What is the average rental yield in Santiago?

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What are the average rental yields across the main neighborhoods in Santiago?

Santiago's rental yields vary significantly by neighborhood, with central districts offering the most attractive returns for property investors.

As of September 2025, the city's average gross rental yield ranges from 4.64% to 4.81%, but specific neighborhoods show notable variations that can impact your investment strategy.

Bulnes leads the market with yields between 5.11% and 5.24%, making it particularly attractive for investors seeking strong returns. Santa Isabel follows closely with yields ranging from 4.71% to 5.02%, while Parque Almagro offers some of the highest returns at 5.11% to 5.36%.

Centro Histórico de Santiago presents yields between 4.08% and 4.84%, showing more variation depending on the specific property and its condition. The Barrio Diez de Julio, San Diego, and Parque O'Higgins area delivers consistent yields between 4.60% and 5.07%.

Prime neighborhoods like Providencia, Las Condes, and Ñuñoa typically offer yields between 4% and 6%, with the variation depending on property type and exact location within these districts.

How do yields differ by property type, such as apartments, houses, or studios?

Property type significantly impacts rental yields in Santiago, with apartments dominating the rental market and offering the most consistent returns.

Apartments, particularly one- to three-bedroom units, form the backbone of Santiago's rental market and deliver yields between 4.6% and 5.3% in central neighborhoods. These properties benefit from strong rental demand and relatively straightforward management.

Studios typically yield at the higher end of the range, often reaching up to 5.2% in desirable areas, with monthly rents averaging between USD 400 and USD 600. The smaller space translates to lower purchase prices while maintaining competitive rental rates.

Houses are less common in central districts and often generate slightly lower yields than apartments due to higher purchase costs and lower rental demand. The house market in Santiago is more limited, with most rental demand focusing on apartment living.

Larger apartments with four or more bedrooms tend to see yields fall below 4%, especially in luxury segments where purchase prices are significantly higher but rental premiums don't always justify the additional cost.

How does the surface size of a property impact the rental yield?

Property size has an inverse relationship with rental yields in Santiago, where smaller units consistently outperform larger ones in terms of return on investment.

Smaller units, particularly studios and one-bedroom apartments, tend to offer the highest yields because they command premium per-square-meter rental rates while having lower absolute purchase prices.

One-bedroom apartments in Santiago average yields of 5.11%, representing some of the strongest returns in the market. These units appeal to young professionals and expats who prioritize location over space.

As apartment size increases, yields typically decrease due to higher purchase prices that aren't fully offset by proportionally higher rents. Three-bedroom apartments might yield around 4.5% to 4.8%, while four or more bedroom units often drop to 3.57% or lower.

This trend reflects Santiago's rental market dynamics, where demand is strongest for smaller, well-located units that offer convenience and affordability to the city's large population of young professionals and students.

What is the average total purchase price including fees and closing costs?

Property acquisition costs in Santiago include both the purchase price and additional fees that buyers must factor into their investment calculations.

Central Santiago properties average USD 2,300 per square meter, with purchase costs for buyers ranging from 2.1% to 3.1% of the property value.

These closing costs include legal fees, notary services, registration expenses, and agent commissions. For a typical one-bedroom apartment costing USD 78,700, buyers should budget an additional USD 1,650 to USD 2,770 for closing costs.

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What are the recurring taxes, expenses, and typical costs that affect rental income?

Santiago property owners face several recurring costs that significantly impact net rental yields and must be carefully calculated when evaluating investment returns.

Property Holding Tax represents the largest recurring expense, ranging from 0.98% to 1.4% annually of the property's cadastral value. This tax applies to all property owners regardless of whether they rent out the property.

Rental income tax in Chile is substantial, with a 27% First Category Tax rate for residents. Non-resident property owners face an even higher final rate of 35% on rental income, though deductible expenses can reduce the taxable amount.

VAT at 19% applies to rental income, while property sales are usually exempt from this tax. Property management fees typically cost 8% to 10% of rental income if you hire a professional management company.

Additional recurring costs include maintenance, insurance, and repairs, which typically run USD 500 to USD 1,000 or more per year for smaller units. Community or building fees for condominiums range from USD 50 to USD 150 per month, depending on the building's amenities and services.

How do mortgage payments and financing options change the effective yield?

Financing significantly impacts rental yields in Santiago, where high interest rates can substantially reduce or eliminate positive cash flow from rental properties.

Typical mortgages in Santiago offer up to 70% loan-to-value ratios, with interest rates ranging from 4.4% to 15.2%, though most common rates fall between 9% and 12%. These relatively high rates can severely impact investment returns.

Foreign buyers face additional challenges, often requiring 30% down payments and local guarantors. Loan terms usually extend 20 to 30 years and are almost always fixed-rate, providing payment predictability but potentially locking in high rates.

High interest rates above 8% can reduce net yields below 2%, making leveraged investments challenging. Mortgage payments can easily exceed rental income unless the principal amount is minimized through larger down payments.

Cash buyers consistently achieve better yields in Santiago's current market environment. Housing loans are generally fixed-rate and primarily available to high-income households, limiting accessibility for many potential investors.

What are the differences in rental yields between short-term rentals and long-term rentals?

Short-term and long-term rental strategies in Santiago offer different risk-return profiles, with each approach suitable for different investor goals and management capabilities.

Short-term rentals through platforms like Airbnb generate average annual revenue of USD 10,000 (USD 834 per month) with typical occupancy rates of 45% and average daily rates of USD 55 as of 2025.

Short-term rental net yields rarely exceed 7% but face higher volatility and occupancy risks. Management costs can reach up to 25% of revenue when accounting for cleaning, guest communication, and platform fees.

Long-term rental yields range from 4.5% to 5.5% gross, with net yields after costs and taxes typically falling between 3% and 4%. These investments offer more predictable income streams and lower management requirements.

While short-term rentals often exceed long-term yields in central districts, they require more hands-on management and face higher vacancy rates and regulatory risks that can impact profitability.

What are some concrete examples of rental yields for different types of properties?

Real-world examples demonstrate how property type, location, and price point impact rental yields across Santiago's diverse neighborhoods.

These examples illustrate how smaller, well-located properties in emerging neighborhoods often outperform larger, more expensive units in premium areas. The Las Condes example shows how higher absolute rents don't always translate to better yields when purchase prices are significantly elevated.

It's something we develop in our Chile property pack.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Chile versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What are the typical profiles of renters in Santiago, and how does this affect demand?

Santiago's rental market is driven by distinct renter demographics, each with specific preferences that shape demand patterns across different neighborhoods and property types.

Young professionals represent the largest segment of Santiago's rental market, typically seeking one- or two-bedroom apartments with modern amenities and proximity to metro stations. This group prioritizes convenience and connectivity over space, driving strong demand for smaller units in central areas.

Families with children prefer two- to three-bedroom units and focus on safe, residential neighborhoods like Providencia and Las Condes. They're willing to pay premiums for properties near good schools, parks, and family-friendly amenities.

Expats and international students often concentrate in central and eastern districts, favoring furnished apartments with flexible lease terms. This segment supports both short-term and traditional rental markets, particularly in areas with good transportation links.

Demand remains strongest for properties under USD 300,000, with low vacancy rates for well-located mid-market apartments that serve these primary renter groups effectively.

What are the vacancy rates across different neighborhoods and property types?

Vacancy rates in Santiago vary by location and property type, with central districts and properly-sized units maintaining the lowest vacancy levels.

Central districts experience vacancy rates of 3% to 5% for one- and two-bedroom apartments, with even lower rates for units near metro stations. These low vacancy rates reflect strong demand from young professionals and the area's employment concentration.

Luxury and larger units face significantly higher vacancy rates, often reaching 8% to 12%. These properties appeal to a more limited renter pool and may experience longer periods between tenants.

Short-term rental properties face different occupancy challenges, with annual occupancy rates typically ranging from 45% to 55% for Airbnb properties. This translates to significant vacancy periods that must be factored into yield calculations.

Properties near universities, business districts, and major transportation hubs consistently maintain the lowest vacancy rates, making location a critical factor in minimizing rental income gaps.

How do we move from top-line rent to gross yield to net yield after costs and vacancies?

Understanding the progression from rental income to actual returns requires careful calculation of all costs and realistic vacancy assumptions.

Gross yield calculation starts with annual rental income divided by purchase price, multiplied by 100. For example, a property generating USD 4,200 annually and costing USD 82,500 delivers a 5.09% gross yield.

Net yield calculation requires subtracting all annual expenses before dividing by purchase price. These expenses include property taxes (0.98%-1.4%), rental income tax (27%-35%), management fees (8%-10%), maintenance costs (USD 500-1,000+), and vacancy allowances.

Vacancy adjustments typically reduce annual income by 3%-5% in central areas, or 8%-12% for luxury properties. For example, a USD 4,200 annual rent becomes USD 3,990-4,074 after accounting for typical vacancy periods.

Net yields in Santiago typically run 1.5% to 2% lower than gross yields. A property with a 5.1% gross yield might deliver a 3.1% to 3.6% net yield after all costs and realistic vacancy assumptions are applied.

Which property types, areas, or strategies look like the smartest choices in today's market?

Santiago's current market favors specific investment strategies that balance yield potential with vacancy risk and management complexity.

Mid-market apartments with one to two bedrooms under USD 300,000 in neighborhoods like Bulnes, Santa Isabel, Parque Almagro, and Ñuñoa represent the smartest investment choices. These properties deliver yields between 4.9% and 5.3% while maintaining low vacancy rates.

Properties near metro lines consistently outperform, benefiting from Santiago's excellent public transportation system and the preferences of young professionals who form the core rental market.

Houses and luxury units offer lower yields but may provide better capital appreciation opportunities. These are better suited for investors prioritizing long-term growth over immediate rental income.

Short-term rentals can be lucrative but require active management and carry higher risks due to changing demand patterns and potential regulatory shifts. They're most suitable for hands-on investors comfortable with hospitality-style operations.

It's something we develop in our Chile property pack.

How have rental prices and yields changed compared to five years ago and one year ago?

Santiago's rental market has experienced moderate changes over recent years, with yields stabilizing after a period of compression due to rising property values.

Five years ago, rental yields in Santiago peaked at 5.2% to 6%, but have declined moderately as property price growth outpaced rental rate increases. This compression reflects Santiago's maturation as an investment market and increased international interest.

As of September 2025, average yields of 4.81% compare closely to yields of 4.7% to 4.8% one year ago, indicating market stabilization. The first quarter of 2025 showed yields of 4.75%, suggesting relatively stable conditions throughout the year.

Property values have continued to appreciate, with moderate 3% to 7% increases expected in 2025, while rental growth has lagged behind price appreciation. This dynamic has maintained yield compression pressure but at a slower pace than in previous years.

The stabilization suggests Santiago's rental market is finding equilibrium between property values and rental rates, providing more predictable returns for new investors.

What is the forecast for yields in the next one year, five years, and ten years?

Santiago's rental yield outlook reflects continued market maturation and evolving economic conditions that will shape investor returns over different time horizons.

Over the next year, yields are forecast to remain stable with potential for modest increases. Moderate property value growth of 3% to 7% is expected, but rental rates may catch up gradually, maintaining current yield levels around 4.6% to 4.8%.

The five-year outlook suggests yields could compress slightly to around 4% to 5% due to sustained demand and continued property price appreciation. Santiago's growing international profile and improving infrastructure may drive property values faster than rental rates.

Ten-year projections indicate further yield compression is possible unless rental demand accelerates significantly. Yields may settle in the 3.5% to 4.5% range as Santiago approaches the yield levels seen in more mature Latin American markets.

Key risks to these forecasts include mortgage rate changes, economic volatility, and regulatory shifts that could impact either rental demand or property values significantly.

How do rental yields in Santiago compare with other major cities in Latin America or globally?

Santiago's rental yields position the city competitively within Latin America while offering stability that distinguishes it from higher-yield but riskier markets.

Within Chile, Santiago offers lower yields than secondary cities like Antofagasta (6.38%) and Concepción (5.61%), but provides greater market liquidity and stability. Other Chilean cities like Temuco (4.92%) offer similar yields with less market depth.

Santiago offers stable returns and relatively low risk compared to regional peers, making it attractive for investors prioritizing capital preservation and steady income over maximum yield potential.

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Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. The Latin Investor - Average Rental Yield Chile
2. Global Property Guide - Chile Rental Yields
3. The Latin Investor - Santiago Property
4. Global Property Guide - Chile Taxes and Costs
5. ApartHotel - Financing Property in Chile
6. IMF eLibrary - Chile Housing Market
7. AirROI - Santiago Airbnb Report
8. Airbtics - Santiago Airbnb Revenue
9. Global Property Guide - Chile Rent Yields
10. The Latin Investor - Chile Square Meter Prices