The real estate sector has faced a series of challenges that have affected market dynamics in recent years, both locally and internationally. Among these factors, credit restrictions by banks have been one of the main concerns for buyers.

With this, mortgage rates, which in 2020 were below 2%, have increased significantly, exceeding 5% in 2023-2024. In addition, banks have reduced mortgage loan terms from 30-35 years to 20-25 years, which, added to the increase in the UF, has made access to housing more expensive and has left many potential buyers out of the market.

Against this backdrop, both private and public actors have had to adapt and find solutions to overcome the crisis.

Private Sector Responses

Real estate companies themselves have had to transform the industry, innovating the way they sell to reach a greater number of buyers. Some of their main strategies include:

• Lease with option to buyAllows tenants to use part of the lease payment as a down payment for the eventual purchase of the property, which facilitates access for those who do not have savings for the initial down payment.
• Flexible financing optionsMore affordable payment plans, such as Bono Pie, installment payments and discounts on the final price.
• Promotions for investorsTo attract investors and reduce the stock stock of properties available for sale, apartment packages are being offered with guaranteed leases for specific periods and significant discounts.
• Alternative financingSome non-traditional entities, such as cooperatives and mutual companies, are offering mortgage financing with longer terms, up to 40 years and financing up to 90% of the value of the property.

Public Sector Measures

On the other hand, some governmental entities have also intervened to lessen the crisis, increasing their presence in the sector, where, for example, the government and BancoEstado have implemented measures.

• SubsidiesHousing subsidies for vulnerable segments have been intensified and improved.
• "Hipotecazo".: BancoEstado has launched special mortgage loan offers for homes in the lower access segment, as well as for homes with housing subsidies from the Ministry of Housing and Urban Development.
• BillThe Ministry of Finance presented a bill that seeks to encourage the sale of homes of up to UF 4,000, with a state subsidy of up to 60 basis points and a state guarantee.

Market outlook

Although the current context of the real estate market continues to be challenging, there are signs of improvement. According to data from the Central Bank of Chile (BCCh), mortgage rates reached levels of 5.21% in December 2023, while in December 2024 they closed at 4.37%. In addition, banks have increased mortgage loan terms to 30 years, which has driven a slight improvement in real estate project sales.

This respite is a positive sign that the sector could resume growth in the coming months.

Investment opportunities

Despite the challenges, the real estate sector continues to offer investment opportunities. With the gradual improvement in market conditions, especially in the medium-to-short term, attractive opportunities arise for those interested in gaining exposure to this sector.

In this sense, we believe that there is an opportunity for a limited time to participate in the financing structure of good real estate projects, managed by good real estate companies, which today are having problems of flows and access to bank financing in the face of greater restrictions.

One of the alternatives is the Fynsa Deuda Inmobiliaria III Investment Fund, launched in January 2025.launched in January 2025. This investment vehicle will finance real estate companies with the guarantee of housing units (apartments) of new and recently completed projects throughout the country. The fund's strategy promises an expected return of UF + 7.0% and has a duration of 2 years.

DISCLAIMER.

José Pablo González

Portfolio Manager Private Debt Fynsa AGF