We mentioned our new ranch to an Argentine friend in London. He promptly fell to the ground, rolling around clutching his sides, practically rupturing internal organs. What prompted this dangerous attack of mirth was our own humble innocence. Out in the wilds of Argentina, in Salta Province, the Anglo-Saxon is out of his element, out of his league, and probably out of his mind, said our Argentine friend. When we explained that we had good legal advice, and that we trusted our property agent, well, that's when the laughing started.
"I've got news for you," volunteered our friend when he was finally able to speak. "It doesn't work that way in Argentina. It's a system based on trust. You can always trust that the seller is lying to you. And if you go to court, they'll laugh at you even more than I am. Down there, it will be as if you were born yesterday... no, as if you hadn't even been born yet."
There's no doubt about it, investing money south of the Rio Grande is an adventure. But like all the best adventures, it's not without its rewards. A pound is a dollar is a peso. No matter what currency you spend, in nominal terms, the price is about the same. We have no explanation for this; perhaps it is merely a coincidence. But when you buy a cup of coffee in London, you pay about three pounds. The same cup of coffee in New York costs $3. In Buenos Aires, you pay three pesos. But the dollar is worth barely half of a pound and an Argentine peso is worth only a third of a dollar. So, the real cost of the cup of coffee in Buenos Aires is only 16th as much as London.
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This is more or less true in property prices too, only amplified. For the price of a single London townhouse, for example, you could buy a whole apartment building in almost any city in Latin America. Out in the country, you get even more.
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On a recent trip to Argentina, we looked at an amazing place. It might have been Arizona or New Mexico - with clear snowmelt coming down from the Andes cutting through warm, barren hills. On the flat-land by the river were 1,000 acres of grapevines, several rustic houses built of adobe, and a marvellous old winery that had been built in 1870, with a capacity of 500,000 liters of wine per year. Rows of Lombardy poplars lined the vineyard, which was irrigated from the river. The weather is nearly perfect, with sunshine almost every day. It rarely gets very cold - even in winter. And surrounding the vineyard are 50,000 acres of wilderness. Had it been in California, with less land, it might be priced at $20m or more. In France or Italy, it would be impossible to find such a place at any price. But in Argentina, the asking price is less than £1m. Another wine area, near the charming little town of San Rafael, offers building lots in the middle of a vineyard for just £12,000. The property is about five minutes from the airport and ten minutes from town and the weather is better than Arizona. You can get a cook, a gardener or a chauffeur for only about £6 per day (if you like the sound of any of these properties, contact Lief Simon liefsimon@internationalliving.com).
Why so cheap? Because it wasn't long ago that Argentina's export industry, and its middle class, were practically wiped out. Inflation ran over 1,000% per year. The whole country went broke. Unemployment hit 25% - just as in the US during the Great Depression. Earnings fell by 30%. So recently burned, the locals are still shy. Foreigners have their doubts too. They've heard that the Latin American currencies are slippery and their courts are greasy. The northern European worries about getting cheated, getting sick, or worst of all, of getting laughed at. But if he can stop worrying, he might find some good buys. Suerte!
by Bill Bonner
Examples of Latin American properties
Contadora Villas, Contadora Island, Panama
Contadora Island is one of Panama's top holiday destinations, with world-class fishing, diving and snorkelling in the crystal-clear waters with coral reefs. Just 40 miles from Panama City, there are four flights a day from the mainland to the island. The journey takes around 15 minutes and costs around $52 return. There is also a ferry service.
Once you get there, the island has two resorts, several restaurants and shops and its own police force and small medical centre. Villas at Contadora are located by the beach and are available as one, two and three bedroom properties with open-plan living areas on the ground floor that take advantage of the views. If you buy a villa, you automatically become a member of the Owner's Association and will pay a monthly service fee to cover maintenance costs of the grounds and facilities, which include swimming pool and grounds. Prices for villas start at £84,000.
Contact: liefsimon@internationalliving.com, www.contadoravillas.com.
Please note: International Living, an affiliate of MoneyWeek, receives commissions from sales at Contadora
Villa Hermosa, La Garita, Alajuela, Costa Rica
A large country villa in La Gartia, the Garden District of Costa Rica. Although surrounded by peaceful countryside, the property is just half an hour from the capital, San Jose, and within 15 minutes of the international airport.
The 20-acre estate incorporates architectural antiques as well as a beautifully refurbished home. There are terracotta floors, exposed ceiling beams, antique wooden doors and landscaped gardens with terraces, swimming pools and ponds. 7 beds, 6 baths, garage. 20 acres. £1.9m Sotheby's International Realty, Costa Rica (506) 203 0130
Pacific Coast, Ecuador
A large family home is on the ocean front with half an acre of grounds. There are five bedrooms, air conditioning, Jacuzzi, fully equipped utility room, pantry, three-car garage with staff quarters, further staff accomodation, open fireplaces, large kitchen and an upstairs deck. £106,000, dmorrill@earthlink.net.
