Miami officials should erect a statue to Argentina’s President Cristina Fernandez de Kirchner. Thanks to her disastrous economic policies, Argentines are flocking to invest here and Argentine developers are building some of the city’s most spectacular real estate projects.
According to a soon-to-be-released survey by the Miami Association of Realtors, Argentines are only behind Venezuelans as the biggest group of foreign buyers in the Miami area this year. Until 2011, Argentines were No. 3, behind Venezuelans and Brazilians.
But Argentines are leaving a greater mark on the city than most others because of prominent Argentine developers building massive condominium projects in the Miami area.
Last Sunday, the Miami Herald’s main front-page story featured Argentine developer Alan Faena, who’s building several luxury hotels and condominiums just north of South Beach. According to the Herald’s story, Faena may “singlehandedly turn sleepy mid-Beach into the city’s resplendent new epicenter.” Asking price for Faena House’s two-story penthouse: $50 million.
Another recent Herald story featured Argentina’s Melo family, a group of developers that is turning a four-block area in Edgwater, near downtown Miami, into a new city center. “A real estate explosion in Edgwater, Miami’s next trendy district,” the headline read.
Eduardo Constantini, another major Argentine developer, is finishing a gated community in Key Biscayne — the first new development there in 13 years — and is building a huge luxury project in Bal Harbor. Other Argentine, Uruguayan and Chilean developers are building high-rises throughout the Miami area, many of which are pre-sold to anxious Argentine buyers.
Lynda Fernandez, a spokeswoman for the Miami Association of Realtors, tells me that the number of Argentines buying real estate in Miami is continuing to grow this year despite — or because of — Argentina’s currency controls.
Judging from what I hear from several realtors, their Argentine clients are coming here because they fear a new economic meltdown at home. As one well-placed realtor told me, “I can sum up the reasons of my Argentine clients coming here in one word: panic.”
It has been a slow-motion downhill process. Much like in Venezuela, the Fernandez government in Argentina has wasted her country’s biggest commodity bonanza in recent history giving away massive cash subsidies to buy votes, but doing little to ensure long-term poverty reduction.
A staggering 45 percent of Argentines are getting paid on a monthly basis by the government, either because they are public employees or because they are getting cash subsidies, according to an Aug. 18 article in the daily La Nacion. The number of public employees alone has grown by 52 percent over the past decade, to 3.3 million, says the FIEL economic research group.
That helped Fernandez get re-elected in 2011, and has led many Argentines to believe her fairy tale that her government had come up with a new “economic model” to reduce poverty. But now that world prices of Argentine soybeans and other commodities have stabilized, the stark reality is becoming apparent: the government has been spending way beyond its means.
Argentines have seen this movie several times before, and know how it ends: with massive devaluations that leave most people poorer than they were. And those who can are rushing to buy dollars, or real estate, in Miami.
Since the beginning of the year, Argentina’s foreign reserves have fallen from $43 billion to $35 billion. The Argentine currency is losing ground, and inflation — officially at 10 percent — is estimated by virtually all independent economists at closer to 26 percent.
Martin Redrado, who was president of Argentina’s Central Bank between 2004 and 2010, told me in a telephone interview that he’s not terribly surprised by the continued flow of Argentine investors to Miami.
“There is no confidence in Argentina, because our economic policies are improvised, erratic and continuously changing. That generates distrust, and scares away capital,” Redrado said. “It’s like Venezuela, in a lower scale.”
My opinion: What’s saddest about Argentina is that, during the Kirchner decade, Argentina wasted its biggest economic bonanza in perhaps a century in short-term populist policies, instead of using its commodity export income to improve education and health, like neighboring Brazil is doing now, and Chile has been doing for decades.
While Fernandez clings to the fiction that Argentina is doing great, the country’s once world-class education levels are plummeting, infrastructure is crumbling, construction has come to a halt, and Argentine investors are rushing to buy properties abroad. Nobody should be surprised if Miami officials go to bed every night saying, “Gracias, Cristina!”