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Arequipa's real estate market in 2025 shows strong fundamentals with property prices rising 9% annually and robust demand driven by mining sector growth.
The city faces a significant housing deficit of approximately 55,000 units, creating upward pressure on prices while offering opportunities for investors and homebuyers willing to navigate the competitive market conditions.
If you want to go deeper, you can check our pack of documents related to the real estate market in Peru, based on reliable facts and data, not opinions or rumors.
As of September 2025, Arequipa presents a compelling but challenging property market with median home prices around S/1,890,000 and strong annual growth driven by mining investments and infrastructure projects.
While rental yields of 5.49% and continued economic expansion make it attractive for investors, buyers must navigate high transaction costs, limited supply, and potential political uncertainties ahead of 2026 elections.
| Market Indicator | Current Status (September 2025) | Investment Outlook |
|---|---|---|
| Median Property Price | S/1,890,000 (~USD 500,000) | Strong upward trend |
| Annual Price Growth | 9% (past 12 months) | Above inflation |
| Rental Yields | 5.49% gross yield | Stable returns |
| Housing Supply | 55,000 unit deficit | Continued price pressure |
| Demand Growth | 15% YoY increase | Mining-driven expansion |
| Mortgage Rates | 6.95-7.25% (fixed) | Neutral financing conditions |
| Economic Growth | 2.8-5% regional forecast | Outpacing national average |
What are current property prices in Arequipa?
Property prices in Arequipa have reached significant levels as of September 2025, with median home values around S/1,890,000 (approximately USD 500,000) for mid-range properties.
The price per square meter averages S/3,480 (roughly USD 1,000), with new mid-range apartments in desirable districts like Cayma and Yanahuara typically priced at S/451,000 for 87-square-meter units.
These prices reflect Arequipa's position as Peru's second-largest city and an important economic hub, particularly for the mining sector. The city's property values have been rising consistently due to limited supply and strong local economic performance.
Luxury properties in prime locations can command significantly higher prices, while more affordable options exist in developing neighborhoods, though these areas may lack some infrastructure and amenities.
How have real estate prices in Arequipa changed over the past few years?
Arequipa's real estate market has experienced remarkable growth, with property prices surging 9% over the past 12 months alone.
Since 2020, total price increases have ranged between 20-30%, significantly outpacing national inflation rates. This growth trajectory has been one of the most robust in Peru, reflecting the city's strong economic fundamentals and growing appeal to both residents and investors.
The price appreciation has been driven by several key factors including a severe housing supply shortage, mining-led economic expansion, ongoing urbanization, and substantial infrastructure investments throughout the region.
This upward trend has been particularly pronounced in central districts and areas with good access to employment centers, where demand consistently exceeds available housing stock.
What are experts saying about the housing market trend in Arequipa?
Real estate experts maintain a positive outlook on Arequipa's housing market, noting that price growth continues to outpace both inflation and national averages.
Industry professionals attribute this strong performance to the city's robust local economy, particularly the mining sector, combined with persistent demographic growth and infrastructure development projects. The expert consensus suggests that these fundamental drivers will continue supporting market growth in the near term.
However, experts also note that the market faces challenges including urban planning delays and regulatory constraints that have slowed new housing development. This supply-demand imbalance is expected to persist, maintaining upward pressure on prices.
Most analysts recommend that buyers act decisively when finding suitable properties, as the competitive market conditions are likely to continue throughout 2025 and into 2026.
It's something we develop in our Peru property pack.
How strong is the demand for property in Arequipa right now?
Property demand in Arequipa is exceptionally strong, with a 15% year-over-year increase recorded in 2025.
| Demand Driver | Impact Level | Key Demographics |
|---|---|---|
| Mining Sector Growth | High | Professional workers, executives |
| Urban Migration | High | Young families, students |
| Investment Interest | Medium | Local and international investors |
| Infrastructure Development | Medium | Government workers, contractors |
| Tourism Growth | Low-Medium | Service sector workers |
| Educational Opportunities | Medium | University students, academic staff |
| Quality of Life | Medium | Retirees, lifestyle buyers |
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What's the current level of housing supply or inventory in Arequipa?
Arequipa faces a significant housing shortage with an estimated deficit of approximately 55,000 units as of 2024.
The limited new housing supply is primarily concentrated in multifamily condominium projects, with development efforts focused in a few key districts rather than spread throughout the metropolitan area.
This supply constraint stems from several factors including urban planning delays, regulatory challenges, and the time-intensive nature of new construction projects in the region. Most new developments require extensive permitting processes and infrastructure coordination.
The slow response of housing supply to growing demand has been a primary driver of the sustained price increases, and this imbalance is expected to persist for several more years given current development timelines.
How are interest rates in Peru affecting property purchases today?
Peru's central bank maintains its policy rate at 4.50% as of August 2025, representing a neutral stance that supports continued economic growth without fueling excessive inflation.
However, mortgage rates for property buyers are higher, typically ranging from 6.95% to 7.25% for fixed-rate loans, with some borrowers facing rates up to 15% depending on their risk profile and down payment capacity.
Foreign buyers face additional challenges in accessing financing, usually requiring larger down payments of 20-30% compared to local buyers, along with stricter documentation requirements and shorter loan terms of 15-20 years versus 30 years for Peruvian citizens.
These financing conditions, while not prohibitive, do require buyers to have substantial capital available and carefully plan their purchase financing strategy.
What's the outlook for the Peruvian economy in the coming year?
Peru's national economy is forecast to grow by 2.6% in 2025, with the Arequipa region expected to significantly outperform this national average.
The southern region, including Arequipa, could see growth rates between 2.8% and 5% in the coming years, driven primarily by new mining investments such as the TĂa MarĂa project and Cuajone expansions, along with continued tourism development.
Major infrastructure investments and the expansion of the Matarani Port are expected to further boost regional economic activity and employment opportunities, creating additional demand for housing and commercial properties.
However, political uncertainty ahead of the 2026 elections and potential global trade headwinds represent risks that could temporarily slow market momentum, particularly affecting speculative investments and luxury property segments.
How stable is employment and income growth in Arequipa at the moment?
Employment and income stability in Arequipa are exceptionally strong, primarily supported by the region's thriving mining sector.
The region experienced a remarkable 116.4% spike in mining production during 2024, creating numerous high-paying job opportunities and attracting new residents to the area, which has directly contributed to increased demand for both housing purchases and rentals.
Arequipa's metropolitan area population has reached 971,000 and continues growing at over 1% annually, reflecting the city's economic attractiveness and job market strength. This population growth creates sustained demand for housing across all price segments.
The diversified economy, including mining, agriculture, manufacturing, and services, provides multiple income streams for residents and reduces dependence on any single sector, contributing to overall economic stability.
It's something we develop in our Peru property pack.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Peru 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 rental yields for properties in Arequipa?
Arequipa properties currently generate gross rental yields of approximately 5.49% as of the second quarter of 2025.
While this yield is slightly below Lima's rental returns, it represents stable and competitive returns for investors, particularly when considering the city's strong economic fundamentals and continued growth prospects.
Investors should note that net yields after taxes, maintenance, and management expenses will typically be 1.5-2% lower than gross yields, resulting in actual returns of approximately 3.5-4% annually.
The rental market remains robust with climbing rents driven by strong demand, especially in central districts and neighborhoods with good access to mining-related employment centers where housing supply remains particularly tight.
Are there any new infrastructure or development projects that could impact property values?
Several major infrastructure projects are underway that will likely drive future property value increases in affected districts.
1. **Matarani Port Expansion**: A US$600 million investment to expand and modernize the port facilities, which will boost trade and create employment opportunities.2. **Majes Siguas II Project**: Expanding irrigation infrastructure and agricultural development, supporting population and economic growth in the region.3. **Urban Renewal Initiatives**: Multiple projects including new shopping centers, hospitals, and road upgrades throughout the metropolitan area.4. **Public Transportation Improvements**: Enhanced connectivity between districts and employment centers, making previously less accessible areas more attractive for development.5. **Social Housing Programs**: Government-backed initiatives by PROINVERSIĂ“N and local authorities investing in public amenities and transport infrastructure, with Alto Selva Alegre district highlighted for particular growth potential.These infrastructure investments are expected to create positive spillover effects on property values, particularly in districts with direct access to new facilities and improved transportation links.
What are the main risks or uncertainties for buyers in Arequipa right now?
Several key risks and uncertainties face property buyers in Arequipa's current market environment.
The continued housing deficit and rapid price escalation in key districts create concerns about affordability and potential market corrections if supply eventually catches up with demand or if economic conditions change significantly.
Political and regulatory uncertainty represents a major risk, particularly with Peru's 2026 elections approaching, which could bring policy changes affecting foreign investment, property ownership rules, or economic priorities that impact the mining sector.
Buyers must also navigate complex legal and tax requirements, with substantial transaction costs that can add 5-7% to the total purchase price, along with ongoing annual property taxes and potential changes to tax regulations.
Additional risks include the requirement for substantial down payments, especially for foreign buyers, and the possibility of extended permitting and legal processes that can delay transactions or create unexpected costs.
How do property taxes, fees, and legal processes affect the true cost of buying there?
Property buyers in Arequipa face significant additional costs beyond the purchase price that can substantially impact the total investment required.
| Cost Category | Rate/Amount | When Applied |
|---|---|---|
| Transfer Tax | 3% of purchase price | At time of sale |
| VAT (IGV) | 18% (new construction only) | New properties only |
| Notary Fees | 0.3-0.5% of price | During transaction |
| Registration Fees | 1% of purchase price | Property registration |
| Legal Fees | 0.5-1% (recommended) | Professional assistance |
| Annual Property Tax | 0.2-1% of assessed value | Yearly ongoing cost |
| Title Insurance | 0.1-0.3% (optional) | One-time protection |
It's something we develop in our Peru property pack.
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.
Arequipa's property market in September 2025 presents a compelling opportunity for both investors and homebuyers, despite the challenges of high prices and limited supply.
The combination of strong economic fundamentals, infrastructure development, and sustained demand growth suggests continued market strength, though buyers must carefully consider transaction costs and political risks in their investment planning.
Sources
- The LatinVestor - Arequipa Price Forecasts
- The LatinVestor - Arequipa Real Estate Trends
- The LatinVestor - Peru Real Estate Market
- The LatinVestor - Arequipa Real Estate Forecasts
- BBVA Research - Peru Central Bank Policy Rate
- The LatinVestor - Moving to Peru Buy Property
- SAE Apoyo Consultoria - Southern Region Growth Forecast
- Global Property Guide - Peru Rental Yields
- Industry Intel - Peru Infrastructure Projects
- InfraPPP World - Matarani Port Expansion