Boston, MA -- (SBWIRE) -- 08/03/2012 -- The Chile Real Estate report examines the Commercial Office, Retail and Industrial segments throughout the country in the context of a historically buoyant market, whose economic growth looks set to cool gradually over the coming years.
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 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 in-country 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.
In addition, 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.
- We believe that robust credit growth and a positive medium-term outlook for fixed investment will continue to underpin Chile's economic growth over the medium term. While moderating copper prices and a still precarious global macroeconomic outlook will cause the Chilean economy to cool somewhat in 2012, the authorities have plenty of ammunition on the monetary and fiscal front to weather external shocks, informing our above-consensus Chilean real GDP growth forecast of 4.8% for 2012.
- In the construction sector, the strong growth seen over 2011 is expected to moderate in 2012; however, activity will remain robust, accelerating in 2013 and 2014. A combination of residential construction and industrial and infrastructure projects related to the mining sector are fuelling strong construction sector employment and activity, indicating a buoyant project pipeline and industry.
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