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Property prices in Arequipa are experiencing strong upward momentum as we reach mid-2025, with residential prices rising by approximately 9% over the past 12 months. This growth significantly outpaces both national inflation and most other major Peruvian cities, driven by severe supply constraints, rapid urbanization, and economic expansion in the mining and infrastructure sectors.
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Arequipa's residential property market is experiencing a significant price surge in 2025, with demand growing 15% while supply remains constrained. The city's metro population has reached 971,000 people, creating unprecedented housing pressure.
Mid-range apartments in districts like Cayma and Yanahuara are leading price increases, with new developments averaging S/451,000 for 87m² units, while gross rental yields remain stable at 5.99%.
| Property Metric | Current Value (2025) | Change from 2024 | Market Context |
|---|---|---|---|
| Median Property Price | S/1,890,000 (~USD 500,000) | +9% YoY | Significantly outpacing inflation |
| Price per Square Meter | S/3,480 (~USD 1,000) | +4.5-9% range | More affordable than Lima |
| Residential Demand | 15% growth projected | +15% YoY | Driven by urbanization |
| Rental Yield | 5.99% | Stable | Healthy investment returns |
| Metro Population | 971,000 people | +1.25% YoY | Continued growth pressure |
| Mortgage Rates | 7.4-15% range | Rising trend | High financing costs |
| Inflation Rate | 1.65% (April 2025) | Within target range | Supporting real price gains |
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.
How much have Arequipa property prices increased in the past 12 months?
Arequipa residential property prices have surged by approximately 9% over the past 12 months as of June 2025.
This growth rate significantly outpaces Peru's national inflation rate of 1.65% recorded in April 2025, indicating strong real price appreciation. The increase also exceeds the performance of other major Peruvian cities, with Lima seeing only 3-7% nominal growth during the same period.
The price surge reflects fundamental market imbalances in Arequipa, where demand for residential properties is projected to grow by 15% in 2025 while new supply remains severely constrained. This supply-demand mismatch is particularly pronounced in popular districts like Cayma and Yanahuara, where new apartment developments are averaging S/451,000 for 87m² units.
Median property prices in Arequipa now reach approximately S/1,890,000 (around USD 500,000), with the average price per square meter standing at S/3,480 (approximately USD 1,000). These figures represent substantial gains from 2024 levels, driven by urbanization pressures and economic expansion in the mining sector.
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Which districts in Arequipa are experiencing the fastest property price growth in 2025?
Cayma and Yanahuara districts are leading Arequipa's property price surge in 2025, experiencing the most rapid appreciation citywide.
These districts benefit from strategic positioning with better infrastructure development, new residential and commercial projects, and higher demand from both local families and newcomers to the city. The concentration of new multifamily condominium developments in these areas has created particular price pressure.
Yanahuara specifically showcases the market dynamics, with 146m² apartments priced at USD 125,000 (USD 857/m²) and 215m² houses reaching USD 232,000 (USD 1,079/m²). These prices reflect the premium buyers are willing to pay for location and modern amenities in well-established neighborhoods.
The rapid growth in these districts stems from Arequipa's lack of a formal urban development plan, which has resulted in concentrated development in specific areas rather than distributed growth across the city. This concentration effect amplifies price increases in the most desirable locations.
Infrastructure improvements and proximity to commercial centers make these districts particularly attractive to the expanding population of 971,000 people in metro Arequipa, which grew by 1.25% year-over-year in 2024.
What are the current mortgage rates for property buyers in Arequipa?
Mortgage rates in Arequipa remain challenging for buyers in mid-2025, with significant variation depending on currency and borrower status.
For Peruvian Sol (PEN)-denominated mortgage loans, the average interest rate stands at 7.41% as of the most recent data, representing an increase from 7.22% in November 2023. Foreign currency-denominated loans offer slightly better rates at 6.32%, though they require higher down payments and carry currency risk.
Foreign buyers typically face rates ranging from 7-11% for 20-year terms, with requirements including 20-30% down payment, valid residency status, local bank account, and comprehensive income documentation. Local banks offer peso-denominated loans at 9-11% for residents with local income, while dollar-denominated loans range from 7-9%.
The financing environment heavily favors cash buyers or those who can secure international financing at 5-7% through home country assets. Developer financing varies by project, typically ranging from 8-12%, providing an alternative for qualified buyers.
Peru's central bank has maintained its reference rate at 4.50% as of May 2025, down from 4.75% earlier in the year, but mortgage rates continue to remain elevated despite these policy cuts.
How do Arequipa property prices compare to Lima and other major Peruvian cities in 2025?
Arequipa offers significantly more affordable property prices compared to Lima while delivering superior price growth, making it an attractive alternative for investors in 2025.
| City | Avg. Price per m² (USD) | 2024-25 Price Change (%) | Market Characteristics |
|---|---|---|---|
| Lima | 1,500 | 3.0-7.0 | Highest prices, slower growth, luxury market stagnant |
| Arequipa | 1,000 | 4.5-9.0 | Strong growth, mid-range market vibrant, supply constrained |
| Cusco | 1,200 | 3.8 | Moderate growth, tourism-driven demand |
| Trujillo | 950 | 5.5 | Emerging market, good rental yields |
| Tarapoto | 800 | 6.0 | Smaller market, faster growth, lower liquidity |
Arequipa's competitive advantage lies in its combination of affordability and growth potential. While Lima's luxury segment faces stagnation due to political uncertainty, Arequipa's mid-range market remains vibrant with strong local demand fundamentals.
The city's appeal as an alternative to Lima has strengthened, offering buyers 33% lower prices per square meter while delivering superior appreciation rates. This value proposition attracts both domestic buyers seeking alternatives to expensive Lima real estate and international investors looking for emerging market opportunities.
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What property types are seeing the biggest price increases in Arequipa?
New apartments are experiencing the most dramatic price surges in Arequipa, particularly in central and desirable districts during 2025.
Mid-range apartments in developments show the strongest appreciation, with new units averaging S/451,000 for 87m² (approximately S/5,180/m² or USD 1,400/m²) in sought-after areas like Cayma and Yanahuara. This represents significant premium pricing compared to the city average.
Multifamily condominium units lead the market due to housing shortage and lack of formal development planning, creating concentrated demand in specific areas. These properties attract both local families seeking modern amenities and newcomers drawn by Arequipa's economic opportunities.
Modern houses in established neighborhoods show moderate but steady price increases, with higher demand for properties offering contemporary features and good connectivity. Land prices are also rising, though limited supply and zoning issues slow the pace compared to ready-to-occupy apartments.
The preference for apartments reflects changing demographics and lifestyle preferences, with younger families and professionals favoring low-maintenance living options with shared amenities over traditional standalone houses.
What are the property price forecasts for Arequipa through 2026-2027?
Short-term forecasts indicate continued nominal growth of 9% for Arequipa properties in 2025-2026, though real appreciation will be limited by inflation.
Medium-term projections for 2027-2030 suggest annual nominal growth of 4-5%, driven by continued urbanization and infrastructure projects throughout the region. This represents a moderation from current high growth rates as supply catches up to demand.
Infrastructure completion scheduled for 2027-2028 may boost prices by 10-15% in connected areas, particularly benefiting properties with improved transportation links and utilities. These improvements will likely create new micro-markets within the city.
Long-term outlook for 10-20 years remains positive with sustained demand from growing population and economic expansion, though real appreciation will depend heavily on political stability and execution of urban planning initiatives.
The key risk factor remains political uncertainty ahead of the 2026 elections, which could temporarily slow price growth if investor confidence weakens, particularly affecting speculative segments and foreign buyer interest.
How is the 2025 political transition affecting Arequipa property investment?
Political uncertainty represents the key risk factor for Arequipa's property market, though local fundamentals remain strong enough to support continued growth.
The 2025 presidential transition has not caused immediate price drops in Arequipa, but has led to increased caution among investors, especially in the luxury segment and among foreign buyers. This contrasts with Lima's luxury market, which faces more significant political sensitivity.
Investor confidence in Arequipa benefits from the city's strong economic fundamentals, including mining sector expansion and infrastructure development, which provide insulation from purely political factors. Local demand from families and regional migration continues regardless of national political conditions.
If political stability is maintained post-2026 elections, demand and prices should continue their upward trajectory. However, increased instability could stall price growth or cause reversals, particularly in speculative investments and international buyer segments.
Economic forecasts remain optimistic, with Peru's Central Bank predicting positive growth rates for 2025 at 3.1%, suggesting favorable conditions for continued foreign and domestic investment in Arequipa's real estate market.
We made this infographic to show you how property prices in Peru compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It's an easy way to spot where you might get the best value for your money. We hope you like it.
What is driving the increased demand for Arequipa properties in 2025?
Residential demand in Arequipa is surging by 15% in 2025, driven by multiple converging factors creating unprecedented housing pressure.
Population growth represents the primary driver, with metro Arequipa reaching 971,000 people in 2024, up 1.25% year-over-year. This expansion creates natural housing demand as new residents seek accommodation in the growing city.
Economic expansion in mining and infrastructure sectors provides the jobs attracting newcomers to Arequipa. The mining sector experienced remarkable 116.4% production growth in 2024, significantly outpacing both Lima and national averages, creating wealth effects and employment opportunities.
Urbanization trends see rural populations migrating to Arequipa seeking better opportunities and amenities, while local family formation among the young, expanding population creates additional demand for starter homes and family housing.
Infrastructure improvements and new commercial developments make the city increasingly attractive for both residents and businesses, while the housing deficit growing at 6% annually according to local construction chamber officials demonstrates the structural supply shortage fueling price increases.
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How much have Arequipa property prices increased since 2020?
Arequipa property prices have experienced substantial cumulative increases of 20-30% since 2020, particularly in mid-range properties in central districts.
The market experienced initial slowdown in 2021-2022 due to mining sector challenges and broader economic uncertainty, but prices rebounded strongly as new mining projects and infrastructure investments gained momentum from 2023 onward.
This recovery and subsequent growth reflect the city's resilience and underlying economic strength, with the mining sector providing fundamental support for local real estate demand. The rebound demonstrates Arequipa's attractive fundamentals compared to other Peruvian cities.
Current price levels represent full recovery from pandemic-era weakness plus additional appreciation driven by supply constraints and economic expansion. Properties that cost S/1.5 million in 2020 now command approximately S/1.9-2.0 million in similar condition and location.
The price trajectory shows acceleration in recent years, with most gains concentrated in 2024-2025 as economic conditions improved and supply shortages became more pronounced across desirable districts.
What economic factors are supporting Arequipa property price growth?
Arequipa's property market benefits from favorable macroeconomic conditions supporting sustained price growth in 2025.
Peru's central bank reference rate stands at 4.50% as of May 2025, down from higher levels, though mortgage rates remain elevated at 7.4-15% depending on loan type and borrower profile. This creates a mixed financing environment favoring cash buyers.
Inflation remains well-controlled at 1.65% annually as of April 2025, with core inflation at similar levels and expectations stable around the central bank's 2.3% target. This low inflation environment supports real price appreciation in property values.
Economic growth reached 3.1% in 2025, driven primarily by mining and infrastructure sectors that provide direct employment and income support in Arequipa. This growth creates the income necessary to support higher property prices.
Currency stability helps international buyers, with the Peruvian Sol expected to remain relatively stable with minor appreciation post-2026 elections, reducing currency risk for foreign property investments.
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Are there signs of a property bubble in Arequipa's real estate market?
Arequipa shows no clear signs of a speculative property bubble in 2025, with price increases largely supported by fundamental economic factors.
Strong demand fundamentals include population growth at 1.25% annually, economic expansion driven by mining and infrastructure sectors, and continued urbanization creating legitimate housing needs. These factors support current price levels without speculative excess.
Price appreciation appears reasonable relative to income growth and economic expansion, with rental yields remaining stable at 5.99% indicating properties retain investment viability rather than purely speculative value.
However, certain risks warrant monitoring, including high mortgage rates potentially limiting buyer pool, political instability affecting investor confidence, and potential oversupply in some segments if demand suddenly weakens.
The market's concentration in specific districts like Cayma and Yanahuara could create localized overheating, but city-wide fundamentals remain sound with genuine housing deficit supporting continued demand growth.
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 residential property market demonstrates robust fundamentals supporting continued price growth through 2025 and beyond.
With 9% annual price increases, 15% demand growth, and supply constraints in desirable districts, the market favors sellers while offering attractive opportunities for informed buyers with proper financing.
Sources
- TheLatinvestor - Arequipa Real Estate Trends
- TheLatinvestor - Peru Real Estate Market Statistics
- Global Property Guide - Peru Property Market Analysis
- TheLatinvestor - Peru Property Buying Guide
- TheLatinvestor - Best Areas in Peru
- Trading Economics - Peru Interest Rate
- BBVA Research - Peru Economic Outlook
- Focus Economics - Peru Monetary Policy