Chile Property Investment News

Chile’s emerging middle class demands property

Chile is coming close to abolishing poverty and its emerging middle class is demanding better quality accommodation, giving rise to a marked interest in investment property in Chile. Poverty has fallen further and faster in Chile than anywhere else in Latin America, fuelled by sustained economic growth and job creation since the mid-1980s. The number of people suffering extreme poverty is down by a third since 2003. Benito Baranda of the Chilean charity Hogar de Cristo states, “Defeating material poverty is a mission well on the way to being fulfilled in Chile”.

The last ten years have seen improvements to the infrastructure of Santiago, Chile's capital, including to its roads and waterworks. On the back of these improvements, the newly emerging middle class is also demanding improved housing, a demand which is of great interest to real estate investors in Chile.

A new middle class is indeed emerging across much of Latin America due to the fast economic growth, low inflation and expanding credit that is seen in many countries on the continent. For example, Brazil has seen the rapid emergence of a middle class due to the country’s economic stability. This middle class, as in Chile, is part of a growing mass consumer market, one that is increasingly taking advantage of the credit that has returned following fallen interest rates. While credit is not as freely available in Chile or Brazil as in developed countries, availability is growing quickly. While consumer loans tend to initially be for cars and durable goods, they are then for mortgages to facilitate the middle classes’ desire to improve the quality of their accommodation and to become homeowners.

The advent of this relatively affluent class promises to transform not only the real estate market in these countries, but also the political situation.