Mansions of the World - Construction Update
March 28, 2013The Argentina monetary policy may be curtailing construction projects in that country. Currency devaluation and inflation are two factors that could heavily influence decisions to spend more money to complete a construction project. According to an article written by Ken Parks at the Dow Jones Newswires, posted on nasdaq.com, inflation is estimated at well above 20% (Some have said between 25% and 30%). and the peso is weakening against the dollar. "The government has weakened the peso at a much slower pace than inflation, while limiting the amount of foreign currency it makes available to the private sector.
"We expect the industrial sector to experience a mild recovery in 2013, assisted in part by the real business cycle recovery in Brazil. However, the recent foreign exchange market distress and depressed business confidence could significantly limit the upside," Goldman Sachs economist Alberto Ramos said in a note." (Read more: http://www.4-traders.com/news/Argentina's Industrial Production Contracts in February -16568101)
In an article written by Michael Warren, Associated Press on March 1, 2013, he states "Capital flight is increasing, with more than $1 billion in foreign currency flowing out of Argentina in the last month. The government is aiming to devalue the currency by 20 percent this year, but Argentines are increasingly taking a 55 percent loss to trade their inflationary pesos for safer dollars on the black market. Many Argentines have received double-digit pay raises only to see their gains wiped out by ever-higher inflation.
While Argentina's economy grew at an average of 7.2 percent a year from 2003 to 2011, private analysts say it slowed to 1.4 percent last year, according to a bleak summary of the country's investment climate published this week by the U.S. State Department." Read more: http://finance.yahoo.com/news/argentine-president-proclaims-victorious-decade-203211540.html;_ylt=A2KJjbyTfFRRqWoAxeiTmYlQ
We believe these are a few indicators that could influence decisions to complete the Mansions of the World project at Puerto Madero Bay One. Following is a photo of the property taken on March 22, 2013:
We all would like to see the Mansions of the World hotel open in Buenos Aires because the city and country are enchanting. However, based upon economic conditions in the world and specifically in Argentina, we do not believe the hotel will be completed any time soon. But then, that is just us, and what do we know?