Authored by the expert who managed and guided the team behind the Peru Property Pack
Yes, the analysis of Lima's property market is included in our pack
Are you considering investing in Lima's real estate market? Curious about the latest trends and what they mean for potential buyers? Want to know which neighborhoods are set to boom and why?
We will lay down recent insights, providing you with a clear picture of Lima's property landscape. Here, no guesswork, we rely only on solid data to guide your investment decisions.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Peru Property Pack
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) Lima's real estate market will decline as economic uncertainties trigger a temporary price drop
Lima's real estate market is experiencing fluctuations due to economic uncertainties.
One major factor is the slowdown in Peru's GDP growth. From 2014 to 2023, the economy grew at an average of just 2.3%. Although there was a slight increase to 3.1% in 2024, it's expected to moderate again to 2.5% in the coming years. This kind of economic slowdown often leads to a temporary decline in real estate prices.
Rising inflation rates are also contributing to these fluctuations. Even though inflation is projected to be around 2.0% in 2025, it still affects consumer purchasing power. When people have less money to spend, they are less likely to invest in real estate, which can lead to a drop in property prices. Additionally, increased unemployment rates in Lima, driven by broader economic instability, can further impact the real estate market negatively.
The value of the Peruvian sol is another piece of the puzzle. When the currency is unstable, it can deter foreign investors from putting their money into Lima's real estate, leading to a decline in property prices. Historical data shows that during economic downturns, real estate prices in Lima have experienced similar fluctuations, often due to decreased foreign direct investment and reduced consumer confidence.
For those considering buying property in Lima, it's essential to understand these dynamics. The market's current state is influenced by a mix of economic factors, including GDP growth, inflation, and currency stability. These elements can create opportunities for buyers looking to invest when prices are temporarily lower.
Sources: World Bank, Central Reserve Bank of Peru, The Latin Investor
2) Suburban districts will see rent hikes slow dramatically as housing options surge
In 2023 and 2024, suburban districts saw a boom in housing projects, much like the 550-unit Lima Ola affordable subdivision in Kaua'i County.
This surge in development means more housing options are popping up in suburban areas, which can help keep rent increases in check.
For instance, the average rent for a one-bedroom apartment in Lima's suburbs is already lower than in the city center, typically between $300 and $500 per month.
This price difference suggests there's a surplus of rental properties in these areas, which naturally slows down rent growth as supply meets or even exceeds demand.
Real estate market reports also point to a surplus of rental properties in suburban districts, with rental yields in emerging neighborhoods hovering around 6% to 8%.
This surplus further supports the idea that rent increases will be slower in these areas as more housing options become available.
Sources: Hawaii Business, The Latin Investor
Everything you need to know is included in our Real Estate Pack for Lima
3) Gated communities in Lima will go up in popularity as security concerns dominate
Lima's crime rates have surged, making safety a top concern for residents.
In 2023, Lima's crime rate was 4266 per 100,000 residents, significantly above the national average. This includes both violent and property crimes, with violent crimes being 74.6% higher than the national average and property crimes 85.2% higher.
Feeling unsafe is common among Lima's residents, with 81% expressing insecurity and a striking 86% avoiding walking alone at night. This fear is pushing people to look for safer housing options.
Gated communities are becoming the go-to choice for many, as developers emphasize security features to attract buyers. The media often highlights urban security issues, reinforcing the idea that these communities offer a safer lifestyle.
Investing in a gated community in Lima is seen as a smart move, especially for those prioritizing safety. These communities are designed to provide peace of mind, with features like controlled access and surveillance systems.
As crime concerns grow, the demand for secure living spaces is expected to rise, making gated communities increasingly popular among potential property buyers.
4) Barranco will see a dramatic price surge as it transforms into a trendy hotspot for young buyers
Barranco is becoming a trendy hotspot for younger buyers, leading to a significant price surge.
In 2024, Barranco was already the priciest neighborhood in Lima, with average monthly rent hitting $11 USD and real estate prices soaring to S/ 7,705 per square meter. This outpaced other districts, making it a sought-after location.
Infrastructure upgrades, like the Metropolitano BRT extension, are boosting Barranco's connectivity and livability, making it more appealing to both residents and businesses. These improvements are expected to further drive up property prices as the area becomes more accessible.
Barranco's lively cultural scene, filled with cafes, restaurants, and cultural venues, is attracting younger crowds, increasing property demand. The neighborhood's modern vibe is a magnet for those seeking a vibrant lifestyle.
Media and social media are painting Barranco as a trendy and desirable spot, enhancing its allure for younger buyers. Real estate reports and demographic studies show a growing influx of younger residents, drawn by the area's conveniences and cultural richness.
The presence of co-working spaces and startups is pulling in younger professionals and entrepreneurs, adding to the demand for residential properties. This trend is reshaping Barranco into a hub for innovation and modern living.
Sources: Statista, World Bank, Peru Telegraph, The Latin Investor
5) Luxury real estate in Lima will face a dramatic slowdown in price growth as competition heats up
In Lima, luxury property listings have surged in 2023 and 2024.
This increase means more homes than buyers, which can lead to market saturation. When there are too many options, buyers feel less urgency, and this can slow down how quickly prices rise.
New developers are flocking to Lima, especially in trendy areas like Barranco and Surquillo. This influx means more luxury homes are being built, creating fierce competition among sellers. With more choices, sellers might need to keep prices steady to attract buyers, which can temper price growth.
According to TheLatinvestor, if prices do rise in 2025, the increase will likely be modest, around 3% to 7% of 2024 values. This is a slower pace compared to past years, largely due to the increased competition and supply.
In these emerging districts, the buzz is palpable, but the sheer number of new properties means buyers have the upper hand. Sellers are finding it harder to push prices up when buyers have so many options.
For those considering a purchase, this competitive market could mean better deals and more negotiating power. The landscape is shifting, and it's a buyer's market in many ways.
Sources: TheLatinvestor, TheLatinvestor
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6) Lima's infrastructure upgrades will go up suburban real estate demand
Lima's infrastructure has seen a major boost in recent years, especially in transportation.
The National Infrastructure Plan, launched in 2019, has been a game-changer, with a big chunk of its $28.5 billion investment going into transportation and communication networks. This plan is all about closing the infrastructure gap that's been around for a while.
One standout change is the new highways and road expansions. Since 2003, Peru has been busy awarding road concessions, pulling in billions in private investment. This has led to the construction and maintenance of thousands of kilometers of highways, nearly doubling the percentage of paved roads. Now, getting around is much easier and faster.
These upgrades have really cut down commute times. Take the Bus Rapid Transit (BRT) corridor in Lima, for example. It's slashed travel times from 120 minutes to just 52 minutes on average. This makes living in the suburbs a lot more attractive, as people can now zip in and out of the city with ease.
With these infrastructure improvements, suburban real estate is becoming more appealing. People are starting to see the benefits of living outside the city without sacrificing convenience.
Sources: Trade.gov, Multiple Cities
7) Miraflores will see a dramatic halt in price growth as new developments flood the market
The coastal district of Miraflores is seeing a slowdown in price growth due to a flood of new developments.
Take, for instance, the 22-story building by the CCLA Group, which is set to be completed in 2025. This is just one of many projects contributing to the saturation of the market. With so many new options, buyers have more choices, which naturally slows down price increases.
Rental yields are also telling a story. A 2-bedroom apartment in Miraflores now yields only 4.74%, making it less appealing compared to other Lima districts. Real estate agents are noticing that wealthy clients are looking elsewhere, with some even considering places like Miami over Lima.
There's a noticeable shift in consumer preferences, as highlighted by the Global Property Guide. The demand for luxury properties in Lima is declining, and this is not just a Miraflores issue. The sales volume of newly-built homes in Metropolitan Lima dropped by about 10% in 2022, even though the inventory remained stable or increased.
These trends suggest that buyers are exploring other districts, possibly seeking better returns or different lifestyle options. The market dynamics are changing, and Miraflores is feeling the impact.
Sources: Global Property Guide, CCLA Group, Global Property Guide
8) Eco-friendly homes in Lima will go up as environmental awareness explodes
Demand for eco-friendly homes in Lima is rising as more people become environmentally conscious.
Back in 2023 and 2024, surveys showed that many Lima residents prioritized sustainability when buying homes. People are increasingly adopting greener habits, with a global survey revealing that 78% of consumers value environmental sustainability.
The real estate market in Lima is catching on, with a noticeable shift towards sustainable living. Millennials, in particular, are leading this change, as they consider sustainability a key factor in their purchasing decisions. This is evident in the growing sales of sustainable materials like WPC panels, known for their durability and eco-friendliness.
Eco-friendly real estate projects are popping up across Peru, with Lima's Javier Prado Tower being a prime example. This development showcases sustainable architecture and energy-efficient technologies, offering better air quality and reduced energy consumption.
Media coverage on sustainable living is also on the rise, further fueling interest in eco-friendly homes. This increased attention is making more people in Lima aware of the benefits of living sustainably, driving demand for such properties.
Sources: Constructive Voices, The Madrona Group, HOSUNG WPC
Everything you need to know is included in our Property Pack for Lima
9) Foreign buyers will flood Lima's market sparking fierce competition and skyrocketing prices in key districts
Lima is becoming a hotspot for foreign property buyers.
In districts like Miraflores and San Isidro, the buzz is palpable. Miraflores, with its lively cultural vibe and closeness to business hubs, and San Isidro, known for its posh neighborhoods, are drawing in international buyers. The Latin Investor and FazWaz.com.pe have noted a spike in real estate deals involving foreigners, making these areas particularly attractive.
This surge of interest is making the real estate market in these districts fiercely competitive. Property prices in Lima, especially in sought-after spots like Miraflores, are expected to climb by 3% to 7% by 2025, according to The Latin Investor. The combination of high demand and limited availability, fueled by foreign buyers, is pushing prices up.
Real estate agents are seeing a flood of inquiries from overseas, signaling a strong and ongoing interest in Lima's property scene. This trend is likely to persist, as Lima's economic potential and strategic location continue to attract international attention.
For those considering buying property in Lima, it's essential to understand the dynamics at play. The influx of foreign buyers is leading to increased competition and higher prices in certain districts, making it a challenging yet exciting market to navigate.
Sources: The Latin Investor, FazWaz.com.pe, World Bank
10) Lima's rental market will dramatically shift to short-term rentals slashing long-term rental yields
The rental market in Lima is seeing a noticeable shift towards short-term rentals.
In 2023, short-term rental listings in Lima were booked for an average of 197 nights per year, showing strong demand. This trend is supported by the rise in active Airbnb listings, which reached 13,782 by September 2024. Platforms like Airbnb and Vrbo are growing rapidly, thanks to tourists and digital nomads who love the flexibility and affordability of short-term stays.
Short-term rentals in Lima are more profitable than long-term leases, with hosts earning an average annual revenue of PEN2K (about $600 USD) in 2023. Rising property prices, expected to increase by 3% to 7% in 2025, make long-term rentals less appealing for landlords. As property values climb, landlords might find it more lucrative to switch to short-term rentals, which offer higher returns.
The lenient enforcement of short-term rental regulations in Lima creates a favorable environment for this market's growth. Lima's cultural and historical charm continues to draw tourists and digital nomads, boosting demand for short-term accommodations. Neighborhoods like Miraflores and Barranco, undergoing gentrification and new development projects, are becoming more attractive to visitors and professionals, likely leading to a shift towards short-term rentals.
These areas are not just popular for their beauty but also for their vibrant lifestyle, making them hotspots for short-term rental investments. The shift towards short-term rentals is impacting long-term rental yields, as landlords pivot to meet the growing demand from travelers seeking unique and flexible lodging options.
Sources: The Latin Investor, Airbtics
11) Miraflores will face plummeting rental yields as oversupply floods the market
In Miraflores, Lima, construction permits and new residential projects have surged, hinting at a potential oversupply of rental properties.
Real estate agencies are buzzing about an excess of rental properties in Miraflores, a clear sign of market saturation. This means there are more homes than renters, pushing landlords to lower prices to attract tenants, which in turn reduces rental yields.
People are increasingly opting to buy homes instead of renting, thanks to favorable financing conditions. This shift is shrinking the pool of potential renters, adding to the oversupply issue in Miraflores.
Economic reports are pointing out a slowdown in demand for high-end rentals, which are quite common in Miraflores. With fewer people willing to pay top dollar, landlords are finding it tough to maintain high rental yields.
In Miraflores, the combination of too many properties and fewer renters is creating a perfect storm. Landlords are feeling the pinch as they struggle to fill vacancies, leading to lower returns on their investments.
For those considering buying property in Miraflores, it's crucial to understand the current market dynamics. The oversupply of rentals and changing consumer preferences are reshaping the landscape, making it a challenging environment for rental investments.
Sources: Global Property Guide, JLL Lima Office Outlook, TheLatinvestor Real Estate Price Forecasts
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12) Lima's soaring demand for affordable rentals will go up rents in lower-income areas
The demand for affordable rental housing in Lima is on the rise, especially in lower-income areas.
Lima's population has been booming, with 157,500 new residents added just last year. This surge is putting a squeeze on the housing market, particularly where affordable options are already hard to come by.
Urbanization is another big factor. As Lima grows, more people are flocking to the city, hoping for better living conditions. This influx means more competition for rental properties, especially in neighborhoods where rents are still within reach for many.
Central Lima isn't much help either. Affordable housing there is scarce, pushing folks to look elsewhere. This shift means increased demand in lower-income areas, which naturally leads to higher rents.
For those on a tight budget, this is a tough spot. The combination of limited affordable housing and steady demand makes it hard for low-income renters to find a place they can afford.
Sources: World Population Review, The Latin Investor, Global Property Guide