Real Estate Investment Pioneers

As I mentioned on Monday, I just returned from a business trip to explore an impressive development project in Argentina.  I had the pleasure of previewing the Algodon Mansion, a 10 unit ultra-lux boutique hotel to open in December of this year in Buenos Aires as well as Algodon Wine Estates situated in the exploding Argentine wine country of Mendoza, specifically in San Rafael. 

I chose to share my trip with my readers because it exemplifies the phenomenon of more and more investors "going global" in search of lucrative real estate investments.  No longer are people only looking in their own back yards and no longer is global real estate investment reserved for only the super wealthy.  Just check out this CNNMoney article from April 2006:

Last year, Vladimir Gasic had an enviable problem. The 50-year-old former IT executive made a small fortune flipping a dozen properties in Phoenix’s Maricopa and Pinal Counties. But he couldn’t figure out where to reinvest his bounty. Trouble was, after a two-year stretch during which Phoenix-area home prices jumped more than 60 percent, Gasic worried about a looming slowdown, and his confidence in the U.S. economy began to sour.

So where does a bubble-wary real estate player turn?

Gasic thinks he’s found the answer–in San Rafael, Argentina. Last November, capitalizing on Argentina’s devalued currency, he snapped up 120 acres of farmland for just $140,000. The region’s soil and climate are ideal for growing grapes for malbec wine–a Bordeaux varietal that’s catching on outside of South America–and Gasic, an aspiring vintner, swears the area is a potential gold mine. "The land would sell for five times as much in Chile," says Gasic, who plans to turn his acreage into an income-generating vineyard within three years.
Gasic’s six-figure bet doesn’t look so radical, though, when you consider that more and more U.S. dollars are moving into foreign real estate. According to research firm Jones Lang LaSalle, Americans invested $12 billion in foreign commercial real estate ventures last year, almost double the amount spent in 2004. Meanwhile, global cross-border investment hit a record $475 billion in 2005.

What’s driving the growth? Investors in many countries where prices have peaked are scouring the globe for better returns, according to Paul Willcox, founder of U.K.-based brokerage Someplace Else. "As their own markets have slowed," he says, "they’re betting on locations they wouldn’t have imagined a few years ago." Finding property abroad is also easier now because of the Web, where buyers can skim listings and contact sellers instantly.

The Algodon projects are the brain child of Scott Mathis of InvestProperty Group, a division of DPEC Partners of which Mr. Mathis is the Chairman and CEO.   Some may say that a development in Argentina is risky due to current political and economic conditions.  I would argue that Argentina and San Rafael specifically is ripe for investment and growth because of these precarious conditions.  William Wilkerson was thought to be insane when he built the Flamingo Hotel way out in the Las Vegas desert  and in 1965 Robert Mondavi was the first winemaker to open a new large scale winery in Napa Valley since the days before prohibition.  If only we all had invested in Vegas in the 40’s or Napa Valley in the 60’s!  Well this may indeed be your Napa/vegas opportunity.

The Algodon Wine Estates among it’s incredible amenities will bring the vineyard experience to the consumer without the travails of the harvest or the wine-making process.  Much of the 2000+ acres lie on the vineyard with some of the vines dating back to 1946.  The malbecs, cabernets, chardonnays, bonardos and roses coming from this region are stellar.  A purchase of land in this magnificent gated community can deliver these grapes right to the back door of your villa…literally.  Each landowner can build a villa on their property for approximately $100/sf and enjoy the delicious wines that are harvested from their very back yard.  The Algodon winery will harvest, barrel, bottle and personalize your labels for your very private reserve.  It is an experience like no other!

Obviously I’m a big fan of this project and believe that in 10 years there will be a multitude of people wishing they had grabbed their piece of paradise 10 years prior.  Carpe Diem!