Chile - Country Commercial Guide
Construction

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-01-16

Overview

While Chile’s economy grew by a meager 1.1 percent in 2019, the construction industry was the highest growing sector, reaching 4.9 percent, an increase from 3 percent growth during 2018. However, Chile’s economic slowdown in recent years, combined with the economic fallout from the social unrest in October 2019, and the current COVID-19 pandemic, leads to a pessimistic scenario for 2020 with a possible recovery during 2021.

Imports of construction machinery and equipment reached $378.1 million during 2019, a significant drop of almost 42 percent, in line with a projected negative growth during 2020 of between -10 and -14 percent, the steepest in 37 years, according to the Chilean Chamber of Construction, CCHC (Cámara Chilena de la Construcción). However, the entity projects a quick recovery during 2021, with a projected growth rate of between 9 percent and 12 percent then decreasing to between 2.75 percent and 4 percent in 2022.

The U.S. is the single largest supplier of machinery and equipment, mostly with heavy machinery, high-tech building materials and capital equipment, followed by Germany, China, and Italy. Building materials from the U.S. have a high reputation, and are in demand, but U.S. companies must be aware that the market is small and very competitive. Construction standards continue to be improved, especially related to regulations covering insulation, energy efficiency, doors/windows, sustainability, and ‘green’ construction. The high cost of energy (the highest in Latin America), fosters the need to use energy efficient materials incorporated in projects design.

There is wide consensus on the need to substantially increase public and private investment on infrastructure to reach sustainable development. The current administration is prioritizing construction investment, which will play an important role in the economic recovery of the country once the pandemic is under control. Investment in infrastructure construction, should continue to grow during the next years through private and public investment, reaching a total of $60 billion (2019-2027), covering three main areas:

  • Base Infrastructure:  Water resources, transportation and storage; Energy; Telecommunications
  • Logistics Infrastructure:  Inter-urban roads; Urban roads; Airports; Ports; Railway roads; Logistics
  • Social Use Infrastructure:  Public Spaces; Hospitals; Jails; Education

In response to the negative economic impact caused by the COVID-19 pandemic, the government is modifying regulations to reduce bureaucracy and speed up authorization processes and qualifications. In this context, 138 private projects totaling $24.5 billion, are being prioritized to start construction by the end of 2021. The latest, projected infrastructure investment for the 2020-2024 period, reaches $34.8 billion, 74 percent of which relate to the mining and energy sectors. Mining is the most important generator of construction projects accounting for approximately 46 percent during 2020.

Infrastructure projects are financed with direct state investment as well as public/private partnership resources. The country has a large portfolio of pending infrastructure projects including ports, airports, and highways. Among the areas with major investment requirements for the 2019-2027 period are urban roads and highways, totaling $60 billion; telecommunication infrastructure (expansion of fiber optics, and coverage of remote areas) for $25.3 billion; and water infrastructure (transportation and storage), for $18.3 billion. A parallel road to the country’s main highway Ruta 5, which runs north/south, is projected to begin construction by 2022.

Arcadis’ Sustainable Cities Index ranks Santiago number one as the most sustainable city in Latin AmericaAccording to Chile Green Building Council, GBC Chile, Chile has 223 LEED certified buildings, and 490 total LEED activities (including certified and ongoing projects). Chile signed a cooperation agreement with U.S. GBC in 2018.

The public consciousness of sustainable practices and support for investment in green infrastructure, engineering, and construction is high. In 2016, Chile started its “National Program for Sustainable Production and Consumption”, which includes sustainable construction. The program involves the Ministries of Public Works, Housing & Urban Development, Energy, Environment, Mining, Health, Economy, Finance, and Agriculture to jointly incorporate and design the local concept of sustainable construction, production and consumption to achieve an overall sustainable environment.

 

2017

2018

2019

2020 estimated

Total Local Production

110

110

95

70

Total Exports

73

59

61

50

Total Imports

672

900

378

300

Imports from the US

197

234

109

78

Total Market Size

709

952

412

320

Exchange Rates: 1 USD

649

641

770

770

Total Market Size = (total local production + imports) - exports)
Units:  $ millions
Source:  Thomson Reuters Chile / Chilean Customs

Leading Sub-Sectors

Chile manufactures very limited and basic types of construction equipment, mostly mining related. Most of the equipment is imported, and U.S.-made products are highly regarded by Chilean buyers. Imports from the U.S. account for 28.9 percent of the market, followed by Germany: 19.2 percent, and China: 8.4 percent. Chinese equipment continues to increase its presence in Chile.

Energy Efficiency

The best opportunities for U.S. exports are for those products that offer high levels of efficiency and that can work on reduced operational costs, replacing expensive labor.  Since the cost of energy in Chile is very high, energy efficient machinery is an excellent sales advantage. The most promising are in areas such as earth moving equipment, concrete technology for high-rise building construction (scaffolding, concrete pumps), and supplies and consumables that accelerate the building process.  Energy efficiency and ‘green’ building materials also have a good market.

Building Materials

Building materials used in green building are good prospects, including those that add points for LEED and other certification programs. ‘Green’ and ‘sustainable’ are key words within the Chilean construction sector. Renewable energy equipment related to construction (commercial, industrial, and housing), insulation products, heating systems and air conditioning systems are important considerations in current construction projects. The local market is open to new and high-tech products; however, it is a small and very competitive marketplace.

Construction Digitalization and Mechanization - Innovation

There is an increasing awareness of the benefits of digital construction, including Building Information Modeling, BIM, Blockchain, Big Data management, software services, inventory management, augmented reality, cloud computing, digital processes integration, and recycling processes (and avoiding waste). Chile’s construction is still in ‘paper mode’, which is inefficient, unprecise, and causes ‘fail phase’ to be recurrent. With digitalization and IT technology, processes can improve efficiency, and cut costs and construction time. Corruption can also be avoided by using technology and online live data. There are already some buildings made of 3D printer materials, and industrialization of construction is also beginning, saving time and cost.

Opportunities

  • Public Works, Infrastructure:  urban and inter-urban roads and highways, airports, ports, hospitals, jails, etc.
  • Mining, energy & general industry related construction
  • Private sector buildings (offices, hotels, first & second homes, mountain, country, lake and beach resorts)
  • Retail, especially shopping malls
  • Educational and private health facilities
  • Industrial facilities

EXPO EDIFICA / Expo Hormigón will take place in Espacio Riesco, October 13-16, 2021

The local trade shows Expo Edifica collocated with Expo Hormigón (Cement Construction Show), is the most important event in the construction industry, and brings together exhibitors and visitors from Chile, Latin America, North America, Asia, and Europe.

Resources

Ministry of Public Works (MOP) 

Ministry of Housing and Urbanism (MINVU)

Chile GreenBuild Council 

Chilean Chamber of Construction (CCHC)

Technology Development Corporation (part of CCHC)   

Institute of Cement and Concrete (ICH

Association of Engineering Consultants (AIC

Association of Architecture Firms (AOA)  

For additional information, please contact CS Chile Commercial Specialist, Mary L. Lathrop, Mary.Lathrop@trade.gov.