Chile Forum

If you look around the world at real estate in coastal "resort" markets like Florida, Spain, Bulgaria, Mexico, etc., all of them are reportedly overbuilt, and property prices are soft with a buyer's market in full swing. For example in Florida, you can purchase condos that originally sold for $300K in 2007, for $110K now. What's the word on vacation properties in Chile? When we stayed at a place near Algarrobo in October, it was literally empty with only maintenance workers and a few security guards. A walk on the beach at night showed only a few lights on -- where are the residents? With hundreds of condos in ten buildings, in the three days of our stay we saw just one other couple, and they were visiting from China. The really odd part is the sales office claims most of the units are sold. Are Chileans so wealthy that they can afford to buy these beachfront condos and never use them? What do you see happening with real estate prices in 2010?

I was recently told by a friend in Santiago that it's fashionable to own a place in San Alfonso Del Mar, "just to say you have it".
Oct isn't exactly high season in region V but the sales of lots, cabanas and apts along the coast seems to be still brisk.

October is your problem. No one vacations in Oct in Chile. If they are empty right now, at the start of the traditional Chilean vacation season and through Feb, then that resort area is in trouble. Yes, many Chileans can afford to buy places and just sit on them for speculation and vacation.

I am in vina right now, and there is no shortage of people, but there is a shortage of places to buy or rent right now. Yea, last year put serious crimp in development, but not like much of the world. The south American and internal market did not get hammered nearly as bad as the rest of the world. also a lot of the developments did serious cuts to liquidate the over capacity.

admin wrote:October is your problem. No one vacations in Oct in Chile. If they are empty right now, at the start of the traditional Chilean vacation season and through Feb, then that resort area is in trouble. Yes, many Chileans can afford to buy places and just sit on them for speculation and vacation.

We knew October wasn't a busy month, but another couple who stayed there in early December reported the same thing - a ghost town with none of the on-site stores or restaurants open. The sales office claims that everything is OK, but I don't see how a place that large can be successful if it's empty ten months of the year.

It can really be packed in Viña during the summer, with all the people coming from Santiago. Wait till the Argentinians arrive...

The reason those places moved the last couple of years is because they dropped the prices, and also a lot of them were bought "green" at big discounts before they built. The interest rates got dropped also this year on savings accounts and at the same time the interest you pay for a mortgage. In fact, the head of the central bank is encouraging people with existing consumer debts to refinance at the lower rates this year. So, lots of people took their money out of the bank and bought real estate. There is a lot of speculative and investment buying going on. There are also a lot of foreigners coming in and buying blocks of apartments just to park their assets in a safe country. It is not unusual to have international real estate investors say come in and buy up an entire side of building, and let them just sit empty or rent them out at discounts just sufficient to cover the costs on the places.

A few years ago Vina use to be like that. You would go in to those big high rises on the beach in the off season, and there might only be one or two apartments with people living all year around in them. The buildings would be completely empty during the week, with about 50% occupancy even on the weekends. It still is like that in a certain respect, but now there are more and more people that live in Vina and those resort towns along the coast year around. They are turning in to more than resort towns.

For example my in laws have owned an apartment in vina for about 11 years or so. They have lived there year around for the most part, but they rented it out the last couple of years by the month. They were getting 800,000 a month, fully furnished. They just got it back for the New Year party this year. The whole family went for the party, and we needed another apartment to accommodate everyone. So, we rented another one for 2 days in the same building. It cost 300,000 pesos for a 3 bedroom, 2 bath apartment on the 23 floor for just 2 days (we managed to talk an extra day out of the real estate agent renting it). They rent that same place out to students at around 500,000 -700,000 a month in the down season to foreign students. There was three other places for rent for the New Years in that building ranging from 400,000 - 800,000 for the New year weekend. That definitely helps with the mortgage on those places. So in a resort area if you can get say and average of around 100,000+ a day in the high season, it makes it fairly easy to leave the place empty in the low season.