New Business market report from Business Monitor International: "Chile Real Estate Report Q1 2014"
Boston, MA -- (SBWIRE) -- 01/02/2014 -- MI View: Chile has long been one of the jewels in the South American crown in terms of a dynamic economy, abundance of resources and consistent growth. These strong fundamentals and a resilient leasing market make Chile a strong and dependable performer in the commercial real estate sector. Lead indicators suggest that construction and pipeline growth is expected to continue at a strong rate. However, given the growth rates in 2012, base effects will likely result in a lower growth figure over 2013, as we anticipate that the rental market will remain flat across all sub-sectors.
In spite of new supply, absorption rates are generally holding up across the board, with record amounts of office space set to come online over 2013-14. In fact, an anticipated broader slowdown in pipeline activity in the medium term is good for the leasing market - particularly in the office and retail sub sectors - as new supply decreases and demand remains relatively buoyant, the competition for prime space in prime locations may well boost rental rates in the medium term. Nevertheless, abundant demand and supply is the general trend across all commercial real estate sub-sectors, and as a result the commercial real estate market is expected to continue to blossom. 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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We believe population expansions in smaller urban areas will drive retail real estate expansions in these areas. This, in conjunction with over-saturation across all commercial real estate segments in Santiago, will encourage a corresponding increase in office and industrial real estate in these areas. We believe that rents will increase in these areas in the short term until new supply comes online, meanwhile we expect Santiago's rents and yields to begin to decline over the longer term as new space comes online in the city and companies move to other urban areas to seek out new markets.
- Tvsdesign, a US-based architectural and interior design firm, has entered into a partnership with long-time client Mall Plaza to design and build Santiago's newest retail destination, Mall Plaza Egana, which will open by the end of 2013. In addition to Plaza Egana, tvsdesign collaborated with Mall Plaza on the newly opened Mall Plaza Antofagasta.
- The partners are also working on Mall Plaza Oeste and Mall Plaza Los Dominicos for a total development of more than 241,500m2 of new retail space.
- New developments include the US$36mn, 29,000m2 Arauco Quilicura in Santiago, and strip centres throughout the country in partnership with AURUS, the Chilean asset manager. Parque Arauco will have a 51% stake in the projects, while AURUS will co-invest 49%.
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