A Six-Bedroom Concrete Light Box in Santiago, Chile
$1.3 MILLION (1 BILLION CHILEAN PESOS)
This modern six-bedroom house is on a residential street in Lo Barnechea, an upscale commune on the outskirts of the Santiago metropolitan region, in central Chile.
The 3,445-square-foot concrete house was built in 2005 on a terraced quarter-acre lot, with floor-to-ceiling windows designed to maximize views of the Andes mountain range from many of the rooms, as well as from the spacious patio and two-level garden.
The front entry hall leads to a door that opens to the patio and garden. An office with access to the garden is on the right, and the living room, dining room and kitchen are on the left. The living room, with Brazilian hardwood floors, is separated from the adjoining dining room by a few steps and a low stone wall with a fireplace. Both rooms look out to the garden, the L-shaped pool and the mountains beyond through floor-to-ceiling windows, as does the office. A half bath for guests is near the entrance.
The spacious kitchen — which opens onto a courtyard leading to the home’s three parking spaces, as well as to the entrance hall and a bright, airy passage to the dining room — has marble counters, a center island and an adjacent room for laundry and storage. Beyond the laundry room are two staff bedrooms and a staff bathroom.
An open wood staircase near the entrance ascends to the second floor, which has four bedrooms, each with mountain views. The main bedroom suite has a walk-in closet and doors to a terrace overlooking the garden. The other three bedrooms share two bathrooms.
The house has a security system and radiant heating. Stepping down from the covered rear patio, the landscaped garden has a flat lawn, and the pool occupies the property’s third and lowest tier.
Santiago, Chile’s capital and largest city, with about 6.7 million residents, sits in a valley surrounded by the Andes and the Chilean Coast Range. The Lo Barnechea commune, in the northeast corner of the city, sits at the feet of the Andes and offers skiing, horseback riding, and hiking at Cerro del Medio Park. Arturo Merino Benítez International Airport is about 25 miles west.
Chile’s residential real estate market has seen years of steady growth stall recently, first with a wave of protests over inequality that turned violent in late 2019, then with the coronavirus pandemic.
Yuval Ben Haym, the regional director of RE/MAX Chile, said Chile is now in the midst of a buyer’s market. Citing RE/MAX data, he estimated that prices across Santiago have fallen about of 3 to 4 percent since early 2019, though he noted that a government stimulus allowing buyers to tap pensions for real estate purchases has helped stabilize the market.
Developers of new homes are lowering prices to compete for buyers as a result of the pandemic, which halted construction for months, he said: “Developers need speed of sales to be profitable as they have high-interest loans.”
A recent report by the research division of Yapo.cl, an online marketplace, found that in the second quarter of 2020, there were 46 percent fewer houses and 35 percent fewer apartments for sale across Chile (where the market is heavily weighted by the greater Santiago area), compared with the same period in 2019. Demand also dropped from the first quarter of the year: 29 percent for houses and 35 percent for apartments, compared to the first quarter of this year.
Another report on the second quarter of 2020 by Portalinmobiliario, a Chilean real estate portal, found similar reductions in supply across Santiago, but also showed a slight uptick in prices, with apartments up over 4 percent and houses up around 3 percent. The average price for two-bedroom apartments across the region in the second quarter were highest in the commune of Vitacura (a neighbor to Lo Barnechea), at 10,762 UF ($393,800), and lowest in Puente Alto, in Santiago’s southeast corner, at 1,270 UF ($46,500).
(Chile uses the Chilean peso, but the real estate market uses the UF, “an indexed type of noncirculating currency which adjusts daily and automatically for inflation so that value remains constant,” said Macarena Laso Aguirre, a partner at the Santiago law firm Morales & Besa, in an email.)
Mr. Ben Haym said the pandemic has shaken up the market, though he expects an imminent course correction. “If they can, people are waiting to see how things turn out before they buy, with this level of demand reduced the prices reduced too,” he said. “I’m sure the next couple of months are going to be compensating for the reduction that we saw in the last couple of months because of the coronavirus.”
(As of Sept. 29, Chile had reported 461,300 cases of Covid-19 — a much higher rate per capita than neighboring Bolivia and Argentina, and higher even than Brazil’s — and 12,725 deaths, according to The New York Times’s coronavirus map.)
Santiago’s high-end market has been stable for decades, said Luis Novoa, the CEO of Chile Sotheby’s International Realty. He estimated the average asking price among properties with his agency is about $800,000, or $330 a square foot.
The social unrest that erupted last fall initially led to an increase in supply of high-end properties, as affluent homeowners decided to sell vacation homes, but that trend has slowed, Mr. Novoa said. Now buyers are awaiting the results of a coming national referendum in October. Investors, though, have started to jump on properties with price cuts, and some are buying sight unseen. These conditions are also emboldening high-end buyers to offer well below asking price.
Across Chile, luxury prices range between $750,000 for a family villa in Santiago to $20 million for select properties in Patagonia, said Martin Rivera Saez, the director of Alto Andes, a luxury agency based in Santiago. But there has been a shift in what is deemed to be luxury, he added. In the past, buyers wanted “large mansions with luxurious finishes, located in areas with privileged views.” A few years ago, the “concept began to change,” and buyers began to seek “less ostentatious” apartments that are easier to maintain.
Because land for new developments is scarce, “we have seen a vertical densification,” with large single-family properties being replaced by high-end condominiums with seven to 10 dwellings, Mr. Novoa said. Meanwhile, areas “with large spaces and better quality of life” are increasingly in demand with the upper middle class.
For example, Mr. Rivera said the pandemic has accelerated interest in the country’s southern region, with his firm seeing a 40 percent spike in transactions there between March and September, compared to the same period last year.
Who Buys in Santiago
About 95 percent of buyers in Santiago, as in Chile in general, are Chilean, Mr. Rivera said. Foreigners who move to Santiago are typically relocating with jobs in the mining, forestry, agriculture or fishing sectors, and they tend to come from China, Spain, Italy, the U.S., Australia and Britain.
Mr. Novoa said that the exchange rate makes it a good time for foreigners paying in dollars to buy in Chile. “However,” he said, “we have not seen changes in the flow of foreign buyers.”
Buyers in the south include Chinese investors and Chilean entrepreneurs or start-up employees who are buying primary residences, Mr. Rivera said, many searching for good schools and “a better quality of life.” The growth of e-commerce and remote work has also fueled this movement away from Santiago.
Most foreigners can purchase real estate in Chile without restriction, although citizens of neighboring countries are prohibited from buying in areas near international borders, said Ms. Laso, the partner at Morales & Besa. Transactions are handled by notaries. Attorneys’ fees vary based on the transaction’s complexity. For a straightforward title review and purchase deed draft, the fee should not exceed 1 to 3 percent of the purchase price.
Prices and loans are set in UF but paid in pesos according to the UF rate on the date of payment. “This means that, effectively, the inflation risk is passed to the buyer/debtor of a property,” Ms. Laso wrote.
Languages and Currency
Spanish; Chilean peso (1 CLP = $0.0013)
Taxes and Fees
Closing costs when a home is bought with a mortgage are between 0.7 and 1.2 percent of the purchase price, not including the commission and attorney fees, Ms. Laso said. Costs are lower if a purchase is paid in cash.
Commission, split between the buyer and seller, is typically 4 percent of the purchase price, and there is a 19 percent value-added tax levied on that commission.
“If no realtor is involved, which is fairly common, no commission is paid,” Ms. Laso wrote.
María Angélica Errázuriz Gubbins, Chile Sotheby’s International Realty, 011-56-2-3224-4491; sothebysrealty.com