Chile property: Pro-business Santiago lures foreign entrepreneurs
Santiago, the sprawling capital of Chile, enjoys a Mediterranean-like climate and is a couple of hours’ drive from the Pacific Ocean to the west, and winter sport resorts in the Andes to the east. Despite its seemingly idyllic location, it is, like many areas in Chile, prone to earthquakes – hence the strict building code that was introduced following a devastating 9.5 magnitude quake in 1960. The code is credited with protecting many Chileans when an 8.8 magnitude quake struck off the coast of central Chile in 2010.
Earthquake-protection techniques are just one reason why greater Santiago, which has a population of 6.3m, is revelling in confidence these days. A strong economy and stable political system have also helped. The most visible result is the Gran Torre (Big Tower) of the Costanera Center in the Providencia district, a 300-metre office block in Santiago’s gleaming new business and financial centre – the tallest building in South America. The $1bn centre also contains South America’s largest shopping mall.
In spite of the global financial crisis, the average price of a home in Santiago rose by 15 per cent in real terms between the second quarter of 2008 and the same period in 2012, according to BBVA Research, which describes the city’s housing market as “dynamic”.
However, according to estate agent Carolina Lippi, some high-end homes in the affluent, eastern comunas, or city districts, of Vitacura and Las Condes increased in value by 25 to 30 per cent in the past two years (Providencia and Lo Barnechea are the two other upmarket districts in the city).
“There are hardly any limits on getting home loans these days and property is seen as a safe investment. Building plots in the most coveted areas are getting so scarce that people are buying old buildings, tearing them down and building something higher,” says Lippi.
One property on sale in Vitacura at present is a five-bedroom, seven-bathroom detached house built in 1995, with an infinity pool, a separate apartment for guests and mountain views. The property is being marketed by Inmobiliaria Poseidón for 65,000 UF ($2.92m). There is little residential property advertised publicly in Chile above this price level.
The Unidad de Fomento is a separate unit of value linked to the Chilean peso and which constantly adjusts with inflation. It is used to price most real estate (and loans, too).
Another example is a four-bedroom, four-bathroom penthouse apartment overlooking Los Leones golf club in Las Condes, with a heated pool and five parking places, on sale for 63,500 UF ($2.85m) via 3C Propiedades.
Beyond Vitacura – and a 45-minute drive from the business and financial centre – a recently built, hacienda-style mansion in the Arrayán sector of Lo Barnechea, with 500 sq metres of living space on a 5,600 sq metre plot is being offered by Lippi Propiedades for 25,000 UF ($1.12m). The house has an outdoor pool and accommodation for staff.
Half a century ago, land in Vitacura was mainly given over to grazing cattle; now it is the epicentre of fashionable Santiago, with restaurants like the minimalist Boragó, where diners can eat dishes flavoured with foraged herbs and edible flowers, or shrimp dangling from a bonsai tree.
Chile’s rigid class system has its own impact on the local high-end property market: extended families tend to stay in the same district, and a lot of property is passed on within families, or pushed discreetly at country clubs or the driving range (or, indeed, advertised less discreetly on Facebook and other social media sites). As a result, up-and-coming neighbourhoods derive much of their buzz from incomers. Good examples include the bohemian district of Bellavista, with its eclectic dining scene, and Bellas Artes, a central district of trendy bars, cafés and markets.
Santiago’s historical downtown, meanwhile, has some attractive French-style neoclassical buildings but it is rather scruffy: in September the authorities introduced new rules to clamp down on the many unauthorised street vendors there.
A renovated three-bedroom, two-bathroom 98 sq metre apartment in Bellas Artes is on sale for 4,500 UF ($202,500) through the Procasa agency.
Nathan Lustig, 28, is an entrepreneur from Milwaukee, US, who came to Santiago in 2010 under the government’s Start-Up Chile programme, which offers grants to promising new businesses, both foreign and Chilean, who set up in the country. Many are in the ecommerce, biotechnology and finance sectors. “Santiago is the most livable city in Latin America and there is wonderful hiking on your doorstep,” says Lustig. “Business-wise, there may be some extra bureaucracy here [compared with the US], but the rules are understandable and you feel confident that they are not going to change suddenly.”
Over the past four years, Start-Up Chile has brought between 800 and 900 overseas entrepreneurs to Santiago, according to the programme’s communications manager, Maite Larraechea.
“There is now a real cluster of young foreign entrepreneurs in Bellas Artes,” says Lustig, who has opened Andes Property, a company offering furnished units to the steady stream of expat arrivals in Santiago.
Lustig’s main gripes are air pollution and petty crime, while the distance from home is also a drawback: “It takes 14 or 15 hours to get to Wisconsin. On the other hand, if you are doing business with New York, or just watching sports or talking with friends there, there is no time difference in the southern winter, and only two hours difference in the summer.”
“Santiago couldn’t be more different from Buenos Aires,” says David Chevalier, 30, an engineer from Nantes, France, who moved to Santiago three months ago. “Superficially, there are streets in the [trendy and gentrifying Buenos Aires] district of Palermo which look like streets in Bellas Artes and Bellavista. But the big difference is the foreigners who come to Santiago are not here to spend money, they are here to make it.”
● Estate agents’ commission is usually 2 per cent of the sale price, paid by both the buyer and seller
● Smog is a problem in the city, especially during the winter
● Violent crime in downtown Santiago fell by 17 per cent during 2012, according to the country’s interior ministry
● Flights from New York to Santiago take about 11 hours from New York and 15 hours from London
● Average temperatures range from about 9C in July to 20C in January
What you can buy for . . .
$100,000 A one-bedroom apartment in Bellas Artes or Bellavista
$1m A three-bedroom new-build apartment in Las Condes
$3m A modern five-bedroom house on 3,500 sq metre plot in a prime location in Vitacura