Chile's Santiago Office Market Gathering Pace

Chile's economic stability has been undermined by weakening demand for its valuable copper resources in recent years although it now seems that the country's commercial real estate sector may save the day.

Santiago is a capital city in transition, actively seeking to reduce its dependence on copper, one of the main pillars of the nation's economy. With a population of 7 million in a country of 17 million, Santiago is Chile's primary property market.

As Chile shifts its economy from reliance on the mining sector to financial services, retailing and distribution, Santiago plays a vital role in the success of the transition. Copper is Chile's number one source of export earnings and prices have plunged as China's economic slowdown cut demand for copper and other industrial commodities. Chile's economic growth rate has plummeted from around 5% annually to 2% or less in 2015, according to MetLife Investments Chilean office.

Santiago is considered to be South America's deepest, most transparent and best-regulated financial market having a well-developed pension saving and investment system that provides capital for local investment in real estate and other asset classes. Retail powerhouses are driving a new wave of investment in warehouse and logistics property as they up their game at home and expand into new markets from Colombia to Brazil.

Factors such as these have garnered Santiago a listing as a high-potential destination in the Cities in Motion Index 2014, published by IESE Business School in Barcelona, which ranks 135 cities on ten dimensions ranging from human capital and technology to public sector management.

Santiago, which ranked 83rd overall posted scores comparable with more developed industrial cities for its economy, governance, urban planning and public management – all features that affect property markets.

The Chilean capital's real estate market reflects its potential for future performance. Thomas Pablo Verbeken, risk officer for real estate at MetLife Chile said, "Santiago has become a very deep market, mainly in terms of class-A office space". He added that the retail sector is highly developed and the warehouse sector showing strong growth, with a much improved outlook for the rest of 2015.

Residential real estate in Santiago is also showing signs of increased activity on the back of commercial expansion in the capital. The city's luxury market is booming with some top quality developments in the trendiest neighbourhood's of Santiago reflecting fantastic value for money. You can pick up a luxurious 3-bedroom duplex apartment close to the city centre for around €500,000.

Santiago's demographic is changing along with the local economy, with rising numbers of professionals seeking family homes in the city's suburbs. The strongest sectors in Santiago include banking, automotive, chemical & pharmaceutical and Electronics which are firing on all cylinders and rapidly expanding. There is consequently a rising demand for good quality homes for rental and in Santiago, renters tend to be well-paid, highly skilled and interested in long term tenancies which is a great dynamic for property investors.