Central Santiago real estate values have risen to their highest levels in nearly eight years.

 

Although the massive Costanera Center project in Santiago's gleaming financial district has gotten a lot of coverage in the press, the city center of Santiago has quietly become a key real estate market. propertyfinder

 

According to a market report cited in the Chilean newspaper El Mercurio, the price of new apartments in Santiago Center reached 36.38 UF (approximately US $1,733) per square meter in July 2012, the highest amount since November 2004, when prices were 30.88 UF (approximately US $1,471) per square meter.

 

The number of available units has also decreased substantially, despite price tags reaching a seven-year high. According to reports, there are currently 6,554 residential units available, down nearly 8% from the 7,119 units available only six months ago.

 

Furthermore, monthly unit sales velocity has risen from a nearly 8-year low of under 6% in July 2010 to 12.5 percent in July 2012. Between March and July, there was a notable increase in sales velocity of approximately 3.5 percent. The sector bounded by the roads Marcoleta, Vicua Mackenna, Avenida Matta, and San Camilo has been found to have the highest sales turnover.

 

The rise in sales prices in this area of town is due to a number of factors. A major improvement in terms of supply has been a reform to a zoning plan that substantially limits the height of residential projects in central Santiago. After years of attempts to revitalize inner-city development, this modification represents a significant shift in development policy. As a result of this change, residential developers are increasingly focusing on the surrounding areas.

 

Another significant factor has been the growing congestion on Santiago's highways. Santiago has experienced significant levels of urban sprawl due to a lack of land for large-scale residential developments in central areas. Furthermore, rising per capita income as a result of Chile's economic growth, combined with more housing finance choices, has allowed more people to rent or buy homes in outlying areas that provide better quality of life. These improvements, together with rising car ownership and restricted main routes of access from newly developed suburban districts to central business districts, have resulted in significant traffic congestion and increased commuting times. As a result, Santiago's downtown has become a more appealing residential area, especially for single and younger home owners and renters.

 

The upward pressure on prices and rents in this part of Santiago is unlikely to abate anytime soon. According to El Mercurio, none of the 12 projects under construction are expected to be completed within the next year, according to a report. Approximately 15% of units currently under construction are expected to be delivered in 13-15 months, while 71.6 percent are expected to be delivered in 22-24 months.

 

Chile's overall level of real estate operation is still strong. In August, the Index of Real Estate Activity prepared by Portal Inmobiliario reached 256.20 points, up 40% from the same month in 2011.

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