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Owing to its stable economy and favourable business environment, Chile has become one of the most attractive real estate markets in Latin America.

July 2015

Chile is today one of South America’s most stable and prosperous countries. It leads Latin American nations in rankings of human development, competitiveness, income per capita, and economic freedom. It has remained one of the highest growing economies in the region in recent years; the country’s GDP growth is forecast to average 3.9% annually from 2016-2018.

According to Cushman & Wakefield’s International Investment Atlas 2015, Chile’s real estate market, which is concentrated mostly in the national capital Santiago, has been showing a stable performance and has bullish longer term prospects, particularly in the retail and industrial sectors, with fast growing regional markets expected to offer a wealth of untapped opportunities for developers and investors.


Chile’s political stability and its strong institutions have been a solid base for foreign investors entering the market. In the last years, as per information from JLL, real estate investors and funds such as Deka Inmobilien, Credit Suisse, Prudential among others made several real estate investments mainly in Class A office buildings located in Santiago.

“Capitalisation rates were around 8.5–9.5% only 3 to 4 years ago. Total market vacancy rate was less than 2%, and in some submarkets it was almost zero, especially in the CBD (El Golf Sector), where most of the foreign investors bought assets,” comments Felipe Acevedo, Associate Director of JLL Chile.

“Chile’s solid economic results have had significant impacts on the real estate sector, especially through increasing residential and office space demand in Santiago. That, combined with the city’s poor urban planning, has pressed asking rents to rise significantly in the recent years, having market specialists be concerned about the creation of speculative bubbles in the long-run,” adds Gustavo Garcia, South America Market Research, Cushman & Wakefield.

Garcia says that the government is taking measures to prevent this excessive price growth, while the main real estate players profit with new launches everyday: a 23% increase in residential units is expected in Santiago city this year, which is the highest rate since 2003. Further, “due to the good work that the Chilean Central Bank is promoting, lowering long-run risks through solid macroeconomic balance, the Chilean real estate market is flourishing with innumerable investment opportunities.”

The retail market in Santiago is quite concentrated, with the three largest retailers representing more than half of the market.

“All these players are local companies that own the assets and lease the retail spaces. Some of them already have regional operations (Argentina, Colombia, Peru),” explains Felipe Acevedo, JLL. “Gross leasing areas in this market are around 2.8 million square metres, of which 70% are located in Santiago. They are expected to grow around 20% next 24 months and up to day there have not being any selling/disposition processes in this market.”


Cushman & Wakefield say that the residential market concentrates most of the foreign capital opportunities in Chile, however, they are not restricted to it.

“New office deliveries are soaring, and it will affect the market in the coming years. The third tower of Plaza San Damián, Apoquindo Capital buildings, Costanera Center, Amunátegui tower, Génesis building and Patio Apoquindo, Oriente and NLC7 are some examples of that,” comments Gustavo Garcia.

He notes that this pipeline is still much restricted to Santiago. However, Cushman & Wakefield expect this to change in the following years, as Santiago’s municipal administration is making changes in the regulatory plan of land use, expanding the real estate market perspective to cities close to the Chilean capital.

“Santiago is one of the most developed commercial property markets in Latin America, with the highest density of retail space per habitant, as well as Class A office stock. Due to this and to the continuous growth of the investment market and demand for real estate as an asset class for institutional capital allocation, we have seen the emergence of demand for other types of assets, such as multi-family rental. We believe this sector has become an attractive investment alternative for long-term local and international players looking for stable growth,” says Marc Royer, CBRE Transaction Services Director in Chile.

CBRE believe that there is still strong potential for growth in the retail and hospitality sectors, especially in the upper market segment.

“Santiago is the major city of Chile, where most of the large companies and the multinational corporations that operate in the country established their headquarters. Out of the capital, we do not see much room for foreign investors, mostly because of the lack of sophisticated markets, as well as development and scale issues,” comments Felipe Acevedo from JLL.

“Although Santiago is the city that concentrates most of the economic activity in Chile, there are some attractive retail investment opportunities that can be found in secondary cities such as Concepción, Viña del Mar, Antofagasta, Puerto Montt or Temuco,” adds Marc Royer, CBRE.

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