Mortgages rise and rental housing in Chile is heading for a boom

Within the real estate market, only the issue of parking lots and multifamily are very active. In the last time, we have received requests from insurance companies to buy multifamily”.

Marcos Kaplún, Director of Kayco International Group

The sharp increase in interest rates on mortgage loans triggered the number of residential rental projects in Chile, that is, the so-called multifamily buildings, which are properties owned by a single owner or investor aimed at renting the multiple housing units that house them. make up. And the prospects for this business suggest that it will more than double in the coming years.

According to the Colliers study area, during the third quarter of 2022, the entry of 10 new multifamily buildings was registered, the same number as the last two previous quarters. In addition, there was an increase in units, equivalent to 3,043 apartments.

According to the consultant, this has been the highest historical income of units per quarter, reaching an accumulated inventory of 26,216 units and a total of 114 buildings in operation. “Taking into consideration a three-year horizon from the third quarter of 2019), there is a compound annualized growth of 36% in the number of units,” said the intermediary firm.

It was specified that the entry of new buildings was concentrated in the communes of Santiago, La Florida, Ñuñoa, Las Condes and Quinta Normal. Unlike the previous period, Santiago registered an increase in its participation, from 26% to 28%; It was followed by Estación Central, with 14%, a slightly lower figure compared to the previous quarter.

Additionally, due to the entry of three new buildings in the municipality of La Florida, it increased its participation by four percentage points, reaching 6 percent.

Participation by typology has remained stable in recent years, where one-bedroom, one-bathroom units (1D-1B) continue to lead with 45% of the market, followed by 2D-2B (20%) and 2D-1B , which decreased from 19% to 18%. The average area has also remained constant, around 41 square meters in recent quarters.

In the market, agents agree that the focus of investors is focused on niches that have been most successful during the pandemic, such as -precisely- multifamily, to which the industrial sector has also joined. All this to the detriment of the office market, which is paralyzed.

Thus, it is not surprising the large number of new multifamily projects that will rise in the coming years. According to Toctoc data, there are currently 24.74 units under construction, with 84 building permits, which are expected to come into operation between the third quarter of 2022 and the first quarter of 2026.

But there is more. The consultancy revealed that there are another 66 permits and preliminary projects approved, which would add 22,432 rental units, which are expected to enter the market between the end of 2024 and the fourth quarter of 2027.