CHILE UPDATES #6
Zero to 60 in the Path of Development
Zero to 60 in the Path of Development
Date: June 28, 2013
New highways, new bridges, new international mountain passes.
New hardware stores, new hospitals, new coffee shops.
The list goes on and on.
If you happen to travel around Chile’s central regions on a very regular basis these days, you’re probably not surprised when you see these kinds of things springing up all over the place.
It’s hard to think of something they’re not building somewhere in central Chile these days.
But is this real growth? Or is it Artificial?
I remember watching the housing boom in the states back in the late 90s and 2000s, but always being a little bothered by the fact that it just didn’t feel natural.
Here in Chile, that doubt hasn’t ever crossed my mind. The development that’s taking place here isn’t superficial, unnecessary sprawl. It’s more like building the backbone of an economy: essential services and improved products becoming accessible to a growing local market that can afford them.
Ever since first arriving here in 2010, I’ve been spending about 350 days or more per year in the country, traveling throughout its central regions, and doing analysis on land prices, development patterns, and the local culture and history.
In my opinion, it’s hands down the most interesting place in the world to live right now.
Apart from Santiago rapidly becoming THE place to be in South America these days, there just isn’t anywhere else that is going to offer an investor as much upside with as little risk.
Thanks to a number of emerging industries (particularly technology) and the solid legal structure, Chile is probably going to be one of the most stable economies on the planet, even in the event of a major future down turn. At the same time, the potential for big upward price swings in certain sectors of the property market is undeniable.
I’ve literally looked at hundreds upon hundreds of properties for sale since I’ve been here and constantly cross reference prices from all across the central regions. I don’t just look at current prices, I check to see what properties sold for 2 years ago, 5 years ago, 15 years ago, etc.
This gives me a really solid understanding of if an area has already seen much appreciation or if prices are still in the bargain basement.
The Property Market in Chile
Over the last several years, property prices, on average, have been increasing by about 8% to 10% per year in Chile’s central regions but if you know where to look, you can do a whole lot better than that.
Just last evening I was chatting with a local friend of mine, the manager of one of the big timber companies, about some of the upcoming infrastructure improvements in the area. His company provides a lot of support for the local government down here and helps them plan new construction projects, road upgrades, subdivisions, etc.
He was telling me about how just across the river from town, back before the bridge was built about 10 years ago, you could buy a one hectare property for about 1 million pesos, roughly $2,000 USD (a price that is very difficult to find for decent land these days). You had to take a boat to get across from one side to the other and with the shifting sand banks, it was a royal pain in the neck to transport things back and forth.
Zero to 60 (well, 1 to 30 actually)
After they built the bridge, people started buying just on the other side, and a small neighborhood has grown over the years. It’s still quite rural but just a few minutes from town, it definitely does has a certain appeal (the views don’t hurt either). A half hectare lot in the area these days sells for about 15 million pesos (roughly $30,000 USD). That's 30 million pesos per whole hectare, or a 30x increase over the course of 10 years. This comes out to just over 40% per year, every year, uninterrupted for ten years, which is similar to what I’ve seen happen in select markets that I’ve written since being here.
The best thing about these path of development properties is that they really are "passive investments". No need to collect rent from a tenant every month or worry about a bad harvest season.
If you’re aware of these same kinds of returns anywhere else in the world currently, and are willing to share, I’d love to hear from you. Just respond to this email.
Otherwise, you might want to start taking action, now, rather than later. Come down and see Chile for yourself. Join us for one of our first ever property investment/ski tours in August, pick up a copy of the property black paper, or at the very least don’t miss the next edition of CHILE UPDATES.
Have a good weekend,
Sincerely,
Darren Kaiser
New hardware stores, new hospitals, new coffee shops.
The list goes on and on.
If you happen to travel around Chile’s central regions on a very regular basis these days, you’re probably not surprised when you see these kinds of things springing up all over the place.
It’s hard to think of something they’re not building somewhere in central Chile these days.
But is this real growth? Or is it Artificial?
I remember watching the housing boom in the states back in the late 90s and 2000s, but always being a little bothered by the fact that it just didn’t feel natural.
Here in Chile, that doubt hasn’t ever crossed my mind. The development that’s taking place here isn’t superficial, unnecessary sprawl. It’s more like building the backbone of an economy: essential services and improved products becoming accessible to a growing local market that can afford them.
Ever since first arriving here in 2010, I’ve been spending about 350 days or more per year in the country, traveling throughout its central regions, and doing analysis on land prices, development patterns, and the local culture and history.
In my opinion, it’s hands down the most interesting place in the world to live right now.
Apart from Santiago rapidly becoming THE place to be in South America these days, there just isn’t anywhere else that is going to offer an investor as much upside with as little risk.
Thanks to a number of emerging industries (particularly technology) and the solid legal structure, Chile is probably going to be one of the most stable economies on the planet, even in the event of a major future down turn. At the same time, the potential for big upward price swings in certain sectors of the property market is undeniable.
I’ve literally looked at hundreds upon hundreds of properties for sale since I’ve been here and constantly cross reference prices from all across the central regions. I don’t just look at current prices, I check to see what properties sold for 2 years ago, 5 years ago, 15 years ago, etc.
This gives me a really solid understanding of if an area has already seen much appreciation or if prices are still in the bargain basement.
The Property Market in Chile
Over the last several years, property prices, on average, have been increasing by about 8% to 10% per year in Chile’s central regions but if you know where to look, you can do a whole lot better than that.
Just last evening I was chatting with a local friend of mine, the manager of one of the big timber companies, about some of the upcoming infrastructure improvements in the area. His company provides a lot of support for the local government down here and helps them plan new construction projects, road upgrades, subdivisions, etc.
He was telling me about how just across the river from town, back before the bridge was built about 10 years ago, you could buy a one hectare property for about 1 million pesos, roughly $2,000 USD (a price that is very difficult to find for decent land these days). You had to take a boat to get across from one side to the other and with the shifting sand banks, it was a royal pain in the neck to transport things back and forth.
Zero to 60 (well, 1 to 30 actually)
After they built the bridge, people started buying just on the other side, and a small neighborhood has grown over the years. It’s still quite rural but just a few minutes from town, it definitely does has a certain appeal (the views don’t hurt either). A half hectare lot in the area these days sells for about 15 million pesos (roughly $30,000 USD). That's 30 million pesos per whole hectare, or a 30x increase over the course of 10 years. This comes out to just over 40% per year, every year, uninterrupted for ten years, which is similar to what I’ve seen happen in select markets that I’ve written since being here.
The best thing about these path of development properties is that they really are "passive investments". No need to collect rent from a tenant every month or worry about a bad harvest season.
If you’re aware of these same kinds of returns anywhere else in the world currently, and are willing to share, I’d love to hear from you. Just respond to this email.
Otherwise, you might want to start taking action, now, rather than later. Come down and see Chile for yourself. Join us for one of our first ever property investment/ski tours in August, pick up a copy of the property black paper, or at the very least don’t miss the next edition of CHILE UPDATES.
Have a good weekend,
Sincerely,
Darren Kaiser