Chile's real estate market has seen a recovery in demand this year. According to the prediction from the Chilean Chamber of Construction (CChC), in addition to the two-digit growth this year, another jump in 2024 for the country is expected. Market analysts believe the upward trend and a steady growth rate are expected to continue until 2028.
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Sales Grew 12% in the First Half
Sales in the Chilean real estate market fell sharply in 2022, with a sales volume of around 40,000 units, hitting the country’s lowest record in almost two decades. This year, however, demand is seen to recover. Data provided by CChC shows sales in the second quarter have reached 12,987 units, with an annualized growth rate of 14%. In the first half of the year, 23,107 houses were sold across the country, an increase of 12%.
People consider two things have led to the remarkable increase. One is last year’s low comparison base, and the other is the declining deflation due to a stable mortgage rate, which means there is less uncertainty about long-term financing. CChC will achieve its 17% increase target of 49,000 units this year, and 15% increase to around 56,000 units the next year. Despite this, annual sales are still below the average of nearly 60,000 units sold per year over the past 10 years.
4.10% CAGR Growth Predicted for 2023-2028
Market analysis shows that Chile’s real estate market has reached a value of USD 11.55 billion in 2023, according to an article posted this August by Gateway to South America. The real estate market is forecast to have an estimated CAGR (Compound Annual Growth Rate) of 4.10% during the period of 2023-2028, promising for investors, developers, and stakeholders in the real estate sector.
The Chilean government is believed to have initiated this growth by introducing new regulations and policies. In 2019, for example, the government suspended the payment of transfer taxes for transactions involving commercial real estate assets. Also, the government has established a new governmental agency, ProChile, to stimulate investments in real estate projects and attract foreign capital. Nevertheless, the government has provided incentives for foreign investors, such as tax exemptions and preferential loan rates.
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Further News
Despite the inspiring news, some believe consumers remain cautious in Latin America when making investment decisions in Chile, Colombia, or Peru. A real estate management firm MTS Consultoria told Bloomberg Linea that though Latin America has experienced growth over the few last years (a post-pandemic recovery), the region is currently going through a crucial moment in the real estate cycle. It is faced with challenges related to economic and political instability, varying levels of infrastructure development, and market volatility.
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So as always, be prepared for the risks while taking into account the ROI before you make any investment decisions.
References: 1. Emol 2. Gateway to South America 3. saonews （公众号：南美中文网）
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