordable properties.

The property market functions mostly on a cash basis, but foreigners are not allowed to bring large sums of money into the country. So the typical route is to transfer money to an Argentine foreign exchange house held at a bank abroad. The exchange house converts the funds into pesos and then back into dollars for a fee of around 2%. On completion, the exchange house presents the buyer with a suitcase of cash.

Mortgage lending has been weak in Argentina and even before the financial crisis just 30% of sales were completed using mortgages. Mortgage lending accounts for roughly 2% of GDP in Argentina, a shadow of the 14% of GDP rate in neighbouring Chile. Following the financial meltdown, savings disappeared and mortgage lending flat-lined.

Many owners are grappling with debts on their homes so Argentina’s Congress recently approved an extension to the ban on mortgage foreclosures. The government set up a fund to settle debts of up to 100,000 pesos (around $32,479) on mortgage defaults during the crisis.

With our financial crisis now long behind us and things looking up for the property market, we hope 2006 is our year on the football pitch too.

Tom Wilson is a spokesman for GE Money