Frutillar was founded over 150 years ago by German settlers that brought with them a love of music. Frutillar has been known ever since in Chile as both a the music capital of Chile, and an exclusive destination for the rich and elite of Chile to quietly get away from it all in the South.

The tradition of music has most recently manifested itself with the completion of the tetro del Lagos concert hall on the beach in Frutillar. The natural extension to such incredible international performing arts venue are incredible international hotels, restaurants, golf-courses, and of course property developments such at the Patagonia Virgin Golf Course community.

Over the last 10 to 15 years, progressively more and more agricultural land and property in and around Frutillar have been subdivided in to parcels typically of about 5,000 square meters (the smallest allowed subdivision for rural land) in anticipation of the international attention Frutillar would eventually gain as a retirement and investment destination for foreigners and Expats in Chile.  

For those that got in early with extrema patience, say 5-10 years ago, the gamble is starting to pay off. Parcels that sold 10 years ago for prices around 3 million pesos, are now fetching 15 million to 25 million per 5,000 square meter lot.

Every indication is that there are more gains still to be had , if the real estate market in Frutillar takes its cue from the popularity of areas like Puerto Varas where 5,000 square meter properties have common asking prices of over 40 million pesos ($80,000 US). Only in the case of Frutillar, there are special factors that will perhaps propel land values beyond anything Southern Chile has ever seen.

Factors effecting real estate prices in Frutillar:

Big money, old money
The first factor is Money. Big, Big, Money. Frutillar is the playground and pet project of big money in Chile, and increasingly rich foreigners.  The big land holders have money, and thus are not in a real hurry to sell. Mercedes and Jaguars are common site on theater night, and just driving around town. The traditional German community would be included in this group, as they have made their fortunes off the dairy industry and sit on large tracks of land they have inherited. So, there is a limited real estate market, just because of what is not on the real estate market in Frutillar.

All that Glitters is not Gold

The second is weather. Frutillar has an abundance of incredible views, just not a lot of the property for sale is necessarily the best property for living. Many properties are hit by high winds much of the year, and / or do not receive direct morning sun in other parts of the year. Such property is typically also taken off the market by Chilean speculators from Santiago that purchased years ago, often during brief visits during the best part of the year, and failed to appreciate or care about the importance of the weather the rest of the year. Many of these properties would perhaps make good summer homes, but are limited for overall investment.  

Economic Class
Frutillar has been divided economically in to a lower and upper Frutillar for about 150 years. Known as Frutillar Bajo, and Frutillar Alto in Spanish. This is because of many complex historical and cultural reasons, but for the most part Frutillar Alto is considered where the blue-collar residents live and where most commercial activities take place. Residents of Frutillar Alto depend on Frutillar Bajo for much of their income.

Frutillar Bajo is near the lake, and has been reserved for tourism activities and is generally the point of gravity where most the money has been attracted to for investment. Investment in Frutillar Alto for living is simply viewed by most Chileans as undesirable, compared to the areas directly around the Lake. This has however served to limit random social housing projects and other programs of the government in Santiago from plopping such things as tin roofed track homes in to the middle of an otherwise picture perfect tourism town. Thus, this urban planning has kept the property values and charm of the town in tack. Towns without such careful planning have resulted in social and economic disasters for everyone concerned in other parts of Chile, especially those trying to build a tourism industry after the fact. Is it fair? Most likely not. Necessary, most definitely.

Frutillar Infrastructure
There are numerous projects and properties near Frutillar that perhaps do not suffer from any of the above issues, that are still are not the best. Most notably access to deep water wells, electricity, but also internet. A few kilometers one way or the other, and many properties may have to wait many years for the basic infrastructure to reach them. Buying in to them, is a gamble on technology development in rural areas in Chile and also commitment by the developers and residents to push through infrastructure in a reasonable amount of time. Frutillar is well wired overall, but there are some less than apparent holes in the utility deployment in and around the city. For example, some property almost in the center of town, will not have wired phone lines, cable, or internet. On the other hand, properties located a relatively long way from town will have broadband Internet and other services. Much of this has to do with the money and political influence of those in the area. Of course Chile has excellent wireless infrastructure to compensate with such things as directTV and mobile broadband. Patience would likely yield some good returns for these sorts of properties near Frutillar.

Overall, what the future will bring to Frutillar is impossible to tell for certain, as with any real estate investment destination, but the writing is definitely on the wall of a town set to explode for foreign investors in Chile. Even if big returns never materialize, Frutillar is definitely one of the best places in Southern Chile and perhaps South America to literally have to sit on a real estate investment while you wait for it to come of age.

Related Southern Chile Topics: Frutillar Chile, Puerto Varas Chile, Puerto Varas Real Estate, Buying Real Estate in Chile, Los Lagos Chile Real Estate Market