Argentina Office Market 3Q2016

Economic Outlook The new government administration has been focusing all its attention in the standardisation of the exchange market, the negotiation with the holdouts and the restoration of credibility of the economy by restructuring a plan of reduction of public expenditure. These directives are expected to lead to a positive economic impact, although not immediately, in the rehabilitation of Argentina´s economy. Certainty, the establishment and implementation of the new economic policies that aim to promote a healthy economic environment have increased expectations for recovery of foreign investment, which will also contribute to the country to reach its full economic potential. However, early results have been decidedly mixed. Public expenditure cuts and the updated of rates of public services implemented in an economic context with alongside very high inflation levels had serious effects on the purchasing power of households, despite of the salary increment obtain by the unionized workers. This has caused a decline in domestic consumption that has already begun to impact on employment levels, leaving a weakening of economic activity reflected in the decline of 3.4% recorded in GDP (INDEC) of the second quarter. In this sense, the government had implemented a plan to reinforce the households of all social sectors weakened by the fall in economic activity, by expanding the social coverage of the Universal Assignation per Child to workers who are not in a dependency relationship. This measure allows that people paid by this program can also have access to other programs of social assistance. Market Outlook The office market continues its positive trend. The demand of space Class A has almost reached the offer, for the first time in years, confirming the preference for products strategically located. The sustained demand for premium space continues to push down the vacancy rate, which reached 5.8% this quarter. This backs the ascendant tendency of rental prices, and doubling of the net absorption for the first nine month of the year regarding the same period of the year before, reaching 65.300 sqm.

Fuente: Cushman & Wakefield

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