The real estate and construction industry has been in crisis for years. That is nothing new. What is beginning to change, however, is that the adjustment cycle appears to be ending across most segments.

The figures from the first four months of 2026 confirm this: home sales in the Metropolitan Region grew by 19% in the first quarter compared to the previous year, and the Chilean Chamber of Construction (CChC) projects nearly 20% growth in nationwide sales for the full year, reaching more than 60,000 units — levels not seen since 2019. Total construction investment is expected to grow by 4.8% according to the latest MACh report. The recovery is real.

In this new cycle, the conversation that matters most at financial tables is no longer just about obtaining capital. It is about how that capital is structured. A mistake that continues to be repeated far too often is evaluating debt solely by looking at the interest rate, as if that were enough. It is not. A structure that appears attractive on paper can become very expensive if it forces repayments before the project generates cash flow, or if it puts pressure on liquidity at the wrong moments. The problem is not the abstract cost of credit, but the mismatch with the actual timing of the business. That is what limits the ability to react to unforeseen events and what, in more than one case, has complicated projects that were otherwise viable.

This is where private debt has gained ground in Chile — and for good reason. According to Acafi data, funds investing in real estate equity or debt closed 2025 with UF 193 million in assets under management and 238 active vehicles, within an alternative funds industry that grew 11% during the year. Private debt continues to be the preferred asset class among newly established funds.

What defines results in this segment is not access to projects, but the quality of the entire process. A strong start is not simply about identifying who needs financing; it requires industry networks and sound judgment to distinguish the true quality behind each transaction.

Structuring must be reflected in solid documentation and safeguards (covenants) aligned with the project’s cash flow profile, rather than generic structures applied without considering the sales cycle or construction milestones. And subsequent monitoring cannot be passive: in private debt, value is built throughout the entire cycle, and the ability to act early in response to warning signs is what determines recovery rates when a loan becomes problematic.

Another point that is not always mentioned: this type of financing works well across sectors with very different dynamics. In warehousing, for example, vacancy rates for Class A warehouses closed 2025 at around 0.2% in Santiago — the lowest in South America according to Cushman & Wakefield — which continues to support demand for high-standard logistics assets and makes the segment attractive for structured debt.

In the mortgage market, rates fell below 4% in April 2026 for the first time since 2021, improving access to credit and accelerating inventory absorption, a factor that directly impacts repayment speed in residential development projects.

At Alza, we identify this stage as a moment to select high-quality projects with structures that support operations rather than strain them. In this business, profitability does not come from the cheapest debt. It comes from the best-designed debt.

Enzo Folch
Portfolio Manager – Private Debt