Argentina's Construction Costs Soar, Squeezing Developer Profits

The construction sector in Argentina faces a critical juncture as building costs continue to escalate, creating significant profitability challenges for developers. While the national GDP has seen modest growth, the construction industry has experienced a sharp contraction.

Specialists note that construction costs in dollar terms have been steadily increasing since late 2023. In a span of just four months, costs rose by 12% to 13%. Meanwhile, property prices have remained stagnant or even declined in relative terms, leading to a reported 20% reduction in developer profitability. Issel Kiperszmid, CEO of Dypsa Group and vice president of the Chamber of Urban Developers (CEDU), stated that costs are now "above replacement values, creating a critical situation for the sector."

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In a period of just four months, costs rose between 12% and 13%, while property prices remained stable or even fell in relative terms, which reduced the developer's profitability by 20%.

When analyzed in the national currency, the picture is different but still concerning. In pesos, construction costs saw a 3.1% increase in April compared to the previous month, accumulating a 10.1% rise year-to-date. This rise is attributed to increases in materials (2.9%), labor (3.1%), and general expenses (3.3%), according to data from Argentina's National Institute of Statistics and Censuses (INDEC).

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costs are above replacement values, which generates a critical situation for the sector.

The broader economic context reveals that while Argentina's GDP grew by nearly 2% between late 2023 and the third quarter of 2025, the construction sector suffered an 11% contraction. This indicates that construction has lagged significantly behind other sectors like services and primary activities, remaining outside the recovery cycle.

Experts suggest that previous cost ranges of $1000 to $1200 per square meter were influenced by "ridiculous" distortions from macroeconomic imbalances. Currently, the cost per square meter is rising faster than the sale price. In March, the cost to construct a sellable square meter reached $1708, an increase of 2.87 percentage points from the previous month, according to Reporte Inmobiliario. In contrast, the average price for a property under construction is $3125 per square meter, as reported by Zonaprop. Kiperszmid acknowledged a positive shift in expectations following the October 2025 national elections.

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The sector was left out of the recovery cycle, contrary to services and primary activities.