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Arequipa's real estate market is showing strong momentum as of September 2025, with central neighborhoods significantly outperforming suburban areas in both price appreciation and rental yields.
The city's property market has experienced consistent growth driven by urbanization, infrastructure investments, and limited housing supply, making it an attractive destination for both residents and investors looking for stable returns in Peru's second-largest city.
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Arequipa's property market shows robust fundamentals with 9% annual price growth and strong demand concentrated in central districts like Cayma, Yanahuara, and the Historic Centre.
Mid-range apartments in central areas offer the best investment potential, with rental yields averaging 5.99% citywide and higher returns possible through short-term rentals in tourist-friendly neighborhoods.
| Market Segment | Current Price Trend | 12-Month Outlook | Best Investment Strategy |
|---|---|---|---|
| Central Arequipa Apartments | +9% annually | 4.5-9% growth expected | Buy-to-rent or buy-to-live |
| Suburban Properties | Moderate growth | Slower appreciation | Avoid for investment |
| Historic Centre | Strong demand | Continued appreciation | Airbnb/short-term rental |
| Cayma/Yanahuara | High growth | Above-average returns | Mid-range apartments |
| Alto Selva Alegre | Emerging growth | High potential | Early investment opportunity |
| Commercial Spaces | Stable | Steady demand | City center retail/mixed-use |
What are the current housing prices in Arequipa right now?
As of September 2025, Arequipa's residential property market shows a median price of S/1,890,000 (approximately US$500,000) for residential real estate.
The average price per square meter stands at S/3,480 (around US$1,000), which represents a significant benchmark for the city's property valuation. Mid-range apartments in desirable neighborhoods like Cayma and Yanahuara are currently averaging S/451,000 for 87-square-meter units in new developments.
For rental properties, typical furnished apartments outside premium areas command approximately S/956 to S/2,650 per month (US$700 equivalent) for units ranging from 85 to 90 square meters. These figures reflect the current state of Arequipa's housing market, which has maintained steady growth throughout 2025.
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How have property values changed over the past 12 months?
Arequipa's residential property market experienced robust growth with prices increasing by approximately 9% year-over-year as of June through August 2025.
This growth rate significantly exceeds Peru's national average and outpaces current inflation rates, indicating strong local market fundamentals. The demand for housing in Arequipa grew by 15% over the same period, driven primarily by economic growth and limited new housing supply entering the market.
These figures position Arequipa as one of Peru's strongest performing real estate markets, with central neighborhoods showing particularly impressive appreciation rates. The combination of increased demand and constrained supply has created favorable conditions for property owners and signals continued market strength.
What are the price projections for the next 6 to 12 months?
Property prices in Arequipa are expected to continue rising moderately, with projected growth of 4.5% to 9% over the next 6 to 12 months.
This continued growth will be driven by ongoing demand and urbanization trends, particularly concentrated in central neighborhoods and established apartment districts. However, the supply-demand imbalance combined with rising mortgage rates (currently 7.4% to 15%) may moderate the rate of price increases toward the end of 2025.
Central Arequipa areas including the Historic Centre, Cayma, Yanahuara, and emerging districts like Alto Selva Alegre are likely to experience above-average growth due to new infrastructure developments and sustained local demand. Investors and buyers should expect the most significant appreciation in these well-connected urban areas.
What does the medium-term market look like over the next 2 to 3 years?
The medium-term outlook for Arequipa's real estate market remains highly positive, supported by ongoing urbanization and substantial mining and infrastructure investments planned for the region.
Central Arequipa districts—including the Historic Centre, Cayma, Yanahuara, and Alto Selva Alegre—are positioned to see above-average capital growth due to new infrastructure projects and sustained local demand. These areas benefit from improved connectivity, urban renewal projects, and proximity to employment centers.
Suburban areas face a different trajectory, with potential slowing in price growth and lower rental yields as new residential developments may outpace tenant demand. The market is likely to become increasingly concentrated in central locations, making location selection crucial for investment success over this timeframe.
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What trends are expected in the longer term over the next 5 to 10 years?
Arequipa's long-term real estate fundamentals remain exceptionally strong, with continued population growth, economic expansion, infrastructure projects, and tourism development supporting sustained market appreciation.
The city's position as Peru's second-largest urban center, combined with ongoing mining investments and government infrastructure projects, suggests the market will remain attractive to both buyers and investors throughout the next decade. Long-term appreciation in city-center and designated growth districts appears highly likely under normal economic conditions.
Potential risks that could slow market growth include macroeconomic shocks, political instability, or significant regulatory changes affecting property ownership or taxation. However, barring such exceptional events, Arequipa's real estate market is well-positioned for sustained growth over the 5 to 10-year horizon.
How does the market differ between central Arequipa and the outskirts?
The performance gap between central Arequipa and suburban areas has widened significantly, with central districts vastly outperforming outlying neighborhoods in both price appreciation and rental returns.
| Market Segment | Price Trend | Rental Yield | Market Characteristics |
|---|---|---|---|
| Central Arequipa | High, rising | Increasing | Strong demand from residents and Airbnb; higher rents, low vacancy |
| Historic Centre | Very strong | High | Professional demand and lifestyle amenities driving appreciation |
| Cayma/Yanahuara | High growth | Above average | Top performers for apartment developments |
| Alto Selva Alegre | Emerging strong | Rising | Major urban renewal and infrastructure investment |
| Suburbs/Outskirts | Moderate/flat | Declining | Oversupply of new builds reduces rental returns |
| Peripheral Areas | Slow | Low | More competition for landlords, tenant preference for city center |
Which neighborhoods show the strongest growth potential?
Several key neighborhoods in Arequipa demonstrate exceptional growth potential based on current development patterns and infrastructure investments.
Cayma and Yanahuara continue to be top performers for apartment developments, showing robust price appreciation and sustained demand growth. These established districts benefit from excellent connectivity to the city center while offering modern residential options that appeal to both local residents and investors.
Alto Selva Alegre represents the most significant emerging opportunity, positioned for substantial value increases due to major urban renewal projects and infrastructure investments currently underway. The Historic Centre maintains its strong performance driven by professional demand and vibrant lifestyle amenities, leading to consistent rent increases and property appreciation.
These neighborhoods share common characteristics: proximity to employment centers, good transportation links, and ongoing infrastructure improvements that enhance their appeal to residents and tenants.
What's the outlook for different property types like apartments, houses, and commercial spaces?
Apartments demonstrate the strongest and most reliable performance across Arequipa's real estate market, particularly in central and established districts where demand consistently exceeds supply.
Houses command higher absolute purchase prices but show slower yield and price appreciation compared to apartments, with popularity concentrated in suburban areas where growth prospects are more limited. The apartment market benefits from stronger rental demand, easier property management, and better liquidity for resale.
Commercial real estate data is less comprehensive, but retail and mixed-use spaces in the city center or adjacent to universities and business districts remain solid investment opportunities. The urban growth pattern supports demand for ground-floor retail, office spaces, and mixed-use developments that serve the expanding urban population.
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How are rental yields looking across different areas of the city?
Rental yields in Arequipa average 5.99% gross citywide as of the second quarter of 2025, with significant variation between central and suburban locations.
Central Arequipa neighborhoods show rising rental yields, particularly for short-term rental properties that benefit from tourism and professional demand. Short-term rentals and Airbnb properties can generate up to twice the revenue of traditional long-term leases, with top-performing properties achieving occupancy rates between 45% and 78%.
Suburban areas experience declining yields due to increased competition from new residential developments and tenant preferences for modern city center apartments. The oversupply of suburban housing has reduced landlords' pricing power and increased vacancy periods, making central locations significantly more attractive for rental property investment.
What budget ranges are most attractive for buyers right now?
Mid-range buyers with budgets between S/400,000 and S/600,000 (US$110,000 to $160,000) find the most attractive opportunities in Arequipa's current market.
This budget range provides access to quality apartments in upward-trending central districts that offer both good value and strong appreciation prospects. Properties in this range typically feature modern amenities, desirable locations, and strong rental potential, making them suitable for both owner-occupiers and investors.
Upscale buyers with budgets exceeding S/1.5 million can access large houses or premium central apartments, while lower-end purchases around S/300,000 continue to attract local families but may deliver more modest appreciation potential. The mid-range segment offers the optimal balance of affordability, quality, and investment potential in today's market.
If you're buying to live in, where and what type of property makes the most sense today?
For owner-occupiers, apartments in Cayma, Yanahuara, and the Historic Centre provide the optimal combination of lifestyle quality, convenience, and future value appreciation.
These central neighborhoods offer superior access to employment centers, cultural amenities, restaurants, and transportation networks that enhance daily living quality. The concentration of services and urban amenities in these areas makes them particularly attractive for professionals and families seeking a vibrant city lifestyle.
Mid-range budgets between S/400,000 and S/600,000 represent the sweet spot for owner-occupiers, providing access to quality properties in desirable locations while ensuring strong potential for future value appreciation. These properties typically offer modern features, good building quality, and proximity to the amenities that make Arequipa an attractive place to live.
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If you're buying to rent out or resell, where should you focus and at what budget level?
Investment buyers should concentrate on central Arequipa areas including the Historic Centre, Cayma, Yanahuara, and Alto Selva Alegre, with optimal budgets ranging from S/450,000 to S/700,000.
For buy-to-rent strategies, properties suitable for Airbnb or short-term professional rentals in central locations deliver the strongest yields due to higher occupancy rates and rental flexibility. These areas benefit from tourist appeal, proximity to business districts, and the lifestyle amenities that command premium rents.
For buy-to-resell strategies, focus on districts benefiting from urban renewal projects, particularly Alto Selva Alegre, or newly developed mid-market apartments in zones with improving amenities and infrastructure. Value increases are most predictable in these designated growth corridors where government investment and private development create sustained appreciation momentum.
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 real estate market demonstrates strong fundamentals with central neighborhoods significantly outperforming suburban areas in both price appreciation and rental yields.
The optimal investment strategy focuses on mid-range apartments in central districts, particularly Cayma, Yanahuara, and Alto Selva Alegre, where infrastructure development and sustained demand support continued growth.