Big Estates in Argentina
The dream of a huge piece of land is common to many people. Almost everyone dreams of being a king (or queen) of their own little country. This dream can be a reality in Argentina or Uruguay. Land there is measured in hectares. One can buy 5,000 or more hectares (15,000 acres) for less than $3,000,000. If one has more money, one can have a bigger country. One has to realize of course that the value of land is based upon its productivity.
An easy comparison is land on the east coast of the USA, where 1 acre supports 1 cow. In most of Texas and the southern Midwest, 20 acres supports 1 cow. The cow walks off much of its weight gain just finding dinner. The argentine pampas, in most cases, is much more productive than land in Texas for the raising of cattle. This is because the Argentine Pampas is mostly pure cattle food. In some places the grass is so high the cattle are invisible.
The first settlers to Argentina left several horses when they abandoned their settlement due to Indian raids. When BA was re-established there were vast herds of horses on the pampas. Garay brought 500 cows from Paraguay when BA was reestablished. Many of these went wild and established a huge wild population of cattle. The settlers just rounded them up, killed them for the hides and, in many cases threw the meat away. Much of this land has been planted to grains and soybeans now.
Argentina is the world’s number 1 producer of soybeans. The Chinese are the world’s number 1 importer. The Chinese should be buying estancias in Argentina. In some cases they are. They are not the only buyers. Because of the vast areas, the wonderful natural resources and the economical living conditions many people from other countries are buying these estancias. They are not only working farms; but vineyards and recreational attractions.
There is one thing to remember in South America. In many cases there is a “use it or lose it” philosophy concerning land. Absentee landlords are not safe in their ownership. If the government doesn’t “redistribute” the land, there is always the danger of “Camesinos sin Tierra”. This translates loosely to farmers without land. This organization will settle on unused land and the governments have little political will to remove them. Think about how it looks on the 6:00 news when the bulldozers wipe out a settlement of poor people.
A good source to see some estancias and maybe even arrange for a visit is Http://www.welcomeargentina.com/estancias/index_i.html .
David Segrest, CIPS, CCIM, CEA, TRC
david@segrestrealty.com also blogs at http://www.dointernationalrealestate.blogspot.com
Canadian Real Estate Association Posts Strong Second Quarter
Here is the most recent Press Release from the Canadian Real Estate Association. The Toronto Real Estate Board also published a strong release last week. You can read it also at Toronto Real Estate Board: June 2009, Best June on Record!!
OTTAWA – July 14th, 2009 – National resale housing market activity bounced back strongly in the second quarter of 2009 above levels reported for the same period last year. Demand continues to rebound sharply in some of the most expensive markets in the country, skewing the national average price upward.
According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales, via the Multiple Listing Service® (MLS®) of Canadian real estate boards, totaled 147,351 units in the second quarter of 2009 – the fourth strongest quarterly sales figure ever. Up 1.4 per cent from the second quarter of 2008, this marks the first year-over-year increase in quarterly activity since the fourth quarter of 2007.
Land, Lots of Land
So far, the articles in this blog have focused on Buenos Aires. BA only comprises a very small portion of the land in Argentina. The “Hinterlands” is the rest of the country. A very large portion of the Hinterlands is Patagonia. This region consists of 786,983 square kilometers and has less than 2,000,000 people. It is extremely close to Antarctica. Much of the region is barren shingle steppes. There are some other areas with more habitable terrain.
The region has volcanoes, glaciers and many lakes. The fossil record of the region shows a connection with Australia. Other characteristics link the region with Antarctica.
Patagonia is rich in mineral deposits and wildlife. Huge tracts of land can be bought for a small amount of money. The land is mostly good for cattle and sheep ranching and recreational use. There are ski resorts and hunting lodges. The thing to remember for people from the northern hemisphere is that the seasons are reversed in the Southern Hemisphere. While we are roasting, Patagonia is gripped by Antarctic winter. Temperatures sometimes plummet to below -35 degrees. Many areas are inaccessible for part of the year.
The name Patagonia was bestowed by Magellan. It was inspired by a character in a popular novel of the time. Patagón was a giant savage. The Indigenous people of the region had an average height of 5’11” and lived in primitive conditions. The average Iberian was 5’1”. The area became well known when it was visited by Charles Darwin on the HMS Beagle.
Real Estate investors are often impressed by the huge tracts of land that can be purchased for very small amounts of money. Unfortunately, most of the return is in the form of ego boost to people who like to own tracts of land that are larger than small countries. There is income to be made; but it is in most cases not commensurate with the costs of the property and the expense of access and using the property for production.
David Segrest, CIPS, CCIM, CEA, TRC
david@segrestrealty.com
http://www.segrestrealty.com
http://dointernationalrealestate.blogspot.com/
How can I buy property in Hungary?
Foreign nationals can buy real property (residential, industrial or commercial) in Hungary under different conditions.
The acquisition of real estate by foreigners is regulated by a 1996 government decree requiring foreign private individuals to obtain a permit in order to buy property in Hungary, unless 
the acquisition is by inheritance or is subject to certain conditions.
Since May 1, 2004, citizens from the European Union (EU), European Economic Area (EEA) and Switzerland who have been continuously living in Hungary for at least four years can purchase residential property in Hungary without a permit. Otherwise, special permission is needed even for EU nationals.
Non-EU citizens and EU citizens living in Hungary for less than 4 years have to obtain a permit to buy a property.
To obtain a permit, an application must be submitted to the relevant metropolitan or county administration office, which grants or rejects the request based on whether it interferes with any “municipal or public interests.” Duty of Ft 50,000 (or Ft 10,000 if the applicant holds a permanent residence permit and has a citizenship petition pending) is payable.
The application must include the buyer’s certificate of nationality (notarized copy of passport) and two official copies of the purchase contract or certificate proving the sale.
During the course of the application, the administrative office requests the opinion of the mayor of the local government competent at the location of the real estate if the purchase does not interfere with municipal interests. The mayor has to reply to the request within 15 days.
Many foreign citizens who want to avoid the lengthy process of obtaining a permit or wish to buy more than one property (foreign ownership of real estate is restricted to one property per non-resident buyer) set up a company locally in Hungary.
As legal entities, businesses in Hungary may buy property without any form of permit. This can be convenient for administrative purposes as well as from a cost standpoint as almost all expenses related to the purchase can be written off on the company accounts.
Belize for $322.00 – Caves,ruins,and real estate are yours now!
In the 5 years I have lived in Belize, I was so thankful to find a great travel bargain to Belize!
The New York Times has just featured a brilliant article on the area of Belize for which I chose to move
to from Florida over 5 years ago.
See the link here-
http://travel.nytimes.com/2009/06/21/travel/21explorer.html
The photos and descriptions are right on the mark- explaining the draw of the inland area of Belize,
known as the Cayo District. This area has been very steady in Real Estate sales from clients coming in
from Canada and the U.S.A.
Now with this wonderful price for the airline travel to Belize, it is time for you to come in and see what I
see daily !
Smiles,
Macarena
Location, Location, Location
The CCIM Institute teaches “linkages, linkages, linkages”. Looking for linkages in Buenos Aires, it is hard to beat Villa 31, sometimes called “Villa Miseria 31”. The Retiro neighborhood in B.A. is one of the most upscale areas of the city. It shares the quality of its location with Villa 31.
Villa 31 is property owned by the port authority. It is next to the major rail and subway stations and the port. It is convenient to upscale shopping and the great restaurants and other things that “linkages” bring. It was invaded many years ago by “homesteaders”.
The “villas miserias” in Argentina are the same as the asentamientos in the rest of Spanish South America. They are settlements created by homeless people on unused land. Once people move in the governments do not have the political will to move them out. The military dictatorships of the 70’s in Argentina tried. They brought in the bulldozers and reduced the neighborhood to 40 families. As soon as they lost power, the people came back, sometimes at a rate of 100 families per week. Now the neighborhood houses between 30,000 and 40,000 people.
The New Mayor, Mauricio Macri vowed in his campaign to eradicate this slum. He claims that the area is unsafe because of the proximity to the rails. The utilities in the area are pilfered from the city grid and the residents don’t pay for them. Many people believe the area should be “radicated” instead of eradicated. The 30,000 plus residents want access to legal utilities. They want police protection and they want to have the housing brought up to at least minimum standards.
There is little outcry about the other “villas miserias” in BA. This one has such a great location that no one wants to leave it to the poor. The labor for the upscale hotels and shopping areas in the area come from Villa 31. The residents and others in the areas claim that the crime does as well. The villa is also home to many artists and street markets. There are even tours of the area for tourists.
You can find more information at
David Segrest, CIPS, CCIM, CEA, TRC
david@segrestrealty.com
http://www.segrestrealty.com
http://dointernationalrealestate.blogspot.com/
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Blog #1 Romania – Land of Opportunity but with a Longer-Term Horizon
Romania is a growing and dynamic country with the youngest population of all European countries except Slovenia. In 2004, Romania’s growth rate hit the expected 7.5% with investments increasing by 10%. This was the same year Czech Republic, Hungary, Poland and Slovakia joined the European Union, a notable year as that is when Western European investors, mainly institutional, began their capital onslaught and began purchasing commercial properties in the many hundreds of million Euros per year to lock in a high yield on their investments. As rental rates and occupancy rates increased as western firms headed to the CEE to increase their business activities and as yields fell, these “pioneer” investors were certain to capitalize on the westernization of Romania. This economic miracle caused the GDP of Romania to almost double from 2000 to 2004. Romania with Bulgaria, was finally able to join the EU on Jan 1 2007, a year of tremendous and maximum peak real estate development and investment from mainly foreign investors, primarily Austrian and German.
In addition to important real estate investment and development opportunities in the capital, Bucharest, and other major cities in Romania, it must be remembered that Romania is the second largest country in CEE with a population of 22.2 million, behind that of Poland with 38.5 million. Bucharest proper with 1.95 million inhabitants, is in fact larger than Warsaw proper with 1.71 million inhabitants. Bucharest has developed into a bustling city focused on finance, services and telecommunications. It is a lovely, charming, green city of grand boulevards and beautiful shining office towers, yet mixed-in with some of the most dilapidated office buildings and residences imaginable…with an unbelievable public parking problem nightmare.
Investment yields in Romania have undergone a dramatic decompression in the years leading up to the financial crisis in 2008 that has hit the world as well as Romania and the other CEE countries. In 2003, yields for quality office properties were around 13% but have steadily, and some say too rapidly, decompressed to around 8% in 2006, and in 2007 an office property, America House, was purchased for a yield of 5.5%. Prior to the credit and financial crisis, commercial property markets were heading towards the “everything is 5% price level”.
2008 was a tough year for the Romanian real estate investment market. With barely any new transactions occurring, all notable deals concluded were initiated in 2007 or early 2008, before the effects of the international crisis spilled over to the local economy. As 2008 progressed and as financial markets froze due to a lack of capital and trust, transaction capabilities decreased dramatically. Buyers started to pull back from transactions, leaving vendors in a market with very few buyers. While most buyers have frozen activity, vendors are not yet prepared to sell at the prices tentatively offered by the few opportunistic buyers still looking at the market. In 2009, not a single major investment transaction has occurred and all major development projects have either been or are being cancelled.
The search for exceptional opportunities and quality distressed assets has become the focus of the remaining few investors actively still in the markets. Buyers are highly selective and cautious in their assumptions regarding price and growth, with interest shifting strongly in favor of well-located, income producing assets. With the bulk of investors sitting on the sidelines until the debt markets re-open, equity players are very careful how they best allocate it. Most are not willing to assume an all equity investment risk and want vendors to meet them half way, thus their ability or willingness to close deals is restricted. Alternatively, many vendors currently are not yet in a distressed position and are often only testing the market with their assets.
The buyer profile is expected to change in 2009 and with it the driving forces of the market. The most likely groups expected to play the market this year will be private equity groups, newly set up opportunistic funds with the goal to capitalize on this market downturn and institutional investors with long-term investment outlooks and opportunistic arms. Sellers who expect to close transactions this year should be aware that these buyer categories have specific return requirements. With difficulties in the financial sector and uncertainty as to where the market will be upon their intended exits, active purchasers will be offering high yields to more realistically price the risks involved. Romania still remains a land of opportunity for serious and institutional commercial propery investors, but certainly they will have a longer-term investment horizon.
Csaba Spottle was CEE Acquisitions Manager from 2003-2008 for Pramerica Real Estate Investors, global real estate investment and management arm of Prudential Financial. He was based in Budapest and had traveled extensively to Bucharest and most major cities in Romania in search of institutional-quality office, retail and industrial income-producing properties.
Beautiful Buenos Aires Argentina
This is a review of an article published in the Smithsonian Magazine on the rebirth of Buenos Aires. I can speak of this event first hand. My wife and I visited Buenos Aires for 1 day on our way home from Punta del Este in 1997. Buenos Aires has often been compared to Paris. At that time she looked like Paris on crack cocaine. The streets and sidewalks were obstacle courses. The stores were full of merchandise. The prices were ridiculous and nobody was buying anything.
I have been back to BA several times since then. Last September was the best. BA was totally gorgeous and active. It was more like a young Paris. According to the Smithsonian article http://www.smithsonianmag.com/travel/Hola-Buenos-Aires.html , BA has 3.2 million people and 10% of them are foreign. The article goes on to profile several of the immigrants. They seem to be mostly artist and entrepreneurs. One even opened a health food store. Old time visitors know that Argentines eat beef and drink yerba mate. That’s it. No longer. The grocery I visited there had foods from all over the world. They even had fresh vegetables. In Puerto Madera everything is either renovated or getting that way. They have some old sailing vessels in the canal that have been refurbished.
These ships had Arctic missions. They are hybrid sailing and power vessels. The detail work is excellent and the history lesson is quite interesting. These ships were used in Arctic rescue and exploration. There is a brief history of Buenos Aires in the Smithsonian article.
One of the main attractions mentioned in the article is the cost of living and relative standard of living. The peso is so cheap compared to the dollar or the euro; that people who have incomes from outside of Argentina often find themselves living the life of the wealthy for the price of the middle class. The real estate prices are comparable with that of any large world city. The other cost of living expenses are much less.
David Segrest, CIPS, CCIM, CEA, TRC
david at segrestrealty dotcom
http://www.segrestrealty.com
http://dointernationalrealestate.blogspot.com/
Serbia is changing its Property Practices to Attract New Investment
The Republic of Serbia has a hybrid system of laws, rules and procedures regarding owning, leasing and developing real property that is in a state of transition. For the most part, property rights are based on Civil Law. Currently, planning, zoning, permitting, and taxing procedures are in place. The Socialist practice that provided for the “ownership or tenancy” of land to be conveyed with ownership or tenant rights of the building or structure on the land is still practiced; however, laws and practices are changing in favor of land ownership and private property rights. The Serbian Government has “guillotined “ or terminated over 15,000 laws that hampered the property transfer system.
The government is working incrementally to change the property ownership system from the “socialist system,” where the State owned most of the property and leased it to end users, back to a privatized system of property ownership. The Property Directorate of Serbia is working through the 78,000 +/- claims for returning property to its original/rightful owner. Reparation is being paid by the State to rightful owners where ownership can be established and where the property cannot be returned to the original owners, their heirs and/or assigns. Additionally, the ownership of all properties is being legally established in a revitalized land registry known as the Cadestre. The process of registration in the Cadestre is targeted for completion in 2010.
To facilitate the privatization process and to encourage property sales and development during the transition process, the government is granting either fee simple ownership or long term leasehold of the property that can include a guarantee no cost conveyance for fee simple ownership to the new property owner when the transfer is possible. This guarantee may include an indemnification provision that holds the new or repatriated owner harmless regarding claims from previous owners, who claim ownership prior to State nationalization of the property.
Under current Serbian Law, the Government may expropriate property under the “ Law of Expropriation” ; however, an owner/buyer/tenant has the right to request a determination from local authorities regarding the matter which is to be made within sixty days. Should the property be expropriated, Serbian Law requires compensation. The “Law of Foreign Investment “ provides safeguards against arbitrary expropriation of foreign investments.
Future Blogs will discuss procurement procedures in greater detail as well as current market conditions that will focus on the various cities and regions. Your comments and questions are welcomed guides to this Blog.
Nancy Bowen Wiggins, CIPS, CCIM
Author, Blog on Serbian Real Estate
Nancy Wiggins Commercial Real Estate
AND HOLDING,d.o.o.
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