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Chile is fast becoming one of the best options for international investment, both for internal and global situations. Diversity and vastness are its main features, besides its really low prices, compared to the global market.
When comparing a property in Europe, with another one with exactly the same features in Latin America, we can talk about prices differences that range from four, six, or even ten times cheaper. For example, a two bedrooms apartment in London costs about US$600,000, while a similar one in Chile City, is around US$150,000.
In the long term, terrorism and environmental issues are just some of the reasons to see the whole of Latin America as one of the most safe and sustainable resources in the world.
The Prices for Property in Chile
Property prices in developed countries can’t grow forever. They are more likely to stabilise, if not, to drop after the well known “real estate bubble” bursts.
On the other hand, in Latin America property prices have just started to react to the increase of demand. Despite circumstantial economic ups and downs, price tendencies are definitively on the raise.
Profits for Chile Properties
The average rental yield for a property in Chile is about 10% to 12% a year, over the value of the property, for permanent rentals. For holiday rentals, it may vary, depending on the area the property is located and the demand it faces in a particular period of time. It is commonly higher, but seasonal variations it make it harder to estimate average profits.
In case you need more information or have doubts on any of these issues, the specialised staff in January First Real Estate will be glad to answer all your questions, click here.
Buying Real Estate in Chile
Chile’s unique diversity
Chile is a country like no other in Latin America. It stretches for more than 4,000 kilometers, making it the longest country in the world. The Pacific Ocean lies on one side and the Andes Mountain Range borders the other.
Because of its expanse, Chile has a very diverse terrain and ecosystem. The Atacama Desert is the driest in the whole world, and is situated in the northern region of the country. On the other hand, the South is filled with thick forests and a succession of volcanoes and lakes. The population is greatly concentrated in the center region, also known as the Central Valley, where the capital Santiago is also located.
Santiago is densely populated, and it is also visited by the most number of both local and foreign tourists in Chile. The number of visitors to Santiago rose from 102,497 in December 2006 to 125,884 in January 2007. However, the number of foreigners who visited the capital in January 2007 is lower by 2.5% from the same month last year.
Addressing the housing deficit
Chile may seem to have enough land to house its 16 million people, but only the Central Valley has most of the arable land. Due to the concentration in the center region, having an insufficient number of homes is unavoidable.
The housing deficit in Chile still exists but it has been reduced significantly. Through a very successful housing policy, the government has greatly improved the owner-occupancy rate in the country.
The Ministry of Housing and Planning (Ministerio de Vivienda y Urbanismo or MINVU) was created in the 1970s, and it has dominated the housing sector since. It is the largest real estate firm and the second largest mortgage bank in the country.
The special law Decreto con Fuerza de Ley 2 (DFL-2) encouraged affordable housing of less than 140 square metres (sq. m). DFL-2 properties are exempt from income tax, and enjoy 50% off the Real Estate Tax for corresponding periods, according to land area.
More and better homes
Almost 152,000 homes were built in 2004, the most number of housing units completed in the decade. In 2005, a total of 147,734 houses were put up by the MINVU. However, in 2006, only 96,556 were completed as of August.
In July 2006, President Michelle Bachelet announced that Chile still lacks 420,000 housing units. With a new housing policy, the government seeks to provide the poorest 40% of the population with better quality homes. These are larger houses with a minimum of two bedrooms.
The government reported that the first 14,184 subsidies were given out in January 2007 under the new policy.
Since Bachelet took office in March 2006, a total of 118,580 housing subsidies have been offered. These consist of new and renovated houses. The administration gives priority to the poorest families, and 70% of these subsidies were granted to them.
Safe but stable economy
Despite the country’s internal troubles, Chile’s economy is still performing well. It grew by 4.2% last year. This is only the most recent of its continued stable growth through the years. The country’s GDP per capita has grown by 22.37% since 2002.
The Chilean government implements a fiscal rule that requires a budget surplus of 1% of the GDP. Some think the 1% safety is no longer necessary since the economy is doing well.
Nevertheless, the budget surplus has many benefits. In a recession, it provides the country the ability to increase public spending. According to the finance minister, it also makes it possible to determine which is permanent income and which is temporary.
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