Chile Real Estate Report Q2 2012 Published : April 2012
No. of Pages : 52
Price:US$1175
Chile’s real estate market is continuing its buoyancy from 2010 and 2011. Despite new supply, absorption rates are generally holding up across the board. Increasing demand and supply is the general trend across all commercial real estate sub-sectors, and as a result, rents are mostly increasing. The country’s status as Latin America’s most prosperous region has helped it retain stability and caused it to become a target destination for people looking to enter into a better market than the eurozone in particular. However, even in Chile – where growth over the past 18 months has been strong in the office, retail and industrial sub-sectors – current global economic woes may yet take their toll. Our most recent round of incountry interviews, conducted in December 2011, indicate that 2012 rental growth is likely to be much slower, or to come to a halt altogether. This is unsurprising in the face of a cautious market for international investment and is still a testament to the country’s stability that no declines are expected. BMI is currently of the view that the Chilean economy is set for a slowdown, as the potential for recession in the eurozone is combining with declining exports and gross fixed capital formation to drag on economic growth. However, we believe that the authorities in Chile are well equipped to prevent any severe downturn, so we have retained our 2012 GDP growth forecast of 4.8%, well above consensus. Key Opportunities In The Real Estate Sector: Gap’s recent entry into the Latin American market via its new store in Santiago has two merits. First, it is likely to pave the way for other major retailers to enter the country in order to remain competitive. Second, Gap has highlighted Santiago as a regional base for its operations, which will boost the city’s profile. Historical stability in the real estate market will help buoy rents and prices through any potential downturn brought about in the wake of the US debt crisis. A recent increase in arrivals from European countries suffering from high unemployment and debt (particularly from Spain) could boost the country’s profile and increase real estate investment opportunities. Key Risks To The Real Estate Sector: The current debt fears in the US, and more recently in Greece and the eurozone, are causing subdued investor interest across the board. Demands for education reform led to major demonstrations in Santiago in August 2011, which could lead to an uncertain political environment. Political woes could be a barrier to the real estate market, constraining access to credit. Chile Real Estate Market Table Of contents Executive Summary SWOT Analysis Chile Real Estate/Construction SWOT Chile Political SWOT Chile Economic SWOT Chile Business Environment SWOT Real Estate Market Overview Market Analysis – Office Supply And Demand Rents And Yields Table: Historic Rents – 2010-2011 (USD per m2/month) Table: Net Yield, 2011-2012 (%) Table: Terms of Rental Contract/ Leases - Mid 2011 Industry Forecast Scenario
Table: Forecast Rents - (USD per m2/month) Table: Forecast Net Yield, 2008-2016 (%) Market Analysis – Retail Supply And Demand Rents And Yields Table: Historic Rents – 2010-2011 (USD per m2/month) Table: Net Yield, 2011-2012 (%) Table: Terms of Rental Contract/ Leases - Mid 2011 Industry Forecast Scenario Table: Forecast Rents - (USD per m2/month) Table: Forecast Net Yield, 2008-2016 (%) Table: Chile Retail Sales Indicators, 2008 - 2016 Market Analysis – Industrial Supply And Demand Rents And Yields Table: Historic Rents – 2010-2011 (USD per m2/month) Table: Net Yield, 2011-2012 (%) Table: Terms of Rental Contract/ Leases - Mid 2011 Industry Forecast Scenario Table: Forecast Rents - (USB per m2/month) Table: Forecast Net Yield, 2008-2016 (%) Construction And Infrastructure Industry Outlook Table: Chile Construction And Infrastructure Industry Data Table: Chile Construction And Infrastructure Industry Data Construction And Infrastructure Forecast Scenario Macroeconomic Outlook Table: Chile - Economic Activity Business Environment Real Estate/Construction Business Environment Ratings Table: Latin Americas Business Environment Ratings Chile’s Business Environment Introduction Table: BMI Business And Operation Risk Ratings Institutions Table: BMI Legal Framework Rating Infrastructure Table: Labour Force Quality Table: Latin America, Annual FDI Inflows Table: Trade And Investment Ratings Table: Top Export Destinations Operational Risk Operational Risk Competitive Landscape Company Monitor Abertis Besalco SA Grupo ACS BMI Methodology How We Generate Our Industry Forecasts Construction Industry Bank Lending Real Estate/Construction Business Environment Rating Table: Weighting Of Indicators Sources