Multifamily or Residential Rental Buildings are a real estate asset model that was born in the United States several years ago. They are residential buildings that belong to a single owner and whose units are designed exclusively for rental. Additionally, as a complementary market, there is the ant or inorganic market that corresponds to small investors who may have one or more units for rent.
Currently, with the rise in mortgage loan rates and the increase in the conditions for requesting them, added to the high value of properties and the few projects in development, access to one's own home is increasingly difficult, so the Residential rental demand was consolidated. For example, in the Multifamily market, occupancy levels under the regime at the end of the 4th Quarter of 2021 reached 98.4%. From 2022 onwards, the entry of 133 Multifamily projects is projected, of which only 47 will enter this year. With this we see that the residential rental market has room to continue growing and position itself within rental assets as one of the most interesting in development.
If socioeconomic factors are added to this, such as the increase in the age of marriage, less attachment to long-term commitments - millennials, lower birth rates, desire to live near productive centers, the Multifamily market will probably grow at double-digit rates for a long time. However, as we mentioned previously, the Ant complementary market is the true competition of the Multifamily, but the same restrictions on credits, increased rates and taxation are likely to reduce the gap between the two.
Alliances between real estate companies and funds to work together have become popular, highlighting associations such as Patio-Santander, Banco Chile-SukSa, Larraín Vial-Ingevec, Ameris – BNV and Principal – Amplo. The union of the bricks and long-term capital results in a good multifamily project, generating growth drivers for real estate companies, Investment Funds and individual investors and will probably be pillars of the development of this industry in Chile. Today "traditional" real estate agencies no longer wonder whether or not they will enter the Multifamily market, the question today is "what percentage of the units" will be marketed through Multifamilys. Regarding the 2021 transactions, we can highlight the Alameda Park I building, located at Alameda 4320, Estación Central, developed by Inmobiliaria Fortaleza, which was committed to BTG Pactual and completed its transaction during the second half of 2021. The project has 299 apartments, 53 warehouses and 56 parking spaces. This asset for Q4 2021 appeared with a vacancy of 1.76%. The Activa Plaza Zenteno building, located at 1239 Copiapó Street, Santiago, was sold to the Zurich Group, who invested UD$18 million, in this way Zurich begins to participate in the real estate rental business through Chilena Consolidada Seguros de Vida. The project has 5,500 m2 and 117 parking spaces in two buildings of 5 floors each, which as of Q4 2021 was still in placement with 26.8% vacancy. During the first months of 2022, the partnership between Greystar and Ivanhoé Cambridge was made public, who formed a joint venture to seek real estate opportunities in the Multifamily segment in Chile. This is the first investment of foreign institutional capital in the residential rental sector in the country. The building was developed by Grupo Activa in 2019 and is called Activa Gran Avenida. The project is located at Lo Ovalle 63/ Jorge Cáceres 116, La Cisterna, corresponding to 2 buildings of 22 and 18 floors + 1 underground, with 297 apartments, 156 parking spaces and 24 warehouses.
With this we see that the residential rental market has room to continue growing and position itself within rental assets as one of the most interesting to develop during 2022.