For new construction projects underway, a warning light comes on: The price of construction, measured in dollars, continues to rise and, with the latest record in March, it recorded an increase more than 80% in the last three months.
In December, per m2 of construction costs 714 dollars according to the survey conducted by Real Estate Report, based on the cost of an 8-storey building within the party walls located in the federal capital.
What happens is that, on the one hand, producers increased prices a lot with the December devaluation. And on the other hand, the decline in the exchange rate and its consequent stability It led the rise that could intensify through the rest of the year, analysts warned.
“The cost of construction, measured in pesos, slowed its rate of increase compared to that of the last two months and increased by 9.04%. However, the reduction in the price of the dollar and its subsequent stabilization in a close range at A$1,000 he produced The rate of increase in the cost of construction per m2 in dollars in March will increase by 26% compared to the previous month,” the RI noted.
Therefore, taking the parallel market price of the North American currency, The cost per salable m2 reached $1,318.82 and the total value to be invested in the construction of the typical building was slightly more than $1 million,” he estimated.
Thus, the cost of construction in March, measured in nominal dollars, became the highest recorded since August 2008 (month of the start of the series) and exceeded the maximum level reached until mid-2018 by almost 11%.
From potential impact of rising construction costs on the marketRI analyst German Gomez Picasso underlines that “the increase in costs will have an impact above all on the works that could begin. You will see that by analyzing very carefully at what value the apartments could be sold after having had a higher cost. Now We need to see if the value of sales versus costs comes close to the new equation”he reflects.
According to Hernán Nucifora, CEO of Global Investments, “if we look at the current picture, with the construction costs that we are experiencing right now, it is worrying because the sales values do not keep pace with the increase in real estate prices,” he says .
“We are faced with a reorganization of prices which, from what we estimate, are slowly starting to fall, or at least they should,” estimates the entrepreneur. And he says: “There was a increase in construction costs by 80% in dollar terms in recent months what it makes many jobs that were about to start will be stopped and many suppliers have started to provide concessions in the form of installment payments that had been cut,” he explains. However, according to the businessman, even if “the current picture is terrible”, his expectation is that the situation will improve if inflation will be stopped.
On the other hand, Gomez Picasso believes that “Most likely, this trend of rising dollar costs will be sustained as long as the dollar remains stable. and also “It could go higher” holds. «Another thing we will see shortly is the transfer of these cost increases to the price lists of brand new apartments. But as long as the dollar remains stable, costs will not decrease, in fact, on the contrary,” he underlines.
Damian Tabakman, president of the Chamber of Urban Developers (CEDU) commented on the issue: “it is to be expected that the best entrepreneurs will be able to fix their economic equations sooner or later. They will do it with better projects, higher management initiatives quality, smarter marketing campaigns and more accessible financing plans,” he noted.
“And also should reduce costs. From land, to construction inputs, to labor productivity, everything will come into play and will need to be reviewed. “We are facing a new cycle.”he wrote on social networks.
“From now on The market expects price certainty for investments in construction“Meanwhile, Javier Rius, general manager of Ayres Desarrollos, says: “Many brand new units that are in stock will be sold at a fixed price. This will give developers more liquidity to make future decisions.”
According to Rius, “the construction price must be honest. The increase in construction cost due to replacement with a higher construction value will allow a reorganization of prices for both new and used,” he said.
Kevin Savelski, director of developer Grupo 8.66, believes that the real estate sector is at a crossroads of challenges and opportunities this year. “The main challenge is to cope with the significant increase in the cost of construction materials.” he says he.
The entrepreneur, however, provides his positive vision: “the increase in the cost of the works may result a revaluation of real estate units, which makes them an attractive investment in terms of resale per square meter,” he says. And he warns: “it is crucial to take advantage of this moment before cost increases are fully reflected in prices.”
Source: Clarin
