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Chile Real Estate Report Q4 2010
Business Monitor International, Sep 2010, Pages: 60
Chile Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Chile's Real Estate industry.
Chile’s commercial Real Estate sector will continue to benefit from the lack of supply relative to demand and from the very favourable overall environment for business. Reconstruction following the devastating earthquake that took place in late February 2010, will contribute to higher real economic growth both in 2010 and 2010. In May 2010, we assessed the situation we said that the earthquake would contribute marginally to demand for commercial Real Estate. When we interviewed them for the second time this year in July, our sources in Valdivia told us that rental rates in that city –particularly in the retail and office sub-sectors – had increased dramatically already.
Although overall economic growth could be held back in the future by a softening of exports to China, we do not see this as having an impact on any of the three main sub-sectors. It appears that Real Estate market protagonists have been careful to balance supply and demand in the three sub-sectors in Santiago and in Valdivia. The vacancy rate for Santiago industrial property is around 12%. For office space in the capital, the vacancy rate is miniscule. When interviewed in the middle of 2010, our in-country sources indicated that they are looking for rental rates to rise by 15-20% across the board in 2011.
For the time being, we are taking the view that yields will remain broadly unchanged through 2011 and 2012. We are looking for any changes in rents (ie in all probability, further increases) to be met by rises in prices and capital values. At some stage though, prices should rise in response to the tightness of the market, the steady increases in rentals and a broadly favourable macro-economic outlook. We expect that, over the two years to the end of 2014, yields will fall back to end-2009 levels as capital values increase ahead of rentals.
Interviews with our in-country sources were conducted in late January and early February 2010.
Key Features Of This Report
This is the latest edition of a new series of industry reports published by BMI that seeks to identify the key dynamics of the real estate sectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets. Once again, the questions that we seek to answer for each country remain as follows: What are the main issues that will matter to actors in and around real estate development in the country concerned, both over the long and the short term? What are the main constraints that they face? What are the key insights that one garners when one compares the real estate sector of the country concerned with its peers in other countries?
In Q3 we have introduced a very substantial new improvement to the reports. We have incorporated data and qualitative observations provided to us by commercial real estate agents operating in the countries we survey. As a result we have gained a much clearer picture of the balance between demand and supply in each of three main sub-sectors – office, retail and industrial. We have also introduced a new approach to the forecasting of rental yields, which is discussed in the methodology sector of this report.
In Q4, we have incorporated a lot of new data in relation to rents and yields in 2010. We gained this data by way of a new round of interviews with our in-country sources in mid-2010. In some cases, the latest information from our sources has caused us to make significant revisions to our forecasts for 2011-2014. We asked our sources to indicate what growth in rents is likely for 2011. We explain their answers in the Forecast Scenarios.
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