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Arequipa's housing market is experiencing significant momentum as of September 2025, with prices rising 9% year-over-year while strong demand from population growth and mining expansion drives activity across all segments.
The market shows clear price differentiation between central districts like Cayma and Yanahuara, where new developments reach S/5,180 per square meter, and suburban areas averaging around S/2,740 per square meter. Rental yields of 5.5-6% remain attractive despite rising property values and high mortgage rates ranging from 7.4% to 15%.
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.
Arequipa's residential market is heating up with 9% annual price growth driven by strong demand and limited supply.
Central districts command premium prices while suburbs offer better affordability, with rental yields around 5.5-6% across property types.
| Market Indicator | Current Status | Trend |
|---|---|---|
| Average Price per m² | S/3,480 (~$1,000) | +9% YoY |
| Central Districts Price | S/5,180/m² ($1,400) | Strong appreciation |
| Suburban Price | S/2,740/m² ($800) | Moderate growth |
| Rental Yield | 5.49-5.99% | Stable |
| Mortgage Rates | 7.4-15% | High, limiting access |
| Population Growth | +1.25% annually | Driving demand |
| Housing Deficit | Growing 6% yearly | Supply constraint |
What's the current average price per square meter for houses and apartments in Arequipa?
As of September 2025, Arequipa's average property price sits at S/3,480 per square meter, which equals approximately $1,000 USD.
This citywide average masks significant variation across different property types and locations. New apartments and houses in Arequipa's residential market range from budget-friendly options in outer areas to premium developments in central districts.
The market shows clear segmentation between different quality levels and locations. Entry-level properties in suburban areas start around S/2,740 per square meter, while premium new developments in sought-after central districts can reach S/5,180 per square meter.
For context, apartments in the city center average S/767 per square foot (equivalent to S/8,260 per square meter), though this reflects high-end boutique units that sit above typical market listings.
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How do prices differ between central neighborhoods, suburbs, and surrounding towns?
Central neighborhoods command the highest prices due to their prime locations, established infrastructure, and proximity to amenities.
The Historic Centre, Cayma, and Yanahuara represent Arequipa's premium residential districts. These areas feature the highest property values, most comprehensive amenities, and strongest price appreciation trends. New apartment developments in these central districts average S/5,180 per square meter ($1,400 USD).
Suburban areas offer more affordable options with prices closer to the citywide average or below. These neighborhoods typically feature larger family units and houses at more accessible price points, generally around S/2,740 per square meter ($800 USD) or the city average of S/3,480.
Surrounding towns like Sabandía and Sachaca present the most affordable entry points into Arequipa's property market. These areas feature larger lot sizes and significantly lower prices but come with trade-offs in urban infrastructure and slower price growth potential.
What's the short-term trend over the past 6–12 months—are prices rising, stable, or falling?
Arequipa residential property prices have risen approximately 9% year-over-year from mid-2024 to mid-2025.
This growth rate significantly outpaces Peru's national inflation rate of 1.65%, indicating real price appreciation in the Arequipa housing market. Strong demand growth of 15% annually continues to outstrip new supply across most property segments.
Apartments in central areas experienced the sharpest price gains during this period. Suburban and peripheral areas saw more moderate appreciation, though still positive growth across the board.
The tight supply-demand balance has created upward pressure on prices throughout the city. New construction has not kept pace with population growth and in-migration, contributing to the sustained price increases.
What do medium-term projections (1–3 years) say about where the market is heading?
Medium-term projections indicate continued nominal price growth of 4-9% annually through 2028.
Areas positioned to benefit from planned infrastructure upgrades between 2027-2028 are expected to see higher gains during this period. The city's development plans include transit improvements and commercial expansions that should boost property values in targeted districts.
Real appreciation is expected to moderate somewhat as new supply begins catching up with demand. However, underlying economic growth and continued urban pressure will maintain support for property prices.
The market outlook depends heavily on successful completion of infrastructure projects and sustained economic momentum from mining and related industries.
What are the long-term drivers of housing demand and supply in Arequipa?
Population growth serves as the primary long-term demand driver, with Arequipa's metropolitan area reaching 971,000 residents in 2024 and growing at 1.25% annually.
- Mining and infrastructure expansion creating jobs and attracting in-migration from rural areas
- Continued urbanization trends as young families move from rural to urban areas
- Economic diversification beyond mining into services and manufacturing sectors
- Educational institutions attracting students and young professionals to the city
- Regional hub status driving business and administrative employment growth
On the supply side, significant constraints limit new housing development. The urban housing deficit grows at 6% yearly, creating persistent undersupply conditions.
Political stability and consistent urban planning policies will strongly impact future market momentum and development patterns.
How does rental yield compare across property types like apartments, family houses, and commercial units?
Arequipa's average gross rental yield for residential apartments ranges from 5.49% to 5.99% as of 2025.
| Property Type | Typical Yield | Market Characteristics |
|---|---|---|
| 2-bedroom apartments | ~5.66% | High demand, central locations |
| 3-bedroom apartments | ~5.31% | Family market, steady demand |
| Family houses (suburban) | 5.5-6.5% | Higher yields possible, lower liquidity |
| Commercial units (well-located) | 6-8% | Higher yields, more vacancy risk |
| Luxury commercial space | Variable | Higher risk, market dependent |
Family houses in peripheral areas can achieve slightly higher yields but offer lower liquidity compared to apartments. Commercial units typically provide higher yields when well-located but face greater vacancy risk, especially luxury space.
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What's the vacancy rate for rentals in different parts of the city?
Long-term rental market conditions remain tight across Arequipa, particularly for 2-3 bedroom apartments in desirable neighborhoods.
Central districts like Cayma, Yanahuara, and the Historic Centre maintain low vacancy rates due to consistent demand from professionals and families. These areas benefit from established infrastructure and proximity to employment centers.
The short-term rental market shows different dynamics. Median Airbnb occupancy rates reach approximately 45%, with best-performing properties achieving up to 70% occupancy during peak tourist seasons.
Seasonal variation significantly impacts short-term rental performance, with strong demand during tourist seasons but weaker occupancy during off-peak periods.
How quickly are properties selling right now, and has the average time on the market changed recently?
Properties in hot districts like Cayma and Yanahuara typically sell within weeks to a few months of listing.
The average time on market has decreased over the past 12 months, reflecting high demand and undersupplied stock conditions. Well-priced properties in desirable locations often receive multiple offers quickly.
Outlying areas and high-end luxury units can remain unsold for longer periods, sometimes several months, depending on pricing and specific location factors.
New mid-range developments in accessible locations see the fastest turnover, while unique or overpriced properties face longer marketing periods.
Which property types and price ranges are currently in highest demand?
New mid-range apartments priced between S/400,000 and S/700,000 represent the highest-demand segment in Arequipa's current market.
- Modern 2-3 bedroom apartments in central or well-connected districts
- Family houses with modern amenities in accessible suburban locations
- New construction units with parking and security features
- Properties near educational institutions and employment centers
- Units with outdoor space or balconies for families
Young professionals and growing families drive demand for these property types. There's a particular shortage of well-priced family-sized apartments in central and transit-connected districts.
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.
How accessible is mortgage financing at the moment, and what are the average interest rates?
Mortgage financing remains challenging in Arequipa as of August 2025, with average rates ranging from 7.4% to 15% depending on lender risk assessment.
Fixed 20-year mortgage rates can reach as high as 15% for higher-risk borrowers. Banks apply particularly cautious lending standards for non-residents or borrowers with limited local credit history.
Affordability metrics highlight the financing challenge. Arequipa's price-to-income ratio stands at approximately 17.7, while mortgage payments as a percentage of income reach 279%, indicating homeownership requires substantial down payments.
These high financing costs significantly impact market accessibility, particularly for first-time buyers and investors relying on leverage.
If you're buying to live in, which areas give the best balance of affordability, amenities, and future growth?
Cayma, Yanahuara, and the Historic Centre offer the best balance of quality of life, amenities, and property value appreciation potential for end-users.
| District | Affordability | Amenities | Growth Potential |
|---|---|---|---|
| Cayma | Premium pricing | Excellent schools, parks | Strong appreciation |
| Yanahuara | High-end market | Historic charm, services | Consistent growth |
| Historic Centre | Varied pricing | Cultural, commercial hub | Urban renewal upside |
| Miraflores (Arequipa) | More affordable | Family-friendly, schools | Steady appreciation |
| Suburban districts | Most affordable | Basic services | Moderate growth |
Miraflores (Arequipa) provides excellent value for families, offering more affordability than the central core while maintaining proximity to schools and parks.
If you're buying as an investment, where are the best opportunities for strong rental income or resale potential?
Central areas provide the best combination of stable rental income and strong resale potential for property investors.
Prime central districts offer higher per-square-meter prices but deliver strong, stable tenant demand. These locations provide the best liquidity and most consistent rental yields in Arequipa's market.
Outer districts with planned infrastructure development present more speculative opportunities. These areas offer lower entry costs with potential for significant appreciation if new commercial or transit projects succeed.
For rental income focus, target 2-3 bedroom apartments in central districts with good transport connections. For resale appreciation, consider areas positioned to benefit from upcoming infrastructure improvements.
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 housing market presents compelling opportunities for both end-users and investors, with strong fundamentals driving continued growth.
The combination of population growth, economic expansion, and supply constraints creates a favorable environment for property appreciation, though high financing costs require careful planning.
Sources
- The LatinVestor - Arequipa Price Forecasts
- Numbeo - Property Investment in Arequipa Peru
- Global Property Guide - Peru Rental Yields
- The LatinVestor - Arequipa Real Estate Forecasts
- Airbtics - Annual Airbnb Revenue in Arequipa Peru
- The LatinVestor - Arequipa Real Estate Trends
- Evendo - Best Neighbourhoods in Arequipa
- Global Property Guide - Peru Price History