Argentina political risk keeps int'l property investors on hold

International commercial property investors have gone into wait-and-see mode in Argentina due to the uncertainty surrounding the October presidential elections, according to Tim Gifford, managing director at CBRE Capital Advisors.

With the economy in recession and inflation stubbornly high, recent polls have shows market-friendly President Mauricio Macri losing to former populist president Cristina Fernández de Kirchner, who has not yet confirmed if she will run again.

Macri succeeded Fernández de Kirchner in December 2015 and started implementing a string of reforms to make Argentina an attractive place for both local and foreign investors.

As a result of the policy change that Macri brought, Argentina joins a group of countries in Latin America that CBRE classifies as emerging, and they also include Colombia, Peru, Panama, and Costa Rica.

Retail, office and industrial property investments in these markets are small in size and made in a more opportunistic way than in the region's primary markets (Brazil, Chile and Mexico), Gifford said on Thursday at an international pension conference in Chilean capital Santiago.

The October elections will likely determine if Argentina remains in the emerging group of countries or not, said Gifford, who added that Argentina has been attractive in the past few years due to strong new office development.

CBRE classifies Brazil and Mexico as primary markets mainly because of their size, and Chile is in this group because it offers investors a liquid market with strong rule of law, Gifford said.

Organized by the international federation of pension fund administrators (FIAP), the conference was held on May 15-16, covering a wide range of topics related to the Latin American and global pension industry.