Rental / Real estate bubble in parts of Santiago

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Is there a rental bubble in Santiago?

Yes
3
75%
No
1
25%
 
Total votes: 4

Donnybrook
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Re: Rental / Real estate bubble in parts of Santiago

Post by Donnybrook » Tue Oct 09, 2012 7:36 am

I'll gather my thoughts and PM you so as not to divert from the topic at hand.

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Fugger
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Re: Rental / Real estate bubble in parts of Santiago

Post by Fugger » Tue Oct 09, 2012 9:06 am

admin wrote:So, as far as the residents of those neighbourhoods going broke any time soon, not going to happen as long as the rest of the country is flush with cash. Last time I was in one of the more desirable building in los condes, about a month ago, everyone had two parking spaces, two vehicles for each parking space, and most of the vehicles where very European / customized / exotic / and / or really frigen expensive. There is no shortage of money going around those neighbourhoods. The more precise problem is who can afford to live there.
Bubble tend to take longer that most consider possible and I don't believe we will see a pop with copper above 3 USD per lb.

Interesting comment on luxury building in Santiago. This is actually the area which in my view is least bubbly. I was visiting a friend in a building in Las Condes which had received some press when launched in 2008 (http://www.capital.cl/coffe-break/full- ... s-premium/, http://www.economiaynegocios.cl/noticia ... p?id=64188, http://www.economiaynegocios.cl/noticia ... p?id=78116).

Apparently (4 years after construction) and despite all the publicity to the contrary still less than 50% of the apartments are sold and rental yields for the large 650 m2 units apparently are as low as 3.5%. Note that I wasn't able to reconfirm these statements, but it definitely seemed plausible.
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otravers
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Re: Rental / Real estate bubble in parts of Santiago

Post by otravers » Tue Oct 09, 2012 9:44 am

The high-end of the market remains very thin, and quite cheap by international standards:
http://www.elmostrador.cl/noticias/nego ... de-ventas/

For one, there's a lot of money in Brazil and Argentina that might end up in Santiago where it may be greeted more warmly eventually - though right now a lot of that LatAm money is pouring into Miami. If you think there's a bubble in Santiago, you haven't looked at Sao Paulo.

I think that some pockets in the Chilean market have been getting ahead of themselves in the short term, yet there's still good long-term potential for appreciation. Germany and Japan had stagnant real estate prices for long periods of time, but they're much older countries, and in the case of Japan, that was coming out of a huge bubble. In the US the Fed pulled all the stops to prevent the market to clear, and housing prices to this day have only lost about half of their growth from pre-bubble levels (i.e. prices have lost a lot from the 2005-2006 levels, but they're still ahead of their ~2002 levels). I think that at least some of the recent appreciation in Chile is now built in, if only because of rising wages and the fact less desirable land (i.e. located in the sought neighborhoods) is available.

The one sure sign that you have a housing bubble is very depressed price to rent ratios. I don't think we have that right now. But if the market is flooded with empty properties then obviously there's going to be pressure on rents and resell values. So far we sat out of buying a small apartment to rent it out because it felt like too many builders where putting product out there for small investors like ourselves. But the bottleneck for many is access to a mortgage, so it's difficult to figure out the whole equation.

Chileans are going to figure out, like our friend Zeronz, that life in the burbs is not that nice once you factor in horrendous commutes (I lived and worked for years in the Paris metro, so I've been there and done that to an extent that makes Santiago traffic look like a breeze). This will put downward pressure on the sprawling, nondescript, remote parts of Las Condes, and the better located parts closer to the center (Vitacura, Providencia, Ñuñoa) will continue rising in relative value. Living in La Dehesa is like living in Rambouillet (posh town south of Paris): close to the capital in kms by bird's flight, yet far in time spent at rush hour. They're even building office buildings up there now so people don't have to commute. But you'll be stuck in a place without much to offer for a night out.

In short, it's a muddled situation that is hard to read and mixes mini-bubbles with pockets of affordable value, depending on location, property type, and your time horizon.

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Fugger
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Re: Rental / Real estate bubble in parts of Santiago

Post by Fugger » Tue Oct 09, 2012 12:15 pm

I know Admin doesn't like the price per square meter metric, but thought it might be interesting to look at data for used apartments in Las Condes, comparing purchase price for used and new apartments and rentals.

First graph in this mini series looks at prices relative to surface for all used Las Condes condos currently offered for sale (approx. 2000 units). The dots in red mark those were "metro" appears in the description. It appears that for smaller units, this demands a slight premium.
lascondes_condo_prices.png
lascondes_condo_prices.png (27.99 KiB) Viewed 1182 times
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otravers
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Re: Rental / Real estate bubble in parts of Santiago

Post by otravers » Tue Oct 09, 2012 1:16 pm

Fugger, may I ask where you got the source data for that chart? Do you have a scrapper that knows how to pull it off portalinmobiliaro, or is there a feed or CSV somewhere?

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Re: Rental / Real estate bubble in parts of Santiago

Post by Fugger » Tue Oct 09, 2012 2:38 pm

otravers wrote:Fugger, may I ask where you got the source data for that chart? Do you have a scrapper that knows how to pull it off portalinmobiliaro, or is there a feed or CSV somewhere?
I wish I had. My little secret is that my 11-year son does some "research assistant" work for me in order to boost his monthly allowance :wink:

The data for the graph is here: http://www.mediafire.com/view/?qsnbjdgzv0li56j
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otravers
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Re: Rental / Real estate bubble in parts of Santiago

Post by otravers » Tue Oct 09, 2012 3:10 pm

Thanks, that's a funny one! Using your son as your local Mechanical Turk to mass copy/paste into Excel puts a big smile on my face. I want to try that on my daughter (12 later this month), what pricing worked for you? I'm betting her reaction will be "boooring / too cheap".

Google got a promising scraper called Needle when they bought ITA but they killed it a few months ago. It would make sense for them to resurface that functionality in Google Refine and/or Fusion Tables but Google is a weird company these days, who knows what they'll do. I have found most web scrapers to be pretty brittle, some people program their way out of such projects in Python but that's not in a skillset. Cheap grease elbow works too, kudos to you!

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Re: Rental / Real estate bubble in parts of Santiago

Post by Fugger » Tue Oct 09, 2012 4:45 pm

otravers wrote:Thanks, that's a funny one! Using your son as your local Mechanical Turk to mass copy/paste into Excel puts a big smile on my face. I want to try that on my daughter (12 later this month), what pricing worked for you? I'm betting her reaction will be "boooring / too cheap".

Google got a promising scraper called Needle when they bought ITA but they killed it a few months ago. It would make sense for them to resurface that functionality in Google Refine and/or Fusion Tables but Google is a weird company these days, who knows what they'll do. I have found most web scrapers to be pretty brittle, some people program their way out of such projects in Python but that's not in a skillset. Cheap grease elbow works too, kudos to you!
Thank you. Curious to hear, whether this will work for your daughter.

For "serious stuff" where the brute force copy/paste approach doesn't work, I have access to a Python programmer in the company.

I guess the comparative advantages of children have moved away from mowing the lawn to other areas :). Our weekly allowance is CHF/USD 1 per grade per week (i.e. he is 5th grade so he gets CLP 2'500 per week) on an unconditional basis, which is more or less sufficient to pay his cell phone bill. I also pay the same amount for work on an hourly basis (i.e. CLP 2'500 per hour). However, I noted that he started to game the system a little bit and his efficiency has decreased by billing more hours for the same work, so I probably will have to change to a task based compensation. Nevertheless, I like spending this time together and he almost certainly takes away something in terms of analytics and data management skills.

At the danger of hijacking the threat, what do you guess are appropriate allowance levels in Chile?
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zer0nz
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Re: Rental / Real estate bubble in parts of Santiago

Post by zer0nz » Tue Oct 09, 2012 4:55 pm

Fugger wrote:
otravers wrote:Thanks, that's a funny one! Using your son as your local Mechanical Turk to mass copy/paste into Excel puts a big smile on my face. I want to try that on my daughter (12 later this month), what pricing worked for you? I'm betting her reaction will be "boooring / too cheap".

Google got a promising scraper called Needle when they bought ITA but they killed it a few months ago. It would make sense for them to resurface that functionality in Google Refine and/or Fusion Tables but Google is a weird company these days, who knows what they'll do. I have found most web scrapers to be pretty brittle, some people program their way out of such projects in Python but that's not in a skillset. Cheap grease elbow works too, kudos to you!
Thank you. Curious to hear, whether this will work for your daughter.

For "serious stuff" where the brute force copy/paste approach doesn't work, I have access to a Python programmer in the company.

I guess the comparative advantages of children have moved away from mowing the lawn to other areas :). Our weekly allowance is CHF/USD 1 per grade per week (i.e. he is 5th grade so he gets CLP 2'500 per week) on an unconditional basis, which is more or less sufficient to pay his cell phone bill. I also pay the same amount for work on an hourly basis (i.e. CLP 2'500 per hour). However, I noted that he started to game the system a little bit and his efficiency has decreased by billing more hours for the same work, so I probably will have to change to a task based compensation. Nevertheless, I like spending this time together and he almost certainly takes away something in terms of analytics and data management skills.

At the danger of hijacking the threat, what do you guess are appropriate allowance levels in Chile?
If you have time you could do this with chile autos to find out what cars hold there value the best so expats who only want to buy a car for 2 years know what model will lose the least amount of money......

just an idea,

also

wouldnt be hard at all to make somehting to pull the data from portalinmobiliario.com the basic results form the query have alot of extra info it too...

'[{"GrupoProductoID":"2","ProductoID":"1369989","TipoID":"1","Destacado":"0","NombreEmpresa":"","Nombre":"","Direccion":"Eliodoro Yáñez / Manuel Montt\,","Moneda":"","Precio":"$ 95.000.000","PrecioDesde":"4.203","PrecioHasta":"4.203","Superficie":"85&nbsp;m<sup>2</sup>","Programa":"1 y 2 dormitorios","Empresa":"","className":"","Imagen":"http://image.portalinmobiliario.cl/Port ... 3758180812"},

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Fugger
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Re: Rental / Real estate bubble in parts of Santiago

Post by Fugger » Wed Oct 10, 2012 4:13 pm

zer0nz wrote: If you have time you could do this with chile autos to find out what cars hold there value the best so expats who only want to buy a car for 2 years know what model will lose the least amount of money......

just an idea,
Will see what I can do.

In the meantime used and new condos in comparison (Las Condes only):
used and new condo prices in las condes.png
used and new condo prices in las condes.png (28.03 KiB) Viewed 1171 times
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Re: Rental / Real estate bubble in parts of Santiago

Post by admin » Wed Oct 10, 2012 5:14 pm

Dang, your son could be really useful. We could use a department of statistics around here. Normally we just make this stuff up, because we are too lazy to dig through the source material.

Just keep him away from the U.S. federal reserve. The economy would collapse from too much relevant information to base decisions on.
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Fugger
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Re: Rental / Real estate bubble in parts of Santiago

Post by Fugger » Fri Oct 12, 2012 9:56 am

Happy to assist. Unfortunately during day time he is at school and most of the time he prefers to do other things in his free time (like playing soccer)...

Your comment about the Fed is funny.

So until I get the rental data, I have to extract more juice from the real estate prices. What I missed in the first two graphs is the significant differential between DFL-2 and non DFL-2 departments, which is visualized in the following graph:
dfl-2 condo prices in las condes.png
dfl-2 condo prices in las condes.png (28.54 KiB) Viewed 1165 times
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