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: 2022-01-25

Overview

Following a 12 percent decrease in construction activity, the Chilean Chamber of Construction (CCHC) reported that construction activity began to rebound in the fourth quarter of 2020, but the chamber still predicts an uncertain recovery in 2021. The sector faces high cost and scarcity of machinery, equipment, products, raw material and general supplies, and building products as a result of lower production. Quarantines and sanitary protocols at construction sites continue to impact the schedules of private and public construction projects. Halted construction projects and slowdown of commercial and housing sales and labor scarcity are additional challenges. CCHC projects that the sector will grow 8.1 percent in 2021 and a 3 percent-4 percent growth in 2022, however growth depends on government commitment to announced projects. Chile has an excellent vaccination rate, but the emerging new virus variants may cause new lockdowns further delaying projects. Investors and other industry leaders are monitoring the Constitution process for proposals or amendments that could be perceived as negatively impacting the profitability of new investments.

Imports of construction machinery and equipment reached $635.1 million during 2020, a significant increase of almost 68 percent and a recovery from the drop in 2019 imports. Chile manufactures very limited and basic types of construction equipment, mostly mining related. The U.S. is the single largest supplier of machinery and equipment, mostly with heavy machinery, high-tech building materials, and capital equipment, with 27.8 percent market share. Other leading suppliers are Germany (17.1 percent), China (9.8 percent), and Japan (6.1 percent). Building materials from the U.S. have an excellent reputation, and are in demand, but the market is small and very competitive. Chile’s construction standards are very strict due to seismic activity, but other construction standards in insulation, energy efficiency, doors/windows, continue to improve. Demand for sustainable construction and green buildings are growing to mitigate the high cost of energy (one of the highest in Latin America), fosters the need to use energy efficient materials incorporated in project design. Industrialized construction is growing in an effort to maximize efficiencies and building time and cost.

Chile continues to incorporate sustainable practices and increase green infrastructure, engineering, and construction. In 2016, Chile started a National Program for Sustainable Production and Consumption, which involves the Ministries of Public Works, Housing & Urban Development, Energy, Environment, Mining, Health, Economy, Finance, and Agriculture to collaborate on design concepts in construction, production, and consumption to achieve a sustainable environment throughout the country. The Arcadis Sustainable Cities Index ranks Santiago number one in Latin America and 30th worldwide. Within Latin America, Chile ranks second in LEED Certifications, according to square meters per capita, and third in the number of certified square meters. Chile also has a very low rejection rate of projects applying for LEED certification, in contrast to other countries in the region. Chile is now certifying LEED 4.0 and 4.1 projects together with other international certification programs, including WELL. There are two locally developed certification programs: Certificación de Edificación Sustentable (CES, Sustainable Construction Certification) and Certificación de Vivienda Sustentable (CVS, Sustainable Housing Certification). CES and CVS are used in housing construction, and CVS is used social housing construction. The Chile GBC and U.S. GBC signed a cooperation agreement in 2018.

Total Market Size

 

2018

2019

2020

2021 estimated

Total Local Production

110.0

95.0

70.0

78

Total Exports

58.6

61.1

57.7

60

Total Imports

900.3

378.1

635.1

700

Imports from the US

234.3

109.2

176.4

180

Total Market Size

951.7

412.0

647.4

718

Exchange Rates: 1 USD

641

770

770

 

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

Leading Sub-Sectors

· Energy Efficiency: The best opportunities for U.S. exports are those products that offer mechanization and high levels of energy efficiency that can work on reduced operational costs, replacing expensive and scarce labor. Since the cost of energy in Chile is very high, energy efficient machinery has an excellent sales advantage. The most promising are earth moving equipment, concrete technology for high-rise building construction (scaffolding, concrete pumps), and supplies and consumables that accelerate the building process, including all industrialized construction systems equipment and supplies. Energy efficiency and green building materials are also in high demand.

· Building Materials: Building materials used in green building are good prospects, including those that add points for LEED and other certification programs. Renewable energy equipment related to commercial, industrial, and housing construction, insulation products, heating systems, and air conditioning systems are important considerations.

· Construction Digitalization and Mechanization: There is an increasing awareness of the benefits of industrialized and digital construction, including Building Information Modeling (BIM), blockchain, big data management, software services, inventory management, augmented reality, cloud computing, digital processes integration, and recycling/re-use processes (avoiding waste). Chile’s construction is still conducted on paper, which is inefficient, imprecise, and causes fail phase to be recurrent. Digitalization and IT technology can improve efficiency, cut costs, and construction time. Corruption can also be avoided by using technology and online data. There are some buildings constructed with 3D printer materials and the market is open for more advanced stages of this technology.

Opportunities

By the end of 2021, the Ministry of Public Works will award contracts in projects worth $5 billion, including paving 4,660 miles of highways, repairs and construction of 150 bridges, irrigation works covering 346,000 hectares, rural potable water works, airports, ports, water management, and public building construction. A parallel road to Route 5, Chile’s 2,100 miles main north/south highway, is projected to begin construction by 2022. The Santiago subway system will be improved and expanded, as well as the national railroad system, to better serve urban and inter-regional passenger and cargo transportation. Mining is the most important generator of construction projects. In relation to private investment, and 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.

· Public Works, Infrastructure:  urban and inter-urban roads and highways, airports, ports, hospitals, jails, etc.

· Agriculture dams and water reservoirs construction

· 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

Resources

· EXPO EDIFICA/Expo Hormigón, October 2022, Santiago, Chile

The local trade shows Expo Edifica, co-located 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.

· Ministry of Public Works, Ministerio de Obras Públicas (MOP)

· Ministry of Housing and Urbanism, Ministerio de Vivienda y Urbanismo (MINVU)

· Chile GreenBuild Council (GBC; Chile Chapter)

· Chilean Chamber of Construction, Cámara Chilena de la Construcción (CCHC)

· Technology Development Corporation (CDT)  

· 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.