How real estate is evolving in Chile after the pandemic
After growing steadily for several months, real estate in Chile sagged. Experts say the reason is the slowing recovery of the country’s economy. In addition, the situation is still affected by the effects of the pandemic.
Over the past year the average price of new buildings in Greater Santiago has increased by 1.7%. This figure is much lower than it was in 2019, when the market showed a 7.32% increase in value. In the previous quarter, real estate rose in price by almost 4%, but then the dynamics declined.
According to data from the Chilean Chamber of Buildings, new home sales in Greater Santiago fell 28.2% last year to 22,672 properties. By comparison, the 2019 drop was recorded at 6.9 percent. In addition, the number of permits issued for residential construction decreased, as did their square footage.
Now a square meter in the nation’s capital costs $3,256. An apartment with an area of 120 square meters in the central district of the city will cost $390,720. The rent price of such an apartment will be $ 1,336 a month. Thus the yield of the object will be about 4.1% per annum, and will increase over time.
The real estate market is affected by the state of Chile’s economy and the pace of its recovery. During the pandemic, it shrank by 6%, the largest decline since the debt crisis of the 1980s. And the decline has been observed for several years. For example, 2019 recorded a decline of 1.1 percent and 2018 recorded a 4 percent decline.
Despite the decline in growth rates, experts give positive forecasts for the current year. They note that Chile’s economy will begin to recover strongly this year, and GDP will grow by 4.5%. The country is projected to lead among other Latin American nations in market recovery. A surge should occur in the second half of the year.
An important factor on the way to further development is to increase investment in real estate and other sectors. In addition, the government is introducing measures to stimulate private consumption, but with massive unemployment, it is very difficult to develop this area.
As in a number of other countries, office real estate is recovering slowly, people prefer to work from home and the vacancy rate is growing. However, a positive dynamic is noticeable in the segment of commercial real estate, demand for premises is increasing. They are becoming more in demand not only in big cities, but also in the provinces.