Algodon Group is not alone in believing there are boom times ahead for Argentine assets, and that Argentina may represent one of the best-calculated risks that one can make in global investment today.
Argentina’s new president, Mauricio Macri is already strongly promoting business-friendly platforms, and we believe the country is in the first stages of real recovery, as tens of billions in foreign investment dollars have begun to return across various industry sectors. It seems to be a new world, as well as a new beginning, for all Argentine assets. Many global financial publications have recently published feature articles highlighting Argentina as one of the best places to invest in 2016 and beyond.
We believe Argentine assets may now be at the beginning stages of what could be a 4-year, or longer, increase in value. A new pro-business government is now in power, and Algodon Group may now have even more exciting opportunities in the years ahead. Our Argentine luxury properties are all non-leveraged, and we believe them to be a great value and timely contrarian investment, as the country may now be entering its next golden age of economic growth.
We have seen recent booming economies in Brazil and other South American countries, and we believe that Argentina may likely follow suit with the potential to show exponential growth and tremendous long-term appreciation. For example, Argentina had one of the best-performing global stock markets in 2013, 2014 and 2015. We believe there is still a window of opportunity to acquire prime assets, both public and private, at great values reminiscent of Brazil’s pre-boom opportunities- of which very few investors had the courage, or even the foresight, to take advantage.
Knight Frank’s Global Vineyard Index 2013 reported that the value of Mendoza vineyards generally has grown up to 25% annually, the highest among its global peer group. As Argentine real estate is typically valued in U.S. dollars, we believe it to be a good hedge against the inflation of the peso, and that the country’s currently underpriced real estate will be the first sector to sharply recover.
In the past 20 years, there has been a revolution in Argentina’s wine industry. In today's competitive wine market, consumers want innovation and new-idea "story" wines, which is why our Bonarda and Malbec varietals and blends, sourced from vineyards dating back to 1946, are a hit among international clientele. Using Algodon’s fine and ultra-fine wines, we intend to increase our brand presence in the wine and hospitality sectors of Argentina, and beyond. The U.S. now consumes the most wine globally, and has recorded some of the highest wine import growth from Argentina, in comparison to any other country’s wine imports to the U.S. We look forward to tapping into the U.S. and Chinese markets, which are the leading wine markets of the world. Moreover, as the quality and reputation of Algodon’s ultra-fine wine collection continues to grow, we believe it may have a direct positive impact on the value of the entire Algodon brand and the value of all of our real estate holdings. Therefore, we continue on our quest to always produce the best.