The Rise of Corporate Landlords in Latin America: The case of Santiago, Chile.

Abstract

Since the 2008 financial crisis, a significant shift has occurred in the global housing market. This change is particularly evident in the transformation of the economic structure of the housing market, marked by the increasing influence of financial actors in the residential sector (Aalbers, 2016). In the past years, the tenure patterns of the Latin-American population have tended to move towards the rental market, changing the traditional relationship between finance and housing through homeownership. Indeed, studies on housing financialization in Latin America have been historically focused on homeownership and the mechanism involved in the process: mortgage system (Rolnik, 2013; Santana Rivas, 2020), debts and securitization (Pereira, 2017; Reyes, 2020). In recent years, real estate and financial business interests have moved into the rental housing market. In Santiago, Chile, these real estate changes have been tied to transformations of city centers, leading to the emergence of dense high-rise housing developments via models of verticalization that attract young families and migrants. The incorporation of new actors, particularly "corporate landlords" in the region, is creating important shifts in the expansion and structure of housing patterns, establishing new practices and financial mechanisms. Institutional financial actors, such as investment funds, insurance companies, and family firms, are increasing their investment portfolios by owning and managing residential buildings, turning them into financial capital assets, transforming the understanding of housing as a social space to an instrument for profitmaking (Madden & Marcuse, 2016). With more than 130 buildings, this model represents 3% of the housing market in Santiago and is projected to increase 65% in the next two years, expanding a multifamily high-rise model in downtown areas of the city. 

Drawing upon a multi-methods approach - that includes thirteen interviews with landlords, the analysis of financial and regulatory documents and the collection of building permits – this paper looks at corporate landlords' ownership typologies and the financial strategies that are transforming the housing market in Santiago. The article's central question is: How are corporate landlords shaping and transforming real estate dynamics and the housing market in Santiago? This research aims to 1) identify the ownership of corporate landlords in Santiago, 2) analyze the differences in ownership, investment strategies, and management, and 3) identify the location of corporate landlords in the city. The study focused on those buildings only owned by one landlord (100% universal ownership) for rent by international financial corporations, real estate investment funds (FII), insurance companies, and real estate companies. The analysis is centered on characterizing these landlords, elucidating their financial mechanisms, and the main socio-urban characteristics of the model entering the rental market in Chile. This paper argues that corporate landlords are changing the Latin American real estate dynamics by expanding new ownership strategies and bringing new financial mechanisms into the rental housing market, primarily through investment funds, creating a verticalization process bridging the ownership with the rental operation. The incorporation of investment funds, particularly in the residential rental market, has marked a new era for the residential housing market in Chile, shifting housing into a service, managing large volumes of units for rent (Rolnik et al., 2022). The latter demands more ownership transparency.