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Source: New York Times
By: Nick Foster

2-25-10.jpgVilla Maria

CAFAYATE, ARGENTINA — In recent years adventurous foreigners with the patience to build their own homes have begun to look beyond the lights of Buenos Aires for locations in the Argentine countryside.

Few, however, are as remote as the Estancia de Cafayate, brainchild of the American financial author and investor Doug Casey, who calls himself an “anarcho-capitalist” and was a classmate of former President Bill Clinton at Georgetown University in Washington.

On arrival in Buenos Aires, and most likely after a change of airport, potential buyers must take a two-hour flight north to the provincial center of Salta and then drive three and a half hours to the green, oasis-like valley of Cafayate.

“I’ve traveled all over the world,” says Mr. Casey, “and this place has got everything I want.

“Here we have fresh air, wonderful hiking, fine wines and great food, and Argentina generally offers an ideal combination of culture and climate at a low cost,” he added. “Think 10 percent of the value of anything comparable in Europe, for example.”

The development covers 550 hectares, or 1,360 acres, in a district where tourism and winemaking (midrange whites from the torrontés grape in particular) — not to mention subdivision preparation and golf course landscaping — are bringing evident prosperity. Some 500 of the 12,000 residents from the nearby town of Cafayate have worked at the development over the last three years. For the moment, only a handful of hacienda-style properties have been built, but when the foundations of more homes are dug, and residents are ready to hire staff, that number is set to rise.

Mr. Casey expects that, when the shared facilities are completed in 2014, the Estancia de Cafayate will have around 50 of its projected total of 360 homes. Plots are being sold for an average of $65 per square meter, or a little more than $6 per square foot, and range in size from 1,500 square meters to 17,000 square meters, or 16,145 square feet to 18,300 square feet. In Argentina, land for luxury residences is routinely priced in U.S. dollars.

Building costs, meanwhile, are averaging $1,200 per square meter.

A third of the plots have been sold, many to subscribers of Mr. Casey’s e-mail investment newsletter, which helps explain why 18 different nationalities have bought into the development. Also, 15 Argentines have purchased plots.

Robert Moore, a resident of Montana, said the Cafayate valley “feels like America felt 50 years ago.”

“The dry and sunny climate in the north of Argentina is similar to that of the west of the United States,” said Mr. Moore, who has three adult children and expects that when his Estancia home is built it will be a “great meeting place for the whole family.”

Mr. Moore and his wife, Gina, also look forward to sampling wines made from the grapes of the estate’s own mature vineyard. In time, the Estancia intends to sell a portion of its grapes to local winemakers to offset a small part of the development’s maintenance charges.

Meanwhile, Reg Chappell, a retired financial adviser from Ontario and a long-time subscriber to Mr. Casey’s newsletter, said he put down his deposit in part because of the safety of the valley and the “excellent working relationship with the local community.”

Mr. Chappell and his wife, Carol, plan to spend part of each year in Cafayate, taking advantage of the Southern Hemisphere’s summertime weather when it is cold and wintry in Canada.

“We also think this is good value for money,” said Mr. Chappell. “The cost of just about everything in Florida, for instance, would be so much higher — and here we’ll enjoy a healthy outdoors lifestyle among like-minded people.”

If nature, wine and golf are the principal draws of the Estancia de Cafayate, the Estancia Villa María offers horses and ease of access.

Just 20 minutes by car from Buenos Aires’ Ezeiza International Airport, and an hour from the city center, Villa María used to be a working ranch. Now its Tudor-style mansion has been turned into a luxury hotel, which is set among landscaped lawns framed by tall palms, oaks and low-hanging sycamores.

According to Federico Blizniuk, director of Fiducia Capital Group, which is developing the property, homes will be built on 816 individual lots across 624 hectares over the next 15 to 20 years. Plots at Villa María range from 2,000 square meters to 1.4 hectares and cost from $40 to $120 per square meter, depending on the lot size and its location.

So, a 300-square-meter house on 3,000 square meters of land would cost approximately $350,000, with additional fees for the kitchen, bathrooms and swimming pool.

Horses are kept on both the grounds of Villa María and beyond. Some 45 are used for polo and for riding by the hotel guests; these will be available to future homeowners at Villa María. Meanwhile, in the village of Máximo Paz that adjoins the estate, many local residents prefer horses to cars and men sport the boina, the characteristic beret of Argentine gauchos.

Non-polo-playing investors will be able to watch the games that are a regular fixture on the Villa María calendar. There also are plans for other sporting facilities, including a golf course and a tennis club overseen by 1977 U.S. Open champion Guillermo Vilas, an Argentine.

Mr. Blizniuk thinks that many homeowners will incorporate stables into their properties.

“For lots of reasons to do with labor costs, climate and culture, you can keep a horse in Argentina much less expensively than in North America or Europe,” Mr. Blizniuk said. “Investors should reckon on roughly 1,000 pesos per month for stabling.” The sum is the equivalent of about $260.

Twenty-five percent of the plots at Villa María have been sold and utility connections are being laid for the initial construction, according to Mr. Blizniuk, who expects that a third of the homes will be bought by foreign investors, in particular Brazilians.

“Brazil is a huge market for us,” Mr. Blizniuk said. “You can feasibly travel down from São Paulo on Friday afternoon for a long weekend.

“Equally, New York is an overnight flight away,” he added.

But even assuming that your home and the development’s shared infrastructure are completed according to contract, how safe is a real estate investment? After all, at the end of 2008 President Cristina Fernández signed a controversial bill to seize Argentina’s 10 private pension funds, its largest institutional investors.

Bret Rosen, a portfolio manager at Explorador Capital Management in Buenos Aires, was upbeat: “Argentines believe in land and physical property as a store of value, because even if the peso depreciates against the dollar, land usually maintains most or all of its value in real or dollar terms over any period of several years.