International real estate
House Hunting in Chile: A Sinuous Oceanfront Wonder for $2 Million
Along with the pandemic, political and social upheaval have destabilized Chile’s property market, but buyers are still leaving cities for scenic areas.
A House in the Shape of an Ocean Wave
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By Michael Kaminer
An Undulating Masterpiece on the Coast of Chile
$2.1 MILLION (1 BILLION CHILEAN PESOS)
Set on craggy cliffs that jut into the Pacific Ocean, this undulating, 3,800-square-foot house outside Los Vilos, Chile, was designed by Ryue Nishizawa, co-founder of the Pritzker Prize-winning Tokyo architecture firm Sanaa.
The three-bedroom, four-bath home is the first completed project in Ochoquebradas, a planned community of 16 houses by the Chilean father-and-son developers ochoalcubo. For the project, eight Japanese and eight Chilean architects were recruited to create “important and special houses, each completely different,” said Folke Bergstrom of Sotheby’s International Realty Chile, the listing agent.
With its wavelike concrete roof, sinuous windows and sleek wood interiors, the home has been featured in international design magazines, Mr. Bergstrom said. “It’s the only house of its kind in Chile, and I’ve never seen anything like it,” he said. It has been unoccupied, but furnished, since its completion last October. Once it sells, the developers will begin building the next home in Ochoquebradas.
Designed by the Pritzker Prize-winning architect Ryue Nishizawa, the oceanfront home has a 165-foot concrete roof that floats on columns and was designed to evoke ocean waves.Credit…Chile Sotheby’s International Realty
The house sits at the end of a paved pathway from a large parking area, which is accessed from a three-mile dirt road off a highway. Close to the main entrance, the pathway passes beneath a concrete arc (part of the slab that makes up the roof) to a spa room with a whirlpool, sauna and bathroom.
Farther down the path, the main entry opens to an expansive great room. In the living room area, sloping ceilings soar up to 10 feet and walls of windows provide dramatic ocean views. The room flows into the minimalist kitchen, where a trio of giant wood slabs conceal artfully built-in Miele appliances, ample storage and two sinks. The kitchen continues to a dining area with panoramic views of the landscape through sloping window walls. A broad, curved terrace runs the length of the living and dining areas.
The home’s primary bedroom suite is tucked into a smaller second structure, which is built into the cliffside and partially underground; a subterranean passage links it to the main living space. Floor-to-ceiling windows connect the bedroom suite to its own long terrace. In place of walls, a series of wood panels separate the bedroom from a bathroom on one side and a large closet on the other.
Los Vilos, about 155 miles northwest of Santiago, is a popular destination for Chilean tourists in the Choapa province of Chile’s Coquimbo region. While Ochoquebradas is isolated, “facilities are nearby” in Los Vilos, Mr. Bergstrom said, with grocery stores, restaurants and gas stations. Ruta Nacional 5, Chile’s longest highway, connects to Santiago, and is part of the transcontinental Pan-American Highway. Santiago’s main airport, Comodoro Arturo Merino Benitez International, is about 135 miles south.
As in many markets worldwide, reduced inventory and high demand have pushed prices higher across Chile as buyers seek “shelters outside of urban areas,” said Maria Jose Borquez, owner of Borquez & Asociados/Christie’s International Real Estate, in Santiago. Areas that once were considered second-home destinations are increasingly luring primary-home buyers, she said: “If it’s near a beach, field or lake, clients want it as their first home now.”
In terms of sales volume, “the pandemic has not affected the high-value segment,” she said, adding that the appetite for homes in bucolic but developed communities like southern Frutillar and Chiloe Island, and northwestern La Ensenada, should only grow.
The home is the first completed project in Ocho Quebradas, a planned community of 16 houses with designs by Chilean and Japanese architects.Credit…Chile Sotheby’s International Realty
Mr. Bergstrom said that prices for high-end properties in his region have increased 25 to 30 percent year over year, and average between $2 million and $3 million. “I sell some of the most expensive houses in Chile, and it hasn’t stopped,” he said. “The issue is that there’s no more space to grow in small towns, and the number of houses for sale has not increased. The only way to get a piece of land is to convince an owner to sell.”
With remote work allowing more people to live in nonurban settings, “those traditionally second-home markets grew the most during the past 24 months,” said Jorge Mira, commercial manager of Engel & Volkers Chile in Santiago. Among the most active markets were the central beach town of Pichilemu, the lakeside southern town of Pucon, and Santo Domingo beach, 70 miles west of Santiago, he said.
Also on that list is Los Vilos, which was “mainly a fishing town, then became a vacation-home area for middle-class people over the last couple of decades,” said Yuval Haym, regional manager of Re/Max Chile in Santiago.
Along with the pandemic, political and social upheaval have destabilized Chile’s property market. In 2019, prolonged protests were staged over economic inequality, and this month, a presidential election will include “hard-left and hard-right candidates, and either outcome will cause some capital flight in the short term,” said Matt Ridgway, owner of Chile Investments, a realty firm in the Colchagua Valley, south of Santiago. Wealthy Chileans, meanwhile, are “divesting stocks and shares and investing in property” because of volatility fears, pushing prices higher at the luxury end.
Chile’s weak peso presents an opportunity for foreign buyers who can stomach some uncertainty, Mr. Haym said: “Chile is more attractive than Miami right now, with a higher return on investment.” With an influx of professionals who transfer in to work in key Chilean industries like mining, fishing and paper, “you’re almost guaranteed someone will rent your condo.”
The minimalist kitchen has a trio of giant wood slabs that conceal built-in Miele appliances, ample storage and two sinks. The kitchen continues to a dining area with panoramic views through sloping window walls.Credit…Chile Sotheby’s International Realty
Condominium sales in cities like Santiago have slowed, but remained consistent, he said. While there is no central real estate database in Chile, Mr. Haym said the average condo price across Chile was about $155,000 in 2021, based on Re/Max data, with the average detached-home price at around $260,000.
For domestic buyers, relatively high interest rates have also kept some first-time buyers out of the market, he said. “It’s gone from 0.5 percent at the beginning of the year to 2.75 percent now, and a lot of people can’t take mortgages because of this. This will lead to a slowdown on purchases and a spike in rentals until we get stabilization on interest rates and inflation.”
Who Buys in Chile
Unlike neighboring Argentina, where international investors have historically fueled property sales, “Chile has never been a huge market for foreign buyers,” Mr. Ridgway said.
“Most international buyers are looking at second homes in the south,” he said, including Patagonia, the lake region of Pucon, and the beach town of Puerto Varas. Before Covid, he often worked with buyers from the United States, as well as some from Germany, France and Britain, “but the pandemic has made it a disaster for that side of my business.”
Mr. Mira agreed that the inability to arrange in-person visits has made sales difficult. “Our unique selling proposition in Chile is Patagonia, the lakes and the forests, and the buyer here wants to see that,” he said. In a typical year, Mr. Mira’s clients would include Swiss, German, and some Spanish buyers, “and recently more Chinese clients, buying homes for themselves rather than as investments.”
In the living room area, sloping ceilings soar up to 10 feet and walls of windows provide dramatic ocean views.Credit…Chile Sotheby’s International Realty
There are no restrictions on most foreign buyers for residential property in Chile, according to Luis Alberto Aninat, a partner at the Aninat law firm in Santiago.
But “having no restrictions doesn’t mean you can walk into the country and buy property,” he said. Foreign buyers must obtain a Chilean investor tax identification number from the Servicio de Impuestos Internos, Chile’s tax authority. Once granted power of attorney, a lawyer can help obtain that number.
Because anyone can claim to list a property in Chile’s unregulated real estate market, Mr. Aninat advises foreign buyers to work with a lawyer from the start of their search. After the lawyer finalizes a preliminary sales agreement, a notary executes a title search and drafts a contract known as a public deed. Once both parties sign the public deed in the notary’s presence, the document is registered with Chile’s national property registry. “You won’t be the registered owner until that happens,” Mr. Aninat said.
Most Chilean banks will not lend to foreigners, who typically pay in cash. But Mr. Haym said some international buyers can access financing. “If you can prove you have assets outside Chile, and a triple-A bank that will provide a status report, a bank here may give you the loan,” he said. “You just have to know how to do the paperwork.”
Los Vilos tourism: munilosvilos.cl/turismo
Chile travel: chile.travel
Languages and Currency
Spanish; Chilean peso (1 peso = $0.0012).
Beyond the dining room, the roof comes to an angular stop without touching the ground.Credit…Chile Sotheby’s International Realty
Taxes and Fees
Mr. Aninat said most notaries will charge about $500, with lawyer’s fees ranging from $13,000 to $15,000. Applying for a mortgage could incur fees of around $1,500 to cover the bank’s risk assessment and review of property documents, he said.
Except for new construction, there is no value-added tax on property purchases in Chile, according to Juan Pablo Borquez, managing partner of BY.estrategica, a strategic advisory firm in Santiago. There is no difference in how capital-gains taxes on property sales are calculated for Chileans and foreigners, he said.
Agent commissions typically total 4 percent of the sale price, split between buyer and seller, Mr. Ridgway said.
Property taxes on this home total about $480 (400,000 Chilean pesos) per quarter, Mr. Bergstrom said.
Folke Bergstrom, Anita Canas, Sotheby’s International Realty, 011-56-97-778-6303, chilesir.com