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Everything you need to know is included in our Peru Property Pack
Are you considering buying real estate in the land of the Incas? Are you questioning if it's a good time to invest?
Market timing is a subject where opinions vary among individuals. Your Peruvian colleague may suggest that it's currently a good time to buy property, but your friend residing in Lima might suggest waiting for a couple more months.
At TheLatinvestor, when we create articles or update our pack of documents related to the real estate market in Peru, we use verifiable facts and concrete data, not just subjective opinions.
We've done extensive research on official reports and government website statistics, resulting in a comprehensive database. Here's what we've learned, which can provide valuable insights for your decision-making process regarding real estate purchase in Peru.
We hope you find this article helpful!
How is the property market in Peru these days?
Peru is, nowadays, a relatively stable country
Neutral
If you want to invest in properties, prioritize stability as it attracts sustainable development and investor confidence. It is an information you need as a foreigner looking to buy a property in Peru.
Currently, Peru is somewhat stable as a country. The last Fragile State Index reported for this country is 72, which is a decent number.
Peru's relative stability today can be attributed to its diversified economy, which benefits from robust mining, agriculture, and tourism sectors, providing resilience against global economic fluctuations. Additionally, the country's democratic governance, despite challenges, has maintained a degree of political continuity and institutional strength, contributing to overall stability.
We should now evaluate more data to see if the timing is right to buy property in this country.
Peru is on track for significant expansion
Positive
Before diving into real estate investment, the initial step is to look into the country's economic condition.
In line with IMF predictions, Peru is set to conclude 2024 with a growth rate of 2.5%, which affirms the country's positive direction. As for 2025, the figure we're looking at is 2.7%.
Besides that, the economy will keep growing since Peru's economy is expected to increase by 11.2% during the next 5 years, resulting in an average GDP growth rate of 2.2%.
The expected sustainable growth rate in Peru indicates a stable and expanding economy, which can lead to increased demand for real estate as more people and businesses seek properties. This growth can drive property values up over time, offering potential investors the opportunity for good returns on their investments.
Let's now look at other metrics.
Peruvian business owners have a more favorable view of the economy
Positive
The GDP growth is arelevant metric, but may not fully encompass business community expectations. Luckily, in Peru there is an established metric that is routinely disclosed. This doesn't apply to every country, so we're in luck.
Surveys and assessments of business leaders contribute to the calculation of the Business Consumer Index (BCI), a metric that reflects their confidence in the present and future economic conditions.
The Central Reserve Bank of Peru's data indicates that the Business Confidence Index is currently 7 for Peru. It can be regarded as a rather neutral score.
That's really encouraging and the trend is upward: the BCI score, 12 months ago, was at -4.
With the Business Confidence Index at a moderate level in Peru, the property market may experience some caution among local businesses. While economic uncertainty could still impact investment decisions and property price growth, the effects might be less pronounced. Buyers could encounter a moderate selection of available properties, which may lead to a balanced market rather than a strong buyer's market.
Peru's population is growing and getting (a bit) richer
Positive
When it comes to buying real estate, population growth and GDP per capita play a significant role, because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Peru, the average GDP per capita has changed by 0.4% over the last 5 years. Though not substantial, there is still a positive trend of growth. Furthermore, the Peruvian population is growing (+6% in 5 years).
This means that, if you purchase an apartment with a view of Machu Picchu and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be an increase in rental demand in Peruvian cities like Lima, Cusco, or Arequipa in 2025.
Properties promise modest rental yields in Peru
Neutral
Our attention will now be directed towards the rental yield.
It's the annual rental income of a property divided by its price. For example, if a property in Peru is purchased for 1,000,000 PEN and generates 50,000 PEN in annual rental income, the rental yield would be 5%.
The website Numbeo indicates that rental properties in Peru promise gross rental yields from 3.2% and 5.9%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Peru.
It suggests a satisfactory level of income relative to the property's value.
Everything you need to know is included in our Peru Property Pack
In Peru, inflation is anticipated to be minimal
Neutral
Simply put, inflation is when prices keep going up.
It's when your customary ceviche dish in Lima costs 30 Peruvian soles instead of 25 Peruvian soles a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
- real estate can act as a hedge against inflation, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
In line with IMF predictions, over the next 5 years, Peru will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data infers that Peru is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.
Is it a good time to buy real estate in Peru then?
Time to conclude !
2025 could be an opportune time to invest in property in Peru, thanks to the country's current stability. Peru has managed to maintain a relatively stable political and social environment, which is a crucial factor for any real estate investment. Stability often translates to predictability, reducing the risks associated with property investments. This makes it an attractive option for those looking to invest in a market that isn't prone to sudden upheavals.
Moreover, Peru's economy is on a promising growth trajectory. With an expected increase of 11.2% over the next five years, the average GDP growth rate will be around 2.2%. This sustainable growth suggests a stable and expanding economy, which typically leads to increased demand for real estate. As more people and businesses look for properties, the value of real estate is likely to rise, offering investors the potential for good returns.
Another factor to consider is the growing and increasingly affluent population in Peru. As the population grows and people become wealthier, the demand for housing and commercial properties is expected to increase. This demographic trend can drive up property values, making it a potentially lucrative time to buy. Additionally, rental properties in Peru offer promising gross rental yields, ranging from 3.2% to 5.9%, according to Numbeo. This indicates a healthy rental market that can provide steady income for property investors.
Lastly, inflation in Peru is anticipated to be minimal, which is good news for property investors. Low inflation helps maintain the purchasing power of money, meaning that the real value of rental income and property prices is less likely to be eroded over time. This economic environment can provide a more secure and predictable investment landscape, making 2025 a potentially great time to consider buying property in Peru.
We sincerely hope this article has provided you with beneficial information!. If you need to know more, you can check our our pack of documents related to the real estate market in Peru.
-Will real estate prices go up in Peru?
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.