Hear
From the normalization of macroeconomics in Argentina and slowing inflation, that hopefully will be consolidated soon, we will have to prepare to adopt a new work model, just as they do in other countries. What will it consist of? The first is linked to the recent reappearance of mortgage loans. As the system grows and consolidates, high-impact changes will be generated, among which we can mention:
All This phenomenon will make the market volume grow geometrically.. We estimate that The level of activity will increase greatly in the coming years.
Secondly, changes related to the product will appear. Other types of buildings will be made thinking of the end user and not of the investor or saver for whom we have been working.
Another very relevant change is already coming in the financial structuring of projects, as is happening in the rest of the world.
Some banks are already starting to offer loans to developers. This completely changes the real estate market, to the extent that it becomes widespread.
Because? As part of the funding for the work is provided by the banks, developers are given the possibility of charging buyers low fees until possession., which they can then combine with a long-term mortgage. With this model, Buyers could pay the same fee from signing the contract in the well until canceling the credit decades later, probably with some reinforcements during the construction period. The same if financing from the well was offered to buyers.
All this operates as a great market activator and catalyzes many new ventures for a public eager to buy their first home.
In this way, it is included and given access to housing to those people who today do not have 30% of the price of the property that the bank does not finance with mortgage loans or who do not qualify because they do not have sufficient and demonstrable income and a good credit history.
There are many variants, but The simplest consists of financing through lines called “construction loans” that are disbursed as work progresses and are returned at the end.
The developer, With the funds from the buyers’ price balances in the well, you must pay off your “construction loan.”
Banks finance approximately half of the investment in construction and the destination of the “construction loan” is what remains attached to the ground. That percentage may increase over time.
It should be noted that with these credits, virtually the entire line of business also becomes traceable, banked and transparent.
And hopefully at some point the mortgage subrogation system so that the “construction loan” can be linked to the long-term loan automatically or resolved through so-called “future mortgages.”
The other aspect that will change a lot will be the building. The financial cost of “construction loans” is a huge incentive to reduce construction deadlines and incorporate technology to do so. That will also be a big difference compared to how we have been doing it, given that the delivery time today is in line with the payment capacity of investors.
The other novelty that will appear, although perhaps not so quickly, is that of institutional investorslocal or foreign, and real estate investment funds.
A fund usually acts as a demanding passive investor controlling the business from the point of view of the proportion of capital contributed, which is associated with a developer whom it requires to also invest. This is the person who manages the day-to-day running of the project, reporting to the fund, and a “split” (distribution) of the project’s profit is established between the two parties.
Finally, It is very possible that it will once again play an important role in the real estate world, the capital market. Currently, real estate has almost no presence in that area, with few exceptions. It is expected that the Argentine capital market will grow a lot and channel resources towards our industry.
In short, most likely A completely new market is coming with actors who will acquire a leading role that we are unaware of today. We must begin to prepare companies in anticipation of the business model to come. Those who start earlier will be better prepared for when it arrives, which hopefully will be soon.
The author is president of the Business Chamber of Urban Developers (CEDU)
