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Argentina’s biggest developer looking to Europe for property investment

‘The best transactions are done when everybody stops and is paralysed,’ said Eduardo Elsztain, chief executive officer of IRSA Inversiones y Representaciones.

‘These days, the whole world is in some way frozen and the best way to preserve value is to have real assets,’ he added but did not reveal what kind of investments he is looking for in Europe, or the specific countries.

The sovereign debt crisis in Europe is depressing real estate prices across the continent, with the cost of UK commercial real estate failing to rise for the first time in more than two years in October, according to Investment Property Databank.

Property prices in Greece have dropped 15% since the end of 2010, newspaper Kathimerini reported last month, citing a report by real estate firm RE/MAX Hellas.

‘When you see a crash, people are reluctant to sell an apartment at half the price, but you can see shares of very good assets selling at 60% discount,’ explained Elsztain.

IRSA has intensified its investments in real estate and the hospitality sector in the US over the last two years. It increased its stake in New York’s Lipstick Building, located in Manhattan’s Midtown area, to 49% in a debt restructuring of the property in January. It also bought a building on Madison Avenue and 34th Street, Elsztain confirmed.

The Buenos Aires based company has also invested in Hersha Hospitality Trust, a real estate investment trust which owns and operates hotels in several states throughout the Northeastern US and now has about 10% of the company, Elsztain said, adding that the values of the properties, the cash flows and the locations are attractive.

Meanwhile, the Buenos Aires neighbourhood of Palermo Soho is experiencing a boom in new house construction, up 70% compared with 2010, according to real estate agents.

The area bounded by Santa Fe, Cordoba, Scalabrini Ortiz and Godoy Cruz has also seen the price per square foot increase above US$230 and has reached US$300 in some locations.

‘The boom is supported by the tremendous commercial activity in the area which is reflected in the prices,’ said Romina Smith from Clarin.