Report shows challenging outlook for construction in Chile

Andy Brown Head of Content, Construction and Engagement

07 November 2024

Amid a challenging outlook for construction in Chile, the Chilean Chamber of Construction (CChC) has presented its ‘Macroeconomics and Construction’ (MACh), detailing the complex investment situation in the sector. Although a partial recovery is expected in 2025, driven by investment in private productive infrastructure, projections for housing investment reflect a significant drop this year.

Santiago, Chile - the country’s real estate sector is struggling. Image: Adobe Stock

The president of the CChC, Alfredo Echavarría, stated, “After two years in which total investment in construction showed negative annual figures, we anticipate growth of around 4.5% over the next twelve months for 2025, particularly due to less demanding comparison bases, the development of mining projects, and a more limited increase in material prices.”

However, Echavarría stressed the slow long-term growth, pointing out that, “If we examine the decade 2016-2025, we see that total investment in construction will have grown on average, only 0.9% during this period, while in the previous decade (2006-2015), that growth was 5%.”

The figures show a decline in real estate investment, which is projected to fall by 6.4% in 2024. Despite forecasts of a moderate recovery in 2025, the real estate sector continues to be affected by restrictions on mortgage financing, directly impacting job creation and the launch of new projects.

Nicolás León, manager of Studies and Public Policies at the CChC, explained that “the real estate sector continues to struggle with restrictions on accessing mortgage financing, leading to lower sales and a significant disincentive to start new projects, which today also involve higher construction costs due to increases in the price of materials and permits, among other factors.”

The report projects a 5.7% growth in infrastructure investment for 2025, driven by a significant increase in productive infrastructure, especially in mining and energy. For the housing sector, investment is expected to increase by only 2.2%, while the sales of residential units will experience an 8% annual growth, an improvement still far from the historical average of 58,000 homes per year.

Faced with this situation, Echavarría emphasised the need to stimulate demand to reduce the housing inventory, proposing a series of measures, including “totally or partially eliminating VAT on the purchase and sale of housing and compensating for the removal of the Special Credit for Construction Companies.” He urged the Government to lower interest rates for mortgage loans, asserting that this measure, “would encourage access to housing and provide relief to the market.”