The real estate and construction crisis currently affecting Chile is no secret. Its origins trace back to social unrest in 2019, which was then followed by the pandemic and, more recently, the impact of inflation. After years of strong growth, the market is now adjusting to a new landscape shaped by rising interest rates, declining demand, and increasing regulatory uncertainty.

In 2024 alone, more than 100 construction companies of various sizes and at least 15 real estate firms declared bankruptcy, in addition to others that filed for judicial reorganization. In total, the sector saw over 115 insolvency proceedings. These staggering numbers highlight the depth of the crisis facing the real estate industry.

Economic instability has affected all players in the real estate market. One of the most severe blows came from the sharp rise in interest rates, which made mortgage loans significantly more expensive and put home financing out of reach for many families. According to the Central Bank of Chile, the average mortgage interest rate reached 5.21% in 2023—well above the 1.99% recorded in 2019. At the same time, construction companies faced surging material costs due to global inflation and logistical disruptions that coupled with budget overruns and delays to seriously undermine the financial viability of projects. Finally, regulatory uncertainty and long delays in securing permits for construction and development have further deepened the sector’s crisis.

In this landscape of volatility and uncertainty, solutions are beginning to emerge—both for real estate developers and for families hoping to buy a home.

One such solution is residential leasing. Today, many people struggle to access housing: coming up with 15–20% of the purchase price for a down payment is difficult, interest rates remain high, and mortgage lending requirements continue to tighten. In this context, residential leasing offers a promising path forward for both developers and homebuyers.

For investors, it provides recurring rental income and the potential for capital gains as property values appreciate. For tenants, it offers the opportunity to live in their future home while they save for a down payment and improve their eligibility for a mortgage. For the market as a whole, it helps absorb unsold inventory, unlocking much-needed mobility in the real estate sector.

Another solution gaining traction is stock advances, a particularly useful tool for developers facing liquidity constraints. In the current environment, many companies are selling units at a much slower pace than initially projected, making it difficult to sustain operations or launch new projects. In response, stock advances act as a financial lifeline; developers receive a loan secured by unsold units, giving them immediate liquidity while buying them time to complete those sales.

Chile’s real estate industry is going through a highly challenging period. Yet amid the crisis, new tools have emerged that offer much-needed relief. At Alza Group, we focus on providing practical solutions to the market’s real problems—such as the liquidity shortages that many developers face and the growing barriers that prevent people from purchasing a home. In 2025, we will continue driving forward initiatives that create value, promote recovery, and open new business opportunities across the real estate sector.

Vicente Castillo – Analista de Inversiones