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Arequipa offers rental yields between 5.5% and 6% gross, making it an attractive investment destination in Peru.
As of September 2025, the Arequipa rental market shows strong fundamentals with apartments dominating rental inventory at 51-52% of listings, while the city center and Yanahuara district command the highest rents. Net yields typically range from 3.5% to 4.5% after accounting for all expenses, positioning Arequipa competitively among major Peruvian cities.
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Arequipa's rental market offers gross yields of 5.5-6% with net yields of 3.5-4.5% after expenses.
The city center, Yanahuara, and Cayma districts provide the strongest rental performance with lower vacancy rates.
| Property Type | Average Gross Yield | Average Net Yield |
|---|---|---|
| 2-bedroom apartment | 5.66% | 3.8-4.2% |
| 3-bedroom apartment | 5.31% | 3.5-4.0% |
| Houses | 5.0-6.0% | 3.5-4.3% |
| Commercial units | 6.0-8.0% | 4.5-6.0% |
| Short-term rentals | Variable | 3.0-5.5% |
What are the main property types people usually rent out in Arequipa?
Apartments and condos dominate the Arequipa rental market, representing 51-52% of all rental listings as of September 2025.
Private rooms follow closely behind, particularly popular for short-term vacation rentals targeting tourists and budget-conscious travelers. Houses make up approximately 19% of listings and appeal primarily to families and larger groups seeking more space and privacy.
The rental inventory is heavily skewed toward smaller units, with 1-bedroom and 2-bedroom properties accounting for the majority of available rentals. This configuration serves couples, young professionals, and small families who form the backbone of Arequipa's rental market.
Hotel-style and boutique rental properties also maintain a significant presence, specifically catering to the growing tourist market that visits Arequipa for its colonial architecture and cultural attractions.
Commercial rental properties, while less common in residential-focused areas, include retail spaces and office units that generate higher yields than residential properties.
Which neighborhoods or areas have the strongest rental markets?
The Historical Center stands out as the most sought-after rental area in Arequipa, attracting both tourists and professionals working downtown.
Yanahuara ranks as a premium rental district, known for its traditional architecture, panoramic views of the city, and appeal to mid-to-high income renters. This picturesque neighborhood consistently commands higher rental rates due to its desirable location and aesthetic appeal.
Cayma represents the upscale residential option, offering a quieter environment that attracts families and professionals seeking premium rental accommodations. The area's well-maintained infrastructure and proximity to amenities make it highly desirable.
Miraflores, Selva Alegre, Paucarpata, Socabaya, and La Libertad each serve different market segments, attracting a mix of families, expatriates, professionals, and long-term tenants. These districts offer more affordable options while still maintaining good rental demand.
For short-term rentals specifically, central districts and areas adjacent to major landmarks experience the highest occupancy rates and can command premium nightly rates during peak tourist seasons.
How do yields vary depending on the surface size of the property?
Smaller properties generally deliver higher gross rental yields in Arequipa's market as of September 2025.
| Property Size | Average Purchase Price | Monthly Rent | Gross Yield |
|---|---|---|---|
| 2-bedroom apartment | $118,690 | $560 | 5.66% |
| 3-bedroom apartment | $165,000 | $730 | 5.31% |
| 1-bedroom apartment | $85,000-$95,000 | $420-$480 | 5.8-6.2% |
| Studio/efficiency | $60,000-$70,000 | $350-$400 | 6.5-7.0% |
| 4+ bedroom house | $220,000+ | $900-$1,200 | 4.8-5.2% |
The inverse relationship between property size and yield reflects the higher demand for smaller, more affordable units among Arequipa's primary renter demographic of young professionals and small families.
Larger properties face longer vacancy periods and a more limited pool of potential tenants, which pressures yields downward despite higher absolute rental income.
What is the typical purchase price including fees, taxes, and closing costs?
The median property price in Arequipa reaches S/1,890,000 (approximately $500,000) as of September 2025, though mid-range apartments in desirable areas like Cayma and Yanahuara average S/451,000 for 87m² (around $125,000).
Price per square meter ranges from S/3,480 to S/5,180 ($1,000 to $1,400 per m²) in sought-after neighborhoods, with premium locations commanding the higher end of this range.
Closing costs and fees typically add 4-7% to the purchase price, covering legal fees, notary services, property registration, and various taxes. These costs are generally lower than Lima but align with other major Peruvian cities.
Legal and notary fees usually account for 1-2% of the purchase price, while property registration and transfer taxes add another 2-3%. Additional costs may include property inspections, appraisals, and real estate agent commissions.
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What are the main ongoing expenses such as maintenance, insurance, property management, and utilities?
Maintenance fees for mid-tier Arequipa apartments typically range from $1 to $2.50 per square meter monthly, translating to $40-$120 per month for a typical unit.
1. **Property management fees**: 8-12% of monthly rental income for full-service management2. **Maintenance and repairs**: $40-$120 monthly for apartments, higher for houses3. **Property insurance**: Basic policies cost under $200 annually4. **Property taxes**: Relatively low compared to purchase price, typically 0.2-0.6% annually5. **Utilities (if owner-paid)**: $50-$120 monthly for 2-3 bedroom units6. **Legal and administrative costs**: $200-$500 annually for document renewals and complianceThese expenses are generally lower than Lima due to Arequipa's more affordable service costs and lower property values, making it attractive for investors seeking better net yields.
Property management becomes particularly valuable for investors not residing in Arequipa, as professional management ensures consistent rent collection and property maintenance.
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What are the typical vacancy rates in different parts of the city and for different property types?
Short-term rental properties in Arequipa show a median occupancy rate of 36%, with top-performing properties achieving up to 78% occupancy and underperforming units dropping to 16%.
Long-term rental vacancies in central Arequipa and popular districts like Cayma, Yanahuara, and the city center typically range from 5-10% due to consistent demand from professionals and families.
Outlying or less desirable areas experience higher vacancy rates, sometimes reaching 15-20%, particularly for larger properties that target a more limited renter pool.
Seasonal fluctuations significantly impact short-term rentals, with August representing the peak occupancy month and shoulder seasons showing notable drops in tourist demand.
Property type also influences vacancy, with smaller apartments (1-2 bedrooms) maintaining lower vacancy rates than larger houses or commercial units due to broader market appeal.
What is the average rent for long-term rentals versus short-term or vacation rentals?
Long-term rental rates in Arequipa vary significantly between central and peripheral locations as of September 2025.
| Unit Type | City Center (Monthly) | Outside Center (Monthly) | Short-Term (Per Night) |
|---|---|---|---|
| 1-bedroom apartment | S/867 ($235) | S/567 ($155) | $31-$42 |
| 2-bedroom apartment | S/1,400 ($380) | S/900 ($245) | $38-$52 |
| 3-bedroom apartment | S/1,933 ($525) | S/1,400 ($380) | $45-$59 |
| Premium properties | S/2,000-2,500 | S/1,500-2,000 | $60-$85 |
Short-term rental income shows significant variability, with median monthly Airbnb earnings of $318, while top 25% performers achieve $612-$962+ monthly. Seasonal fluctuations can cause income to vary by ±20% throughout the year.
Western-style, fully furnished condos command premium rates of S/2,000-S/2,500 for 2-3 bedroom units, reflecting the higher standards expected by expatriate and affluent local tenants.
How do gross yields compare with net yields once all costs are factored in?
Gross rental yields in Arequipa typically range from 5.5% to 6% for residential properties, but net yields drop to 3.5-4.5% after accounting for all expenses.
The difference between gross and net yields amounts to approximately 1.5-2 percentage points, primarily due to maintenance costs, property management fees, taxes, and vacancy periods.
Short-term rental properties face more variable costs including higher turnover expenses, cleaning fees, and platform commissions, but can outperform long-term rentals with effective management and high occupancy rates.
Maintenance and management typically consume 10-15% of gross rental income, while taxes, insurance, and other carrying costs add another 3-5% in annual expenses.
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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.
Can you share example rental yields for apartments, houses, and commercial units?
Residential apartments deliver the most consistent yields in Arequipa's rental market.
| Property Type | Gross Yield Range | Typical Net Yield | Investment Range |
|---|---|---|---|
| 2-bedroom apartment (central) | 5.3-5.7% | 3.8-4.2% | $100,000-$140,000 |
| 3-bedroom apartment | 5.0-5.5% | 3.5-4.0% | $150,000-$200,000 |
| Single-family house | 5.0-6.0% | 3.5-4.3% | $180,000-$300,000 |
| Commercial retail space | 6.0-8.0% | 4.5-6.0% | $120,000-$500,000 |
| Office space | 6.5-8.5% | 5.0-6.5% | $100,000-$400,000 |
Commercial properties generally outperform residential investments in terms of gross yields, but require higher initial investments and more specialized management expertise.
Houses tend to generate lower yields than apartments due to higher maintenance costs and longer vacancy periods, but may appreciate more over time due to land value.
What kind of renter profiles dominate the market—students, families, professionals, or tourists?
Families and working professionals represent the dominant long-term rental market in Arequipa, particularly attracted to growing areas with new infrastructure and employment opportunities.
University students form a significant portion of the rental market, especially in districts near major educational institutions, typically seeking affordable shared accommodations or small apartments.
The short-term vacation rental market attracts diverse demographics: approximately 40% domestic Peruvian travelers, with international tourists primarily from the United States and Europe making up the remainder.
Generation Z tourists account for roughly half of all Airbnb guests, seeking authentic cultural experiences and budget-friendly accommodations in central locations.
Most rental demand focuses on 1-2 bedroom accommodations for couples and small families, though larger groups and families represent a significant segment in the short-term rental market.
How have rents and yields changed over the past 5 years and the past year?
Gross rental yields in Arequipa have stabilized at 5.5-6% over the past 3-4 years, down from highs exceeding 10% in the 2010s due to market maturation and increased property values.
Arequipa residential property prices surged 9% year-over-year in 2024-2025, outpacing both national inflation and Lima's growth rate, driven by housing shortages and continued urbanization.
Rental rates have followed property price increases, with particularly strong growth in central and popular districts experiencing a 15% jump in rental demand over the past year.
The short-term vacation rental market gained significant prominence post-2020, with occupancy rates showing seasonal variability but generally healthy performance compared to pre-pandemic levels.
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What are the forecasts for yields in 1 year, 5 years, and 10 years, and how does Arequipa compare with other similar large cities today?
One-year forecasts predict continued stable gross yields around 6%, with rents expected to rise at least in line with inflation and potentially ahead in central areas due to sustained demand.
Five-year projections suggest gradual moderation of growth as new supply enters the market, with forecasted annual price and rent increases of 4-5% annually, maintaining yields in the 5.5-6% range.
Ten-year outlook remains positive if urbanization and infrastructure development continue, though political and policy factors could significantly impact long-term performance.
Arequipa's current yields position slightly below Peru's national average and major Lima districts, but outpace most other large Peruvian cities due to ongoing demand pressure and constrained supply.
Compared to regional peers, Arequipa offers competitive yields similar to secondary cities in Colombia and Ecuador, while providing better political stability than some neighboring markets.
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 rental market offers attractive yields for investors seeking exposure to Peru's growing secondary cities.
With gross yields of 5.5-6% and net yields of 3.5-4.5%, the market provides competitive returns while benefiting from ongoing urbanization and infrastructure development.