A real estate project, from the market study to the reception of the works, takes on average 68 months to recover its investment. This was one of the conclusions from the study “Income from real estate projects presented in the Environmental Impact Assessment System (SEIA)”, developed by the academic from the University of Talca, Armando Durán Bustamante.
The professor explained that the existing permitting factor does not facilitate the completion of these projects. “Of those 68 months, 58 correspond to administrative and technical procedures, before and after the development of the works, which reflects the reality of permitting in Chile,” he explained.
In this regard, the academic indicated that at the beginning of this year the National Institute of Statistics (INE) reported a drop in building permits for housing, which registered the lowest figure in the last 30 years.
Durán warned that this has contributed to a decrease in the number of construction projects submitted to the Environmental Impact Assessment System (SEIA) over the past five years. In 2019 there were 178, while in 2023 there were only 103 initiatives submitted.
According to the study, in the Ñuble region, a total of four real estate projects were submitted to the SEIA during 2023, representing a total investment of US$104.1 million; meanwhile, a total of three projects were approved, amounting to an investment of US$35.0 million.
Reduce paperwork
The expert pointed out that, despite some recent changes to the Environmental Impact Assessment System (SEIA) for processing real estate projects, it is “ineffective, because public bodies take too long to process authorizations and, in the case of having permits to develop real estate projects, the start of work cannot be carried out due to new requirements not contemplated in the studies.”
According to Durán, this drop “is in line with the information provided by the real estate industry, represented by the Chilean Chamber of Construction, which predicted that around 140,000 jobs would not be created in 2024 for this reason.”
In this regard, he indicated that the study included a series of interviews with real estate investors, who insisted on the need to speed up and group the large number of permits in “a unit or organization such as the One-Stop Shop, which consists of reducing the countless phases of the procedures, with a single application that resolves the administrative requirements and reduces waiting times, in order to make investment in this area more expeditious.”
“Today, architectural and engineering projects require at least the review of the water, electricity, Serviu, Vialidad (MOP), Municipality, Directorate of Hydraulic Works, Seremi of Housing and Urban Development and Seremi of Agriculture companies. There are more than 10 institutions in the projects mentioned above alone,” explained the academic.
Finally, the UTalca academic indicated that it is necessary for “Congress to move forward with the bill on permits, and thus, ensure that Chile continues to work on the path to social equity.”
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