Simon Black with his recommendation for living in Santiago, Chile.
The great value of real estate in Santiago, Chile
by Simon Black
May 31, 2011
Santiago, Chile
As I told Sovereign Man: Confidential subscribers on our monthly teleconference yesterday afternoon, I’ve been focused over the last several months on sniffing out the best deals in Chilean farmland for our planned resilient community. We’re definitely close.
My base in Chile is here in beautiful Santiago, however, and I wanted to take some time today and tell you about the real estate market in the city.
First, you should know that Santiago is a truly fantastic city. In terms of weather, you can hardly beat it: bright, blue sunny skies and a temperate, Mediterranean climate where it hardly rains. And yet, you’re no more than an hour or two from both world-class ski resorts, as well as the beach. (note: the city does have a problem with smog which is worst in the winter time)
Another ‘dreary’ winter day in Santiago, taken from my balcony in El Golf at about 11:50am this morning. High temperature today: 73F.
Furthermore, Santiago is just a nice, clean, modern, first world city… something like Madrid meets Chicago. It’s a pedestrian-friendly city with great mass transit and a privatized highway system. There are parks everywhere among the sprawling towers, and you see locals everywhere enjoying a coffee in the city’s numerous cafes and eateries.
(as an aside, Santiago has something you won’t find in too many other places in the world… a concept called ‘cafe con piernas’ or coffee with legs. Think of it as a combination of Starbucks and Hooters…)
Most of all, this place is civilized; Santiago is devoid of the sort of destitute squalor you would expect of a Latin American capital. Obviously some parts of town are nicer than others, but overall I find it every bit as nice as Europe or North America with every amenity you could ever want or need, and all at a pretty nice cost of living discount.
Compared to what I’ve seen elsewhere around the world, real estate in Chile (and Santiago in general) is a relative bargain. Bear in mind, I think about real estate in terms of square meters, which for our metric challenged readers is 10.76 square feet… so a 1,500 square foot 3-bedroom home is about 140 square meters.
My unequivocal, universal standard for ‘cheap’ residential real estate in big cities is $1,000 per square meter. It’s really hard to find this anymore in the world. Ecuador comes to mind– there are a number of good quality properties in Cuenca and Quito for $1,000 per square meter.
I’ve also seen a number of existing condos in Medellin, Colombia for this price, as well as parts of the Yucatan peninsula in Mexico (such as Merida).
In parts of Santiago, it’s possible to find some bargain properties for $1,000 per square meter. In the area around Parque Forestal near in the center of town and the Bellas Artes district, you can find some lovely older properties for between $1,000 to $1,200 per square meter.
The construction quality is excellent– these buildings are solid concrete, built to last… and they’re huge too. You can find many apartments in excess of 300 square meters (3,225 square feet) with a beautiful view overlooking the area’s numerous parks.
The neighborhood is undergoing a gentrification process and is becoming popular now with young professionals, the art crowd, and Santiago’s rapidly growing gay community… the triumvirate of a promising real estate market.
It’s also a protected, historic area, so the chances of a new eyesore going in anytime soon are slim.
Property taxes are a joke; owners might pay $40 to $100 per year in taxes on a reasonably-sized apartment, while rents command a 6% yield at present. I expect the rental yield to increase over the years, along with property values, as supply is constrained and demand is increasing.
In other parts of Santiago– the upmarket areas of Vitacura, Las Condes, La Dehesa, or Providencia, property prices can run between $2,000 to $3,000 per square meter. This is much more expensive than downtown, but it’s still quite reasonable to what I’ve seen elsewhere in the world, including in Argentina and Uruguay.
Even in Asia, which has some of the cheapest cost of living on the planet, it can be hard to find good quality construction for less than $2,000 per square meter. In Bangkok, many upmarket properties sell for in excess of $5,000 per square meter, no doubt a bubble fueled by cheap credit and Chairman Bernanke’s exported monetary inflation.
Santiago has been much less prone to such speculative bubbles; the central bank here has taken rather steps to both hike interest rates and allow the peso to appreciate. In the face of coordinated currency devaluation and exchange rate games in just about every other country on the planet, these are undoubtedly bold moves.
The peso is now near its 10-year high against the dollar, and the central bank’s benchmark interest rate is 5%. In the Greek-induced financial system meltdown part II that I expect to occur over the next 2-years, Chile will consequently emerge as one of the safe havens (i.e. least scathed countries) because of the responsibility it is taking now.
Smith-n-Jones says:
This guy needs to get out more. Santiago definitely DOES have epic third-world type squalor. My in-laws live there (courtesy of a mega-huge engineering firm headquartered in SF), so my wife and I visit whenever we can. They have a 2500 sq. ft. apt on the 10th floor of a nice apt. building, 4 bdrm, 3 bath, all very elegant and they rent it for about $3000 a month. The inner city is full of gleaming high-rises, relatively safe streets and it is very pretty. But the outer parts of the city are dangerous, squalid, and very, very ugly. You just have to go 10 miles or so outside the city center. I agree that if you never leave the inner sanctum of the high-rent part of Santiago, it is quite nice. Did I mention the pollution is devastating? Gas is much more expensive than anywhere in America, and there are no grocery stores worth a crap. Food is expensive and choices are few. Clothes and most consumer items are really expensive. A nice pair of Levis will set you back $75 if you can get a sale. And it DOES rain there. And that quick ride to the coast? Forget it. There are no interstates to whisk you there. A trip to the coast, just 45 miles or so away, can easily take a big part of your day just getting there. It also costs $150 for an entrance visa into Chile and there is a surprising amount of bureaucracy getting around in the country. And it does partake of the official corruption so typical of Latin American countries. You need to spread a few bribes to get much business done, just be subtle about it.
All that considered, I actually like the place a lot, and have very fond memories of the times we have spent there. It’s just that this guy drooling over the place sounds like Jim Cramer selling stocks. He obviously is not a disinterested observer. He must have some sort of deal going to misprepresent what that country really is like.
It’s a great place, and it’s on my short list of places I may want to flee to is TSHTF in America, but let’s be honest, it ain’t Beverly Hills.
Well-loved. Like or Dislike:
9 
2
31st May 2011 at 1:01 pm
bluestem says:
$ 100.00 a sq. ft. for housing? That’s not cheap. John
Like or Dislike:
0 
0
31st May 2011 at 2:32 pm
Oscar Mannheim says:
I live “next door” to Chile and haven’t been there since 2009, but I’d have to agree with the above comment: Mr. B is in some way “talking his book,” whatever it may be. Chile is becoming more and more expensive. I’ve spent more time in the south than elsewhere, but I was very impressed with the neatness of things and the Leader supermarket was very well stocked, at least compared with the neighboring nation to the east. There are many with a good work ethic. For those who like being “beneath the radar,” rural Argentina and Uruguay have certain advantages, but one has to be prepared for an austere lifestyle having very little in common with what I remember of the USA, where I’ve not been in 13 years now. I sometimes bridle at how all the expat-promo sites seem to favor trying to duplicate a US lifestyle on the cheap; it won’t work in the long run and could actually prove risky. Then again, unless you already have some bucks or a steady income, you won’t be getting permanent residency in any case.It’s a tough call.
Like or Dislike:
1 
0
31st May 2011 at 2:36 pm
Reverse Engineer says:
Simon Black is another Doug Casey filthy rich Expat who bloviates all the time about Chile. The likelihood is Simon has a deal with the corrupt Chilean Goobermint and gets a piece of the action for every filthy rich Pigman he gets to move to Santiago. Just like Casey, he is completely unaware of the grinding poverty surrounding his little enclave of other filthy rich Pigmen. When the lights go out in Cheeelay, Nazis like “Sovereign Man” and Speedy Gonzalo are going to get their nuts roasted over an open fire. Idiots.
RE
Well-loved. Like or Dislike:
15 
5
31st May 2011 at 2:45 pm
Welshman says:
100.00 per Square Foot for well built housing in the inter-city is quite reasonalble.
Like or Dislike:
0 
0
31st May 2011 at 8:09 am