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Representatives of the different links that make up the value chain of the real estate business reflected on the changes that the industry has experienced in recent months
Contrary to what has happened in recent times, 2025 will possibly be the year of change in relation to supply and demand in the real estate business. This was one of the many conclusions reached by different actors who participated in the panel that took place in the second edition of the Banco del Hogar event organized by Banco Hipotecario.
In keeping with current events, Jorge Cruces, Investment Director of IRSA; Santiago Tarasido, CEO of the construction company Criba and head of the Association of Housing Entrepreneurs (AEV); Conrado Isla, president of Carlos Isla, a firm dedicated to the distribution of materials and Alejandro Renghini, CEO of Ilva, dedicated to the production of porcelain tiles, started the discussion referring to credit, which led to all the protagonists explaining how this instrument affected and affects their segment in particular.
The Argentine real estate market projects a 2025 with a takeoff in the residential segment, driven by access to credit and demand for new housing developments
The Argentine real estate market projects a 2025 with a takeoff in the residential segment, driven by access to credit and demand for new housing developments
Marcelo Gómez
Thus, the IRSA director started the panel by announcing the takeoff of the residential market after “15 years of a market focused on investor demand.” According to Cruces, both the money laundering and the possible financing “make there be more demand,” which forces prices to rise. “It was the time of small units, now it is time for another type of product, which is not in stock, and for us it is a great opportunity,” he explained the reason why the company will advance in a US$2 billion investment plan in residential real estate projects.
Santiago Tarasido, from Criba, acknowledged that this “was not an easy year, beyond todays picture. With inflation on the decline, after many years of tremendous inoperability, possibilities are opening up. In 2025 we must remain calm, but there are conditions that indicate that they are on the right path.”
In his role as head of the AEV, he explained that the housing issue “is a problem that we saw and could not find a solution for, tired of looking for proposals and bringing ideas together and in the context in which we were working it was almost impossible to propose anything. Now, thinking about a market with credit where construction will be done for people who need it and not just for investors is good news.”
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Time for efficiency
Alejandro Renghini, from ILVA -specialized in porcelain-, agreed that the coming year is one in which “good prospects are seen”; a 2025 that, he explained, will find the company investing US$30 million in a new plant. “But beyond that, we will have to reinvent ourselves with the efficiency of the production system, since we are coming from years with little competitiveness.”
According to him, “now is the time to generate service”, since, he foresees, there will be a different stability, without peaks. In this context, he stressed, the challenge will be to reinvent ourselves to be competitive internally and also from the region.
Companies are betting on automation and productive efficiency to compete in a more open and dynamic market
Companies are betting on automation and productive efficiency to compete in a more open and dynamic market
Shutterstock – Archive
“Until the end of last year, distribution was focused on maintaining stock, to supply the chain and sustain the inefficiencies that would occur due to the lack of inputs. This year the focus will be much more on connectivity,” said Conrado Isla of the construction materials distribution company, pointing out how the macro scenario impacted the company and its activity.
In the same vein, he highlighted what the new economic framework will bring: “Before, we sold to the client because we had stock or because we offered them a hedging tool in the face of the macro instability that existed, because people did not know how much materials would cost tomorrow and they used us as a hedging tool.”
“Today I think that this will no longer be the case,” said the businessman before continuing: “Now people will make their money count through financial tools and the focus will be on efficiency, service and the added value that we can provide. I think that the local industry will have to become more competitive because an opening process is coming. And distribution will also have to become more efficient.”
Context & Prices
The power that the consumer has gained in the current scenario was the next topic of the talk. Tarasido said that, specifically, decision and power have been transferred to him. “Until now, in an economy without alternatives and with high inflation, the one who had the decision was the one who had the stock. Today, having stock is not an advantage. There is an important paradigm shift there.”
According to the CEO of the construction company, 2024 was a year with a large increase in costs that poses another challenge in addition to those mentioned: how to ensure that these increases are transferred to prices, which will inevitably involve the entire construction segment due to the simple cost of replacement.
Rising costs and comparison with other cities in the region challenge the construction sector in Argentina
Rising costs and comparison with other cities in the region challenge the construction sector in Argentina
LA NACION
“There has to be an issue of the purchasing power of the salary that gives the possibility of credit or buying at better prices,” Tarasido continued, adding an extra component: the comparison of values ??with other cities in the region. “We were too low and it was unsustainable, both the construction costs and the sale prices of units. It was not logical that well-located units in good locations are cheaper than other cities in the region with what Buenos Aires represents,” he emphasized.
Jorge Cruces provided his developers perspective, warning that in 2025, stock prices will continue to rise, especially for new square meters. In this regard, he referred to the honesty of values, highlighting that, in addition, there was inflation in the world with respect to construction costs, to which Argentina was not exempt.
Tax burdens and formalization
“But, later, mortgage credit will formalize the industry. The next step is to review the tax burden. Today, depending on the province, it represents between 45% and 55% of the tax burden. An unpleasant number,” continued Cruces, in relation to what is to come and the market responses.
Along these lines, Tarasido added: “We conducted a study based on data from the Chamber of Construction that showed that only in relation to gross income, it has a chain effect on a real estate development with an impact of 2.5% to 3% that is applied to all inputs. It is a point that, for example, does not exist in Uruguay.”
High taxes represent a challenge for the real estate industry that seeks greater formalization and competitiveness
High taxes represent a challenge for the real estate industry that seeks greater formalization and competitiveness
Santiago Hafford – La Nación
According to him, today there is no chance of passing on the increase in costs to the price, which could happen next year, “with better access to credit and with a better purchasing power.” So yes, Isla estimated, it could be transferred if functional units are sold with an increase in the sales ticket. “Today prices have not increased and costs have increased,” he defined.
Imminent future
Renghini added predictions about what will happen in the coming months, always in contrast with the present. Thus, he pointed out that Argentina is one of the few countries where stock is valued, while in the rest of the world it is the other way around: “The less stock you need to be able to function, the more efficient you are. On the other hand, here, because of the replenishment, you are forced. All the suppliers that have to do with porcelain work in a way that they always buy in the future and I think that will end up disappearing,” he predicted.
Tarasido also predicted changes in the construction field. “Today you have the possibility of generating models and having the building built without it being built. And you already know exactly where the installations, the pipes, the structure go… And to this you add a production capacity that you did not have 20 years ago,” he described.
The head of Criba also indicated that there is a tendency to build off-site, that is, outside of the workplace, and less in the workplace, which implies a "very important" change in the production matrix, in addition to a lot of advantages - from safety to the possibility of working in the rain - although there are also challenges such as greater integration in a value chain that, according to the CEO of the construction company, is very dispersed.
Cruces also referred to what is to come, specifically in the residential market. “Demand in Argentina, depending on real wages and mortgage loans, is infinite at the moment,” he said, illustrating that many young couples and families need housing and that if a way is found for them to be able to pay for it, demand will respond.
“That is what is happening now. We are seeing it. In other words, the entire market is seeing that there is demand as long as people can afford it. Today, our stock is one and two-room apartments. In other words, there are a lot of three and four-bedroom apartments to be built in the next 10 years,” he concluded. |
