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
What will happen in Lima’s real estate market? Will prices go up or down? Is Lima still a hotspot for foreign investors? How is Peru’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Lima, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Lima's property prices will dip temporarily due to economic uncertainties causing market fluctuations
Lima's real estate market is experiencing some turbulence due to economic uncertainties.
One major factor is the slowdown in Peru's GDP growth. From 2014 to 2023, the economy grew at a modest average of 2.3%. Although there was a slight uptick in 2024, the growth is expected to slow again. This sluggish economic pace makes people cautious about investing in property, leading to a temporary dip in real estate prices.
Inflation is another culprit. As inflation rises, consumers' purchasing power weakens, making it tougher to afford homes. When wallets tighten, fewer people buy, causing property prices to drop. Add to this the increased unemployment rates in Lima, and you have a recipe for a shaky real estate market. With more people out of work, demand for homes decreases, pushing prices down further.
The value of the Peruvian sol also adds to the market's instability. When the currency fluctuates, foreign investors become wary of putting their money into Lima's properties. This hesitation reduces demand, leading to falling prices. Historically, during economic instability, Lima's real estate prices have seen ups and downs, often tied to decreased foreign investment and shaky consumer confidence.
When people lose confidence in the market, they hold back on investments, which can cause a temporary decline in property prices. This pattern is not new; it's a cycle that repeats whenever economic uncertainties loom large.
For those considering buying property in Lima, it's crucial to keep an eye on these economic indicators. Understanding the broader economic landscape can help you make informed decisions in a market that's currently in flux.
Sources: World Bank, Central Reserve Bank of Peru
2) Rents in suburban areas will rise more slowly as more housing options become available
In 2023 and 2024, suburban districts saw a boom in housing projects, much like the 550-unit Lima Ola subdivision in Kaua'i County, Hawaii.
This surge in development means more housing options are popping up in suburban areas, which can help keep rent increases in check. For instance, in Lima's suburbs, the average rent for a one-bedroom apartment is already lower than in the city center, hovering between $300 and $500 per month.
Such affordable rents suggest a surplus of rental properties, which naturally slows down rent hikes as supply meets or even surpasses demand. This is good news for potential buyers or renters looking for more budget-friendly options outside the city.
Government incentives, though not specifically detailed for Lima, have been a game-changer in other regions, boosting the supply of rental properties significantly. This trend is expected to continue, further easing rent pressures in suburban areas.
As more housing becomes available, suburban districts are likely to experience a slower increase in rents, offering a more stable and affordable living environment compared to urban centers.
For those considering a move to the suburbs, this could be the perfect time to explore these growing communities, where new developments are reshaping the landscape and providing more choices for potential homeowners.
Sources: Hawaii Business, Lima Market Data
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.
3) Demand for gated communities in Lima will rise because of security concerns
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) Property prices in Barranco will rise sharply as it becomes a trendy area for young buyers
Emerging neighborhoods like Barranco are set to see a significant price surge as they become trendy hotspots for younger buyers.
In 2024, Barranco was already the most expensive neighborhood in Lima, with average monthly rent reaching $11 USD, and real estate prices climbing to an average of S/ 7,705 per square meter, outpacing other districts.
The Peruvian government's investment in infrastructure, such as the extension of the Metropolitano BRT, is enhancing connectivity and livability, making Barranco more attractive to residents and businesses. This development is expected to drive up property prices further.
Barranco's vibrant cultural scene, with its growing number of cafes, restaurants, and cultural venues, is drawing in younger demographics. Media coverage and social media trends are showcasing Barranco as a trendy lifestyle destination, increasing its appeal to younger buyers.
Sources: Statista, World Bank, Peru Telegraph
5) Luxury property prices in Lima will rise more slowly as market competition increases
The luxury real estate scene in Lima is getting more competitive by the day.
By 2023, there were about 143 real estate companies in Lima's premium districts, a 9% increase from 2021. This surge includes developers from countries like Chile, Colombia, and China, making the market even more crowded.
No single company has taken over, with the biggest players holding just a 7-8% market share. This means everyone is scrambling for their slice, creating a fierce competition.
In popular areas like Barranco, San Isidro, and Miraflores, property prices have actually dropped. Barranco saw a 19.9% decline, San Isidro 16.5%, and Miraflores 10.2%. This slowdown suggests the market isn't as strong as it used to be, likely due to the increased competition and high inventory.
Sources: El Comercio, Gestión, Properati
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6) Interest in suburban real estate in Lima will grow due to infrastructure improvements
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) Price growth in Miraflores will slow down as new developments saturate 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) Demand for eco-friendly homes in Lima will grow as people become more environmentally conscious
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
We have made this infographic to give you a quick and clear snapshot of the property market in Peru. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Foreign buyers will boost competition and drive up prices in specific districts
In 2023 and 2024, Lima has become a magnet for foreign property investments.
Districts like Miraflores and San Isidro are the main attractions. Miraflores is loved for its vibrant cultural scene and closeness to business hubs, while San Isidro offers upscale living and historical charm. These areas are drawing in expatriates and international investors, making them highly sought-after.
The influx of foreign buyers is making it easier for them to enter the market. This is leading to increased competition in these districts. As more international buyers show interest, the demand for properties is rising.
With this growing demand, property prices in Miraflores and San Isidro are expected to climb. Experts predict a 3% to 7% increase in prices by 2025. This trend is making these districts even more competitive for potential buyers.
Foreign buyers are not just looking for homes; they are investing in Lima's promising future. The city's strategic location and economic prospects are key factors driving this interest. As a result, the real estate market is becoming more dynamic.
For those considering buying property in Lima, understanding these trends is crucial. The competition is heating up, and prices are on the rise, especially in popular districts.
Sources: World Bank, FazWaz.com.pe
10) Short-term rentals will grow in Lima, affecting long-term rental returns
Lima's rental market is seeing a noticeable shift towards short-term rentals.
Tourists are driving this change, preferring short stays over long-term commitments. In 2023, a typical short-term rental in Lima was booked for 197 nights a year, with a median occupancy rate of 54%. The average daily rate was around PEN12, which is about $3 USD. By September 2024, the number of active Airbnb listings in Lima had surged to 13,782, showing the rising demand for short-term accommodations.
Platforms like Airbnb and Vrbo are key players in this trend. As of September 2024, Airbnb reported a 4.36% year-over-year revenue increase, highlighting the popularity of short-term rentals among tourists and digital nomads. The lenient enforcement of short-term rental regulations in Lima makes it easier for property owners to list their homes, further fueling this trend.
Rising property prices in Lima are also influencing the market. With prices expected to increase by 3% to 7% in 2025, long-term rentals are becoming less attractive for landlords. In 2023, short-term rentals had a median occupancy rate of 54%, and hosts earned an average annual income of PEN2K (approximately $600 USD), often higher than long-term leases.
For landlords, short-term rentals offer a more profitable option. The flexibility and potential for higher earnings make them appealing, especially as property values rise. This shift is reshaping the rental landscape in Lima, with more property owners opting for short-term arrangements.
As the trend continues, long-term rental yields are likely to be impacted. The focus on short-term rentals is changing how landlords approach the market, prioritizing immediate returns over traditional long-term stability.
Sources: Airbtics, Global Property Guide
11) Rental yields in Miraflores will drop because of an oversupply in high-demand areas
Miraflores in Lima is buzzing with new construction projects, leading to an oversupply of rental properties.
With so many new places popping up, vacancy rates are climbing as more properties sit empty. This is a typical sign of too many rentals chasing too few tenants.
Real estate agencies are noticing a surplus of rental properties in Miraflores. This means landlords might have to cut rental prices to fill their units, even if the property values themselves are holding steady or going up.
As a result, rental yields are dropping because the income from renting isn't keeping up with property values. This is a key concern for anyone looking to invest in rental properties here.
High-demand areas like Miraflores are experiencing this shift, where rental income isn't matching property value growth. It's a tricky situation for landlords trying to maintain profitability.
For potential buyers, it's crucial to understand that oversupply can impact rental returns, making it a buyer's market but a challenging one for landlords.
Sources: Global Property Guide, JLL Lima Office Outlook, Airbtics Airbnb Market Statistics
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12) Rents in Lima's lower-income areas will rise as demand for affordable rentals increases
The demand for affordable rental housing in Lima is set to increase rents in lower-income areas.
Lima's population has grown by 157,500 people in just the past year, putting a strain on the housing market. This surge is particularly felt in areas where affordable housing is already hard to come by. As more people flock to the city, the pressure on available rental properties intensifies, especially in neighborhoods with lower income levels.
Urbanization is a big draw, pulling more people into Lima in search of better living conditions. This migration means more competition for rental properties, especially in areas where rents are still relatively low. The influx of new residents is making it harder for locals to find affordable places to live.
Central Lima is facing a shortage of affordable housing, which is pushing people to look elsewhere. With limited options in the city center, property prices and rents in lower-income neighborhoods are climbing. This trend is squeezing renters who are already struggling to make ends meet.
Adding to the challenge, wages in these areas haven't kept up with inflation. This means that low-income renters have less purchasing power, making it even tougher to afford rising rents. The gap between what people earn and what they need to pay for housing is widening.
As a result, the demand for affordable housing is outpacing supply, leading to higher rents. This situation is likely to continue as more people move to Lima, drawn by the promise of better opportunities. The city's housing market is under pressure, and those in lower-income areas are feeling it the most.
Sources: Global Property Guide, World Population Review
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.