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Construction Costs Soar in Argentina, Squeezing Developer Profitability
🇦🇷 Argentina /Energy & Infrastructure

Construction Costs Soar in Argentina, Squeezing Developer Profitability

From La Nación · (8m ago) Spanish Critical tone

Translated from Spanish, summarized and contextualized by DistantNews.

TLDR

  • Construction costs in Argentina have risen significantly in dollar terms since late 2023, outpacing property price increases and squeezing developer profitability.
  • While dollar costs have surged 12-13%, property prices have remained stable or fallen, leading to a reported 20% reduction in developer margins.
  • In national currency, construction costs saw a 2% rise in March and 6.5% year-to-date, driven by increases in materials, labor, and general expenses, according to INDEC data.

The Argentine construction sector is facing a critical juncture, with escalating costs threatening the viability of new developments. Specialists are projecting challenging scenarios for the remainder of 2026, as the cost of building a square meter has become a significant hurdle for real estate dynamics.

Developers are grappling with a complex landscape where profitability is in the red. Since the end of 2023, construction costs in dollars have jumped between 12% and 13%. In stark contrast, property prices have either stagnated or declined in relative terms, resulting in a substantial 20% decrease in developer profitability, according to Issel Kiperszmid, CEO of Dypsa Group and vice president of CEDU.

En un periodo de apenas cuatro meses, los costos subieron entre un 12% y 13%, mientras que los precios de los inmuebles se mantuvieron estables o incluso bajaron en términos relativos, lo que redujo la rentabilidad del desarrollador en un 20%“,

— Issel KiperszmidExplaining the significant impact of rising construction costs on developer profitability.

Kiperszmid highlighted the dire situation, stating that current costs exceed replacement values, creating a critical scenario for the industry. While the national currency figures show a more moderate increase—2% in March and 6.5% year-to-date according to INDEC—the dollar-denominated costs paint a grim picture. The gap between rising production expenses and stagnant market prices leaves developers in an uncomfortable position, struggling to reconcile costs with market demand.

“hoy están por encima de los valores de reposición, lo que genera una situación crítica para el sector“.

— Issel KiperszmidDescribing the severity of the cost increases relative to the value of the properties.
DistantNews Editorial

Originally published by La Nación in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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