Will the real estate investment boom of Chileans continue in Miami?
It is known that after the social outbreak in Chile during October 2019, many investors decided to take their resources out of the country. The real estate sector was one of the most coveted, especially in Miami.
Chileans have that city in the United States as one of their favorite destinations, so it is not strange that they want to invest in a home to be able to stay when they travel and take advantage of renting it when they are not there.
According to the latest annual report from the Miami Association of Realtors, foreign homebuyers invested $6,8 billion in residential properties in South Florida in 2022, up 34% from $5,1 billion in 2021. Of these, 6% correspond to Chileans.
If we want to project what will happen in 2024, it is expected that when interest rates begin to fall, the appetite to invest in Florida will increase. Although the number of transactions has currently decreased, prices have continued to rise, mainly due to having a fairly small, historically low inventory. Chilean investors continue to buy, but not at the pace of times of heightened political unrest and low interest rates.
It should be noted that the rates in Florida are still convenient for Chileans, since they are fixed in dollars and not in UF, so they are not adjusted for inflation. The same dividend is always paid, while the rent is adjusted annually. In this regard, rents have increased by over 50% since the pandemic to date.
In addition, another advantage is that loans can be requested for up to 30 years regardless of the age of the person requesting it and there are no penalties for prepaying the loan. The fee for a foreigner is from 25%. In this sense, it is convenient for older investors since the loans are accessible without an age limit.
Despite the fact that economic growth in the United States continues to be revised downwards, both the Fed and economists are increasingly optimistic that this situation will improve already next quarter, as inflation has slowed, retail sales increased in July and single-family home construction has been strong this past quarter.
Regarding this item, according to data from the US government, the sale of new homes during the month of May grew at an accelerated pace, a process that goes hand in hand with the increase in consumer confidence to the highest level in almost a year. and a half.
Purchases of new single-family homes in the United States increased 12,2% during May to an annualized rate of 763 thousand units. Despite the fact that these types of homes constitute a smaller proportion of the total real estate supply versus the used ones, the process was mainly driven by the reluctance of the owners of houses with ultra-low mortgage rates to sell and having to buy another one at a much higher rate. higher, this means that we have a low inventory, a constant demand and, finally, incentives for builders.
In a scenario of inflation and economic uncertainty in Chile and in the world, securing capital in dollars and in real estate investments, especially in the state with the highest population growth, low unemployment and great international as well as domestic demand, is a great alternative. Today we see how Chilean investors continue to arrive in Florida, not only to buy an apartment, but also to acquire commercial properties and participate in real estate developments.
There are good opportunities due to high interest rates for those with cash, as that leaves fewer competitors in the market, especially in the commercial real estate market, where returns move with rates.