It takes only one look at a map to be intrigued by Chile.  It is the longest and probably one of the skinniest countries in the world.  To say Chile is geographically diverse is an understatement. Tourists can enjoy a multitude of activities ranging from climbing active volcanoes and hiking in the world's driest desert to rowing through icy fjords in the vicinity of Antarctica.  Opportunities to bike, surf, ski, hike, and swim abound.  From Santiago to Easter Island, Chile's geographical, historical and cultural landscape fascinates visitors of all stripes.
 
The country's real estate market has shown stable growth over the last ten years but Chile isn't for property flippers.  A rate of 8 to 10 percent annual growth means only those who are in it for the long haul are interested and that is just fine by locals.    
Chile has well established private property laws. "Legal institutions in Chile are strong and the laws are very clear," said Victor Fuenzalida Dublé, Director of Fuenzalida Propiedades, a real estate company in Santiago.  Chile is also one of Latin America's most developed countries, boasting a good quality of life for its well educated population. 

The Chilean real estate market

Chile was hit particularly hard by the global economic crisis that resulted in falling commodity prices. In January and February, the country registered a $2.6 billion year-over-year trade surplus decline, according to Latin American Quarterly, a report prepared by the research department of Prudential Real Estate Investors. While the country's economy may not contract in 2009, growth is likely to be on the low side.
 
The property market in Chile has grown consistently over the last decade, according to allchile.net, a website run by Spencer Global International Consulting. However, these are turbulent times for property markets around the world.  Just as most everywhere else, the market in Chile reflects current global economic realities.   
  Office vacancy rates, while still low in Santiago, are creeping up, according to Latin American Quarterly. The retail sector is soft, with sales down by 3 percent when compared to the same time, a year ago.  As for the residential sector, buyers are weary of taking out mortgages during a time of economic uncertainty. Investors are cautious and are choosing to hold on to their cash. As a result, transaction activity is down. "Our sales have been down by a third since October 2008," said Dublé.  

Most investors acquire property in the capital, according to Dublé. "A large number of investors buy in Santiago because the city has shown to have the biggest returns in relation to initial investments," he said. Vacation spots such as Viña del Mar are popular but "don't have the best returns."

As far as property types, small, 1 or 2 bedroom apartments bring the highest returns, according to Fuenzalida Propiedades.  The value of these properties grow at an approximate annual rate of 8 percent while the value of larger places grows by a slightly lower rate of around 5 percent.

Buying real estate in Chile
 
Foreigners have the same rights as Chileans when it comes to real estate transactions, according to allchile.net. International buyers can purchase property anywhere in the country outside of areas considered important for national security. There are no residency or citizenship requirements.  For its part, owning property in Chile will do nothing to guarantee residency status.  Foreigners are required to obtain for an RUT or a Chilean tax id number before legally acquiring property.  Property agents charge 1.5 to 3 percent of the sale price which is generally shared between the buyer and the seller. 

Just as anywhere else, it is important for buyers to conduct thorough research of the desired property.  A title search is need to determine if it has issues regarding building permits, taxes, inheritance claims, and others problems that can stand in the way of a proper and legal transaction. Purchasing through a reputable real estate agency should save buyers from getting in trouble, according to Fuenzalida Propiedades.

Looking ahead

In March, Moody's Investors Service raised Chile's foreign debt rating citing strong fiscal savings that will see the country though the global recession, according to Bloomberg. Mauro Leos, an analyst at Moody's, confirmed that the country has “solid institutional and policy frameworks" in place. This sends a positive message to investors about Chile. The country is expected to weather the global economic slowdown better than its peers.

Real estate agents in the country also feel optimistic about the future. "Once the international economic crisis passes, the real estate market will return to growing at a pace of 6 to 10 percent a year," said Dublé.

This article was Republished with permission from Nuwireinvestor.com
The original article can be read at: Nuwire Investor