mandag, mars 31, 2008
Cash is king
Bring cash. Argentinian confidence in banks rival their lack of faith in the military, police and politicians. All for quite understandable historical reasons of course, having banks literally steal your account does not make for credibility.
Renting apartments for example, is done with cash. Stranger still is the fact that cash is also used for buying apartments. While the process of buying a house can be nerve-wracking enough in Europe or the US (especially these days), imagine the added stress of carrying around a briefcase of 100k+ USD on the streets of Buenos Aires. The atmosphere is pretty tense with buyer and seller sitting around a table counting a wad of notes before the final signatures can be made.
Buildings are popping up all over there place, especially in the trendy bubble of Palermo as in the picture. Prices have been rising phenomenally, but there is a limit to how much influence foreign capital can have. At the moment the costs of apartments are very much out of whack with the general Argentinian economy. So even though prices are still stupidly cheap from a European viewpoint, it is buyer beware, given the extremely cyclical nature of the Argentinian economy. The next crash could see prices dropping 20-40% and with the current centre-periphery conflict the situation is dicey. Rent, with cash.