Chile Real Estate Report Q1 2015

Nov 13, 2014 - Business Monitor International - 63 pages - USD $1,295
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Chile's economic stability is now under threat from weakening demand for copper, the country's most valuable export. As such, we are anticipating a potential slowdown in the commercial real estate market growth as we enter 2015. There remains room for optimism, however, with strong fundamentals cultivating a relatively resilient leasing market. Longer-term opportunities are significant, particularly in the retail and industrial sub-sectors and outside the capital city, Santiago.

The final quarter of 2014 presented Chile with a tough reality. Following decades of economic stability, with an average growth rate of more than 5% in recent years, growth finally began to stall. Declining Chinese demand for Chile's key export commodity, copper, is now increasing unemployment and impacting the levels of both consumption and investment. Despite this potential downturn, the longer-term provides a wealth of opportunity for real estate developers and investors. A growing export base with increased investment into manufacturing offers the industrial segment reasons to remain optimistic.

During the first half of 2015, Santiago will see additional supply of Grade A office space leading to an increasingly saturated market which will potentially push rental rates down. Our in-country sources have reported a decrease in vacancy rates in Grade B properties owing to firms using this tenant-favorable environment to upgrade to Grade A space.

Chile's retail sector possesses great potential though opportunities may be deferred until the economic climate improves. In the longer-term, household incomes and consumer spending are expected to rise which will in turn boost demand for Western-style retail space. As Santiago's retail market becomes increasingly saturated, developers and retailers alike are seeking opportunities in other parts of the country.

The industrial market holds the best growth prospects out of the three sub-sectors. Chile has been gradually developing a...

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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including Daily Alerts, monthly regional Insights, and in-depth quarterly Country Forecast Reports.