Vina & China

Chile Investment, how to invest in Chile, what to watch out for when investing, economic issues, currency exchange in Chile, and more.
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JHyre
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Vina & China

Post by JHyre » Tue Mar 21, 2017 10:24 pm

A client sent me this. The people behind evidently promote overseas investment, so it is their job to be "happy-happy". Still, interesting.
Dear Overseas Property Alert Reader,
Lee HarrisonCristian Laborda

Prediction: Chile will soon see big dividends paid to its #1 tourist destination thanks to its standing as China’s closest Latin American ally. --L.H.

For many countries 2016 was a disappointing year. Generally speaking, a number of stable democracies showed real signs of instability and uncertainty for the first time in decades.

For Chile, by contrast, 2016 was an encouraging year.

Chile’s 2016 annual growth rate continued despite an earlier threat of a significant slowdown for the first time since the 2010 global recession. Thankfully, growth rates remained stable due to a strong third-quarter performance from the mining and manufacturing sectors, which exceeded market expectations.

Furthermore, newly released economic forecasts show that Chile will very likely meet or exceed these healthy growth rates through the year 2020. Consumer confidence rose to its highest level in nearly two years, and business confidence also ticked up in the closing months of 2016.

Nevertheless, even with these solid economic numbers, I believe the number one reason why Chile should celebrate 2016 as a success is because it finally received a major uptick in recognition for one of its previously underappreciated sectors: tourism.


Tourism is no longer Chile’s "underappreciated" economic sector

Tourism Has Come Into Its Own In Chile

Chile’s attractions, natural resources, and business offerings have finally caught major attention from foreign travelers, thanks to recent government marketing initiatives and other measures designed to strengthen Chile’s international profile and presence.

In 2015, the World Travel Awards named Chile the Top Adventure Tourism Destination in South America. In 2016, Chile not only repeated its win in the South America category, it was also named Top Adventure Tourism Destination in the World.

Patrick Mendes, CEO of AccorHotels Latin America, recently announced plans to nearly triple the number of its hotels in Chile, an expansion he attributed to Chile’s "dynamic market." Also, this increased international profile has resulted in several European airlines now offering nonstop flights to Santiago from Paris, Rome, Madrid, and, most recently, London—that’s in addition to the nonstop flights already on offer from Sydney and many U.S. cities.

However there is one country in particular, already quite invested in Chile, whose strengthened ties with Chile are particularly noteworthy: China.

Why China Matters So Much To Chile

In addition to being the world’s largest economy, the world’s largest exporter of goods, and one of the world’s largest importers of goods, China is Chile’s largest trading partner. China receives over 25% of all exports sent from Chile, with the number of Chilean exports sent to China having tripled over the last decade.

Moreover, China is by far the world’s largest source of international tourism, and has been since 2012. Chinese travelers have increased their tourism expenditure by double digits every year since 2004. Specifically, according to the most recent U.N. World Tourism Organization highlights for 2015, China sent more than 128 million outbound travelers abroad, who spent a record US$292 billion dollars.

At the end of 2016, Chilean President Bachelet invited Chinese President Xi to Chile to sign several bilateral accords and strengthen free trade zones within the Asian and Pacific regions. This meeting will prove to be important for both Chilean and Chinese interests, since a trade alliance in the Asia-Pacific region could help make China the world’s largest economy and trading power by the year 2021.

But additionally, President Bachelet agreed to waive visa applications and fees for Chinese tourists. This change is expected to increase the number of Chinese tourists visiting Chile by 40% over the previous year, every year for the foreseeable future.

With that in mind, I believe that Viña del Mar will see the greatest immediate impact from the influx of Chinese tourists.

Why Viña Del Mar?

First and foremost, President Bachelet’s decision to host this month’s Pacific Alliance trade meeting in Viña del Mar is telling.

Any time a president meets to discuss diplomatic matters (particularly such important matters as trade agreements) in a location outside of the presidential palace, it should get your attention. And in this case, since one of the goals of this meeting is to expand Chinese tourism to Chile, there was no better place to highlight than Viña del Mar, Chile’s number one tourist destination.


It’s easy to see why Viña del Mar is Chile’s #1 beach destination

Viña del Mar is located 120 kms (75 miles) outside of Santiago, and is the fourth most populous city in Chile. It also borders the second most populous city in Chile, Valparaíso. Both Viña del Mar and Valparaíso are located right on the coast and have Mediterranean climates, with average daytime temperatures ranging from 16°C (61 °F) in the winter to 23°C in the summer (73 °F).

The truth is, I could have written an article about properties in either Viña del Mar or Valparaíso. But I picked Viña del Mar as the better investment option due to its beaches.

Viña del Mar’s beautiful white-sand beaches are what make it Chile’s number one destination for both international and domestic tourism. Walking through the city, you will notice a number of hotels, restaurants, malls, entertainment centers, and even castles right along the coast. These castles and presidential palaces were built in Viña as summer and weekend getaways for wealthy Chileans, and even today, the city still possesses much of that same allure.

Viña del Mar offers tourists the unique option of being able to stay by the beach, while still having easy access to the activities and sights in Valparaíso. The adjacent cities are just a few minutes apart and well-connected by buses and trains.

Editor’s Note: Follow the link to see more about Valparaíso, its lifestyle, and its properties. --L.H.

Essentially, Viña del Mar and Valparaíso are a two-for-one deal for tourists.

Chinese tourists flying such a long way will want the best bang for their buck, and Viña del Mar—when combined with Santiago and Valparaíso—offers them three cities for the price of one.

Here’s How To Capitalize On This Chinese Influx

The best way to take advantage of the opportunities on the horizon is to invest in a desirable Viña del Mar property with easy access to the beach. These properties already see good demand from domestic and foreign renters and buyers, a demand that will increase with increased Chinese presence.

I believe these properties are the best ways to take advantage of this opportunity:

Located directly on the Playa El Sol beach in the city center, this 120-square-meter (1,292-square-foot), three-bedroom, two-bathroom apartment with a terrace could not be in a more attractive location for tourists.

In addition to sprawling city and ocean views, the apartment is within three blocks of the mall, supermarkets, and a dozen restaurants. The asking price is 5,864 UF (US$232,500).

Editor’s Note: The UF is a non-monetary unit of value that translates to a price in Chilean pesos. Follow the link to learn how the UF works. --L.H.

A smaller, 90-square-meter (969-square-foot), three-bedroom, three-bathroom beachfront apartment a few blocks down from the first apartment, with similarly great ocean views and a terrace, is listed for 4,040 UF (US$160,000 at today’s exchange rates). Though further away, this apartment is still no more than a 10-minute walk to all places of interest.

A two-bedroom, two-bathroom, 80-square-meter (861-square-foot) beachfront apartment with a terrace and ocean views in every room, located in the building immediately next to the apartment above, is listed for 4,351 UF (US$172,500 today).

For something larger, a three-bedroom, two-bathroom, 149-square-meter (1,604-square-foot) single-family home, located just south of the city center—though close to stores and restaurants—is listed for 5,108 UF (US$202,500 today), and is located six blocks from the beach.

Viña Del Mar Is A Good Investment Value

Ultimately, Viña del Mar is already a popular place for foreign and domestic tourists in Chile. As such, the properties I suggest above will always be in demand within the Chilean tourism market.

At the same time, it’s clear that Chile has benefitted greatly from its relationship with China and will see further benefits as China’s international profile rises, which gives demand for properties in Viña del Mar nowhere to go but up.

Cristian Laborda,
For Overseas Property Alert

Editor’s Note: Cristian Laborda, a Chilean-Spanish lawyer with a license to practice in both countries, is the founder and Managing Director of Laborda Abogados, a law firm in Santiago, Chile. The firm specializes in providing advice to foreign individuals or companies on real estate, immigration, taxation, investment, relocation, acquisition, intellectual property, and family law matters.

In addition to his functions at Laborda Abogados, Cristian currently works as a consultant in oceanic affairs and other international matters, areas in which he has 10 years of expertise. He was formerly the acting Chilean Delegate and Head of the Oceanic Affairs Department at the Ministry of Foreign Affairs. He is also a member of the American Society of International Law, International Bar Association, Colegio de Abogados de Chile, FCIB Global, United States ALQ, and Alumni Centre INBA.

Cristian has greatly enjoyed being a part of the growth and transformation seen by his home country, Chile, in recent years, and is excited to advise and support foreign individuals and companies seeking to take part in all that Chile has to offer.

Lee Harrison
Editor, Overseas Property Alert

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Re: Vina & China

Post by admin » Wed Mar 22, 2017 8:12 am

ha, ha, ha, cough cough, bullshit. Sounds like they understand neither Vina nor the Chinese.

yea, we get a few of these guys trying our business model out every year. By the time they figure out (or don't) there are a few pieces missing from that model that we don't make public, it is too late. They are out of business.
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Re: Vina & China

Post by JHyre » Wed Mar 22, 2017 8:38 am

I find the idea that Vina real estate can only go up amusing. I think the opposite is true - they have not had a crash and are due for one. Hopefully not one of the more literal sort. The construction (in Con Con for example) seems to be unaccompanied by bigger roads, additional sewers or additional parking. The buildings themselves are presumably sound. For what they are charging, they had better be!

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Re: Vina & China

Post by admin » Wed Mar 22, 2017 11:39 am

yea, another saturated market of apartment buildings in a none-core living area. The first time the Santiago job market turns a little soft, people start dumping their speculative vacation property on the coast they don't really use or need. Renting them is not that easy either, except for a few really high demand times of the year. After that you are left renting to a bunch of college kids. Meanwhile, the developers take 2-3 years to throttle back projects when the market does turn soft, dumping entire buildings worth of new apartments on the market.

I watched an auction a couple months back in con con, of an entire uncompleted (about 50%) building. They hardly got the minimum for it. Con con and vina are in competition for the new middle class, similar to Pucon, that view owning an apartment on the coast as a status symbol more than a good investment. Does not mean they can afford it.

In those markets, if you buy anything less than prime, prime, beach front your risking your investment. A city block more or less, makes a big difference and not all that glitters is gold in Vina. There are a lot of poblacions and just dumps around Vina.
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Re: Vina & China

Post by admin » Wed Mar 22, 2017 11:46 am

and don't forget the new IVA and real estate tax that shot the real estate market in the foot. Santiago had a drop of 38% in sales of apartments. How do you think vacation apartments that cost as much or more are doing?
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Re: Vina & China

Post by admin » Wed Mar 22, 2017 11:47 am

as for the Chinese, if they think Chinese tourist coming to Chile is where the action is at, they don't know the Chinese.
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Re: Vina & China

Post by admin » Wed Mar 22, 2017 12:26 pm

just heard on the news that construction dropped 10% in January (prime building month in Chile), the worst since the sub-prime.
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Re: Vina & China

Post by nwdiver » Wed Mar 22, 2017 8:45 pm

Vancouver is a primary destination for Chinese tourists, Canada is a "preferred" country for Chinese tourists, Vancouver has a 15% Manderin speaking population, has mainland tourism jumped in the last few years? A bit but the travel agents are cutting each other's throats and many locals don't want to deal with the mainlanders, when you see "Chinese tourist" it means mainland China, not Hong Kong, a jump in chile from 0 to 100 to 200 to 400 to 800 to 1600 tourists a year is 100% growth over 5 years ;)

I should grab a few well connected Manderin speaking friends and head to Chile and win big......... Not
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Re: Vina & China

Post by admin » Thu Mar 23, 2017 11:47 pm

My chinese friends in china have a very, very long list of other places to go first.

Imagine you live in a country that almost no one has ever traveled at all, let alone for international recreational tourism reasons. Most of my friends in china with money, watched their grand parents starve to death durring the cultural revolutiin, so they could survive as children.

So now, suddendly, you have the means and motivation to travel. Where would you go first?

Chile?

Vina del mar?

Really?

Hell, i like to consider myself well traveled, and when vacation decision time rolls around vina del mar is not even on the bottom of the places i want to go next in chile, let alone the world. I even lived there for a year, because of family reasons. It is not the worst place in the world, i had a lot of good times there, but hardly my favorite place in the world or chile to vacation.

We had a fully paid for apartment left to us after a family member died, and we could not unload that sucker fast enoughe. Prime. Beach front. We were able to sell it in pretty short order for a fair market price.

Aftet the sale, i compared the original purchase price to the sale price in dollars (what most investors will use), divided by the years it was owned (about 20 years as recall). Guess what a great investment it was?

The return was about 2 to 3% a year. Not considering things like property tax, maintence, building expenses, etv.. It was not a financial loss to us, only because we inherited it. Even being free, we dropped about $10,000 to own it for a year. Fixing things, taxes, building expenses, and so on. We did not even have to pay an attorney nor a real estate agent, because, well we do that for a living.

Our family members that owned it, only did ok because they were living there full time (i.e. not renting).

It will hardly blow your hair back in terms of investments.

Buy a savings bond, a cd, or go looking for some other part of chile with better property investment opertunities.

Again, vina is not a terrible place; just as imternational or even domestic investments go it is not that great.

The chinese that are here in chile are here for very diffrent reasons.
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Re: Vina & China

Post by chinito » Sun Mar 26, 2017 3:08 am

admin wrote: ...

The chinese that are here in chile are here for very diffrent reasons.
+1 for this reply. We los chinos don't do real estate investment here in Chile.

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Re: Vina & China

Post by Bargain Hunter » Thu Jun 08, 2017 1:11 am

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Re: Vina & China

Post by El Chupacabra » Thu Jun 08, 2017 2:59 pm

Bargain Hunter wrote:Admin, if you think in Chile Vina Del Mar is not a great spot for investment, where else apart from Santiago would you recommend for foreigners with a limited budget looking to invest in Chilean real estate?
Yes, I was wondering the same.
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