Boston, MA -- (ReleaseWire) -- 11/29/2012 -- The Chile Real Estate report examines the commercial office, retail, industrial and construction segments throughout the country in the context of a historically buoyant market, whose slowing economic growth looks set to cool the commercial real estate market.
With a focus on the principal cities of Santiago and Valdivia, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the dynamic supply and demand landscape: in spite of 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 more predictable market than the eurozone in particular.
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However, even in Chile - where growth over the past two years 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 in-country interviews, conducted in July 2012, indicate that 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 it is still a testament to the country's stability that no declines are expected.
- Although strong economic activity in the first half of 2012 exceeded our expectations, we do not expect this trend to continue. We see Chilean private consumption growth slowing in the second half of the year, which will contribute to a deceleration in economic growth. Indeed, we already see signs that a slowdown is under way in the export sector. We currently forecast a general slowing in real GDP growth from 5.6% in 2011 to 4.8% in 2012.
- Growth rates have returned in the construction segment to low single digits in 2012, following exceptionally high base rates in previous years. Compared with regional peers, 2012 year-onyear forecast growth of 2.8% is very positive. Growth will pick up in the longer term with an average rate of 3.6% per annum through to 2020. The construction industry is expected to rise in value from US$18.6bn in 2012 to US$28.6bn in 2016.
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