What is the outlook for the real estate market in Peru?

Authored by the expert who managed and guided the team behind the Peru Property Pack

Everything you need to know before buying real estate is included in our Dominican Republic Property Pack

Who is the author of this content?

THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Peru. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At The LatinVestor, we explore the Peruvian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Lima, Arequipa, and Cusco. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What's the current trend in housing prices in Peru right now?

Peru's housing market is experiencing a two-speed economy as of September 2025.

The national market shows minimal nominal growth at just 0.1% year-over-year, which translates to a real price decline of -1.7% after adjusting for inflation. However, Lima's premium districts are telling a completely different story with price increases reaching up to 12% in 2024.

Districts like Miraflores, San Isidro, and Surco command prices of $2,000-$3,500 per square meter, with Miraflores leading at the highest end. The average home price nationally sits around S/452,900, but this figure masks significant regional variations.

Lima continues to see record transaction volumes, with Q1 2025 showing a 38.9% year-over-year increase in new unit sales. The demand is particularly strong for compact, well-located properties that appeal to both local professionals and international buyers.

Regional cities like Arequipa and Trujillo are outperforming the national average with local price appreciation of 2-5%, making them attractive alternatives for investors seeking value opportunities.

How have prices moved over the past 12 months, and what's expected in the next year?

The past 12 months have shown a clear divide between Lima and the rest of Peru in terms of price performance.

Lima has experienced its strongest performance in years, with premium districts seeing consistent price growth throughout 2024 and into 2025. The capital recorded its highest new unit sales in Q1 2025, demonstrating sustained buyer confidence and market momentum.

Secondary cities like Arequipa and Trujillo have delivered moderate but steady appreciation of 2-5%, significantly outperforming the national average. These markets benefit from growing local economies and improved infrastructure connections.

Looking ahead to the next 12 months, expect Lima's prime areas to continue their strong performance with projected nominal growth of 3-7%. This growth will be supported by continued demand for well-located, compact units and improved financing conditions.

The broader national market is expected to see gradual improvement, though real appreciation will remain modest unless inflation continues to cool from current levels.

What's the medium-term forecast for the next 3–5 years?

The medium-term outlook for Peru's real estate market from 2025-2030 points toward moderate but steady growth across major urban centers.

Lima and other prime cities are projected to see annual growth rates of 4-5%, driven by ongoing urbanization and middle-class expansion. The completion of major infrastructure projects, particularly the Chancay mega-port, will create new growth corridors and investment opportunities.

Secondary urban nodes will benefit from improved connectivity and regional economic development, with cities like Arequipa, Trujillo, and Chiclayo expected to close the gap with Lima in terms of price per square meter.

The period will likely see continued preference for smaller, functional units in urban centers, reflecting changing demographics and lifestyle preferences among younger buyers. Technological adoption in housing and smart building features will become increasingly important for property values.

It's something we develop in our Peru property pack.

What's the long-term outlook for the next 10 years or more?

The long-term outlook for Peru's real estate market through 2035 and beyond shows sustained appreciation potential in major urban areas.

Demographics will play a crucial role, with Peru's growing urban population and expanding middle class providing a solid foundation for housing demand. The ongoing shift from rural to urban living will continue to support property values in established cities.

Infrastructure development will create new value corridors, particularly around major transportation hubs and port facilities. The Chancay mega-port and associated logistics networks will likely generate significant real estate opportunities along these corridors.

Climate considerations may increasingly influence property values, with coastal and highland properties potentially commanding premiums for their environmental advantages. Sustainable building practices and energy-efficient properties will become standard market expectations.

The Amazon region presents the most speculative but potentially highest-reward opportunities, particularly for eco-tourism and sustainable development projects, though these remain higher-risk investments requiring careful due diligence.

How does the outlook differ between Lima, coastal cities, highlands, and the Amazon region?

Region	Price Growth Trend	Investment Opportunities	Risk Factors
Lima	Strong (8-12% in premium areas)	Condos, compact units, premium properties	Political volatility, high entry costs
Coastal Cities	Moderate (2-5%)	Mixed residential, emerging commercial	Market liquidity, regional economic dependence
Highlands	Subdued but stable	Tourism properties, traditional housing	Title issues, limited market depth
Amazon Region	Niche and volatile	Eco-tourism, sustainable resorts	Legal complexity, environmental regulations
Tourist Hubs (Cusco)	Tourism-driven cycles	Short-term rentals, hospitality	Tourism dependency, seasonal fluctuations
Industrial Corridors	Infrastructure-dependent	Logistics, worker housing	Economic cycles, policy changes
Border Regions	Restricted/Limited	Very limited for foreigners	Legal restrictions, security concerns

What's happening with residential properties compared to commercial and industrial real estate?

Residential properties remain the primary driver of Peru's real estate market, particularly in Lima and growing secondary cities.

The residential sector benefits from improved mortgage rates at 7.44% as of June 2025, down from historical averages above 10%. Government incentives and competitive loan products have significantly boosted purchase volumes, especially among first-time buyers and the expanding middle class.

Commercial real estate shows steady but modest growth, with office and retail rental yields often outpacing residential returns in premium locations like San Isidro. The commercial sector's annual growth rate is projected at around 0.22% for 2025-2029, reflecting more cautious expansion compared to residential.

Industrial real estate performance closely ties to Peru's GDP growth and major infrastructure projects. The sector benefits from logistics expansion around the Chancay port and other transportation hubs, though it receives less attention from individual investors.

The focus remains on compact, functional residential units that serve both the local professional market and international buyers seeking rental income or lifestyle properties.

How do condos, single-family houses, and land investments compare in terms of growth potential?

Condos and apartments show the strongest demand and growth potential in urban Peru, particularly in Lima and emerging city centers.

Smaller units of 1-2 bedrooms are experiencing the highest appreciation rates, driven by young professionals, expats, and investors seeking rental income. These properties offer the best liquidity and easiest management for both local and international owners.

Single-family houses appeal more to families and buyers in suburban areas or highlands, seeing slower but steadier price appreciation. They're particularly popular in outlying suburbs of Lima and tourist areas like Cusco, where space and traditional architecture command premiums.

Land investments present the highest risk but potentially highest returns, especially in rapidly urbanizing areas on Lima's periphery or tourist zones in the Amazon region. However, these require extensive due diligence regarding zoning laws, legal status, and infrastructure access.

It's something we develop in our Peru property pack.

What's the current rental yield in different parts of Peru, and how is demand for rentals evolving?

Peru's rental market offers attractive yields compared to many international markets, with nationwide average gross yields around 6% as of September 2025.

Lima delivers varying yields depending on location and property type. Studio and one-bedroom apartments in prime areas like Miraflores, Barranco, and Surquillo generate yields between 5.2-7.5%. Family units typically yield 5-6.5%, with the highest returns found in well-connected neighborhoods that attract both locals and expats.

Arequipa offers stable yields averaging 5.5%, supported by steady local demand and growing economic activity. Cusco maintains yields close to 6% due to its strong tourism sector, though this creates seasonal variations in rental income.

Coastal cities like Trujillo provide yields around 5.5% with good stability, reflecting balanced local housing markets. Rental demand continues growing for compact city-center units, driven by young professionals, international residents, and the expanding short-term rental market through platforms like Airbnb.

The trend clearly favors smaller, well-located properties in urban centers over larger suburban units, reflecting changing lifestyle preferences and work patterns.

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.

What are the mortgage rates and financing conditions right now, and how do they impact buyers?

Mortgage conditions in Peru have improved significantly, making property ownership more accessible than in previous years.

Current mortgage rates average 7.44% as of June 2025, representing a substantial decrease from the long-term average above 10%. This reduction has been a key factor driving increased residential purchase volumes throughout 2024 and into 2025.

The government has implemented various incentives to support homeownership, including subsidies for first-time buyers and competitive loan products from both public and private lenders. These programs particularly benefit the growing middle class and young professionals entering the property market.

Banks are offering more flexible financing terms, with some institutions providing loans up to 90% of property value for qualified borrowers. The improved credit environment has been especially beneficial for buyers of compact units in Lima and secondary cities.

Foreign buyers face additional considerations, including higher capital gains taxes (30% for non-residents) and restrictions on properties within 50km of borders without special permits. However, financing remains available for qualified international buyers.

Where are the best opportunities for someone buying to live, to rent out, or to resell in the near future?

The best opportunities vary significantly depending on your investment strategy and timeline in Peru's diverse real estate market.

For buyers looking to live in Peru:1. Lima's emerging districts like Barranco, Surquillo, and Jesús María offer excellent value with good connectivity and lifestyle amenities2. Miraflores and San Isidro provide premium lifestyle options for those with higher budgets3. Arequipa and Trujillo offer lower costs with good quality of life for those preferring secondary cities4. Cusco appeals to those seeking cultural richness and tourism exposure5. Coastal cities provide relaxed lifestyle options with growing infrastructureFor rental income investors:1. Miraflores for expat and tourist demand with premium rental rates2. Surquillo and Barranco for local professional market with steady demand3. Secondary cities with yields above 5.5% and lower entry costs4. Cusco for tourism-related short-term rentals5. University areas in major cities for student housing demandFor resale/flipping opportunities:1. Districts with major infrastructure upgrades showing fastest transaction velocity2. San Miguel and Magdalena with improving connectivity3. New suburban developments with good transportation links4. Areas benefiting from the Chancay port development5. Tourist zones with growing international recognition

What's the minimum and maximum budget range that makes sense for each type of buyer or investor?

Buyer Type	Budget Range (USD)	Price per m²	Typical Property
First-Time/Local Buyers	$60,000 - $100,000	$800 - $1,200/m²	Entry-level units in Lima/regional cities
Middle-Income Investors	$90,000 - $180,000	$1,200 - $2,500/m²	Quality apartments in demand districts
Premium Investors	$180,000 - $400,000	$2,500 - $3,500/m²	High-end condos in prime areas
Luxury/International	$300,000 - $700,000+	$3,500+/m²	Premium units in Miraflores/San Isidro
Land Investors	$20,000 - $200,000	Varies significantly	Development plots, tourism land
Commercial Investors	$150,000 - $500,000+	$1,500 - $4,000/m²	Office, retail, mixed-use
Tourism/Hospitality	$100,000 - $300,000	$1,000 - $2,500/m²	Hotels, vacation rentals

What risks should someone be aware of before buying property in Peru, both short term and long term?

Property investment in Peru carries several important risks that buyers must carefully consider and mitigate through proper planning.

Political and economic risks include Peru's history of political volatility, which can impact investor confidence, currency stability, and regulatory continuity. Changes in government policy regarding foreign investment, taxation, or property rights could affect long-term returns.Legal and title risks are particularly significant, with possibilities of title fraud, unclear property boundaries, or overlapping claims especially common with land purchases. The legal system can be complex for foreigners, making professional legal counsel essential for any transaction.Regulatory restrictions specifically affect foreign buyers, including the ban on purchasing property within 50km of borders without special permits. Non-resident buyers face high capital gains taxes of 30% on resale, significantly impacting investment returns.Tax and transaction costs add substantial expenses beyond the purchase price, including 18% VAT on leases, capital gains taxes for sellers, and various municipal fees. These costs can significantly impact overall investment returns if not properly factored into calculations.Market liquidity varies dramatically by location, with slower resale markets in provincial, highland, and Amazon areas compared to Lima and major coastal cities. This affects the ability to exit investments quickly when needed.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.

Sources

1. Home Ready Global - More Peruvians Buying Homes in 2025
2. The LatinVestor - Peru Price Forecasts
3. Fynsa - Peru Urban Growth and Real Estate Market Expansion
4. The LatinVestor - Lima Which Area
5. The LatinVestor - Peru Real Estate Market
6. Ecovis Global - Real Estate Investment in Peru
7. Statista - Peru Residential Real Estate Outlook
8. Global Property Guide - Peru Rental Yields
9. The Global Economy - Peru Mortgage Interest Rates
10. Peru Biz Connect - Investing in Peru Real Estate