As many may remember, December of 2001 was a month of both crisis and triumph in the Argentine political arena. The democratically elected President of Argentina resigned after his government’s final attempts to avoid a fiscal crisis ultimately ended in failure, forcing Argentina to default on international loans. Although the default was clearly the harbinger of a political and economic crisis, it also proved the strength, resolve and tenacity of the Argentine democracy, as an interim government quickly began to lay the groundwork for new elections. Drastic measures were both needed and taken, and in accordance with the Argentine Constitution, a new President, Nestor Kirchner, was elected by popular vote, pledging to lead the country back to financial stability and fiscal responsibility.

Prior to the crisis in December of 2001, the Argentine currency, the Peso, had been tied to the U.S. dollar at an even one-to-one ratio. One of the first drastic measures taken during the crisis was to sever the relationship of the Peso to the U.S. dollar, allowing the Peso to float and to arrive at its’ own value. This caused the Peso to rapidly plummet in value as compared to the U.S. dollar, at one point giving the dollar a value of 4.50 Pesos. This Peso value slowly decreased as internal markets adjusted to the new economic realities, and the value of the Peso has settled in at around 2.9 pesos to one U.S. dollar since then. This still provides almost triple the previous buying power for the U.S. dollar in Argentina, even as the dollar falls against the Euro and the British Pound Sterling. Although Buenos Aires used to be the most expensive city in South America, now travel, meals and lodging in Argentina are very cheap by world standards, as are many other goods and commodities, including real estate.

The Argentine Peso’s loss of value against the U.S. dollar has had a number of interesting and beneficial effects in various sectors of the Argentine economy and has also created excellent investment opportunities for investors with foreign currencies. Argentina is one of the largest producers of food in the world, having huge areas of very fertile soils, excellent farming and ranching climates, and a highly evolved and technologically advanced agricultural base. When the Peso devalued rapidly, land prices and many other costs associated with the production of agricultural commodities fell rapidly as well. As a result, Argentine agricultural commodities became much more economically competitive in the world commodities markets, since the selling prices in those markets are fixed in U.S. dollars. This sudden increase in competitive pricing in turn set off an increased interest in agricultural land in Argentina, since in reality the price of land had fallen dramatically while at the same time the economic productivity of that same land had skyrocketed, effectively causing a substantial increase in the ROI that an investor could achieve on land used for agriculture, not to mention the longer term appreciation potential.

Today, land prices continue to rise steadily in Argentina and there is a general consensus that they will continue to do so for a very long time, given their undervalued status and high productivity. There is substantial activity in the agricultural sector on an international level in Argentina now, with a brisk business being done in new imported heavy farming equipment to satisfy the demand for the ever increasing agricultural expansion. New crops, such as genetically engineered soy beans, are changing the face of Argentina by expanding agricultural production into lands that had traditionally been used for cattle. Many cattle ranchers are gleefully selling their cattle to plant crops, while other ranchers are quite happy to sell their fertile land to farmers and subsequently purchase more, but less fertile land, farther away from these new centers of agriculture. This practice has set off a small land boom in what were previously considered more marginal lands in Argentina, since now there is also an increase in demand for these previously ignored lands as well. Land clearing is proceeding at a rapid pace in Argentina now, as these formerly marginal lands are reclaimed from brush to be sold and resold to both cattle ranchers and farmers for crops such as potatoes, fruits, vegetables, olives, figs and citrus.

Although unquestionably Argentina as a country has suffered in these last few years, there is light at the end of the tunnel, and the opportunities for investors and for Argentina look very attractive, both in the short and long term. Labor is very cheap and local goods are very affordable, while the cost of living remains extremely low in comparison to other countries. The economy should continue to improve in general and the agricultural sector should continue to boom, taking real estate along with it, for a number of years to come. The Argentine people proved their dedication to the democratic process by dealing with a national financial and political crisis in an orderly and democratic manner, which is a source of pride for all Argentines. Opportunities are frequently created when unfortunate things happen, and today Argentina appears to be a land of great opportunity with a bright future.