According to the latest CASEN report, as of 2022, we saw that the housing shortage has increased recently, reaching 935,000 homes—a 17% increase from 2017. This shortage is concentrated in the Metropolitan Region, which accounts for 42% of the total, and has been exacerbated by rising land prices, construction costs, higher mortgage rates, and tighter financing restrictions. This has made it more difficult to access housing, a situation reflected in high demand for housing subsidies. For this reason, solutions such as DS 49—or, previously, DS 116, which was replaced by DS 19—must be expanded. 

What is the DS19?  

This program was created in 2016 with the goal of alleviating the housing shortage and promoting the social integration of families from different socioeconomic backgrounds, with units ranging from 1,200 UF to 2,800 UF (depending on the geographic area). What’s interesting about this program is that the requirements regarding proximity to services—such as public transportation, schools, and green spaces—ensure that the projects are well-located.  

 To carry out these projects, a series of requirements must be met, including the sale of no more than 300 units, submission of the preliminary design to a reviewer or approval of a building permit, and adherence to a price range, depending on the location of the housing. At the same time, the property must be located within 500 meters of public transportation, 2,500 meters of a commercial, sports, or cultural facility, and 1,000 meters of an educational institution, preschool, or green space. 

 In addition, it offers incentives for the real estate sector, such as the Serviu’s UF 300 bridge loan per home, which encourages the construction of this type of housing, since initially there was a problem where many subsidies went unclaimed due to a lack of supply in the area. And for those who need mortgage loans to purchase one of these homes, the program provides a government guarantee to encourage financing from banks or other institutions.  

Who is eligible for this benefit? 

1. Low-income families: Must have a subsidy certificate (DS49, DS1, or for disaster victims since 2014), with access to housing priced between UF 1,200 and UF 1,400
2. Middle-class families: Whether or not they have a subsidy certificate, provided they meet the minimum family savings requirement, they must fall within the top 90% of the Social Household Registry and not own any property; they have access to housing priced from UF 1,400 to UF 2,800, with the option to apply for a mortgage.   

                              What are the benefits for an investor? 

 This type of project has significant market depth, unlike traditional projects. This translates into faster sales, which have slowed recently due to the uncertainty and interest rates we’ve seen in recent times, making it a more defensive real estate asset at this time, in addition to the clear benefit of contributing to society, since a greater supply of this type of product helps reduce the housing shortage. 

 However, as with any investment, there are risks, the main one being construction risk—both in terms of delays and cost overruns—since there is the constraint of not being able to raise prices, which means the impact cannot be passed on to the price. 

 For this reason, it is important to work with project managers and construction companies that have extensive experience in this type of project, as is the case with our Fynsa Real Estate Development IV Investment Fund, which invests in the DS19 project in the city of Concepción, in the Biobío Region.

You can find more details about this and other funds here.

José Pedro Márquez

Senior Real Estate Portfolio Manager