Construction & Real Estate
From The Report: Peru 2019
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Increased investment in infrastructure projects – such as those in mining, the $1.5bn extension of the Jorge Chavez International Airport, the increased supply of social housing and infrastructure development around the 2019 Pan American Games – are set to propel the construction sector. Investors are optimistic given the large portfolio of public projects, but authorities should be sensitive to concerns regarding project slowdown and transparency. Performance in several segments of the real estate sector improved in 2018. Government incentives and facilitation of mortgages are expected to fuel residential real estate demand. Warehousing expansion is being driven by e-commerce sales growth, and a widening middle class is attracting investment and international brands to the retail segment. Challenges like a systemic housing deficit and low mortgage penetration rates remain, but the uptick in the sector is expected to continue. This chapter contains an interview with Guido Valdivia, Executive Director, Peruvian Chamber of Construction.

Articles from this Chapter

Overview

Ramping up: A renewed focus on infrastructure development and social housing is expected to drive growth
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Construction will be the biggest driver of GDP growth in Peru in 2019, according to the Lima Chamber of Commerce, with the sector expected to grow by 6.7% over the year. Increased investment in infrastructure projects, such as those in mining and the $1.5bn extension of the Jorge Chávez International Airport in Callao, will propel expansion further. Anticipated 2019 growth would outpace that of 2018, during which the sector expanded by 4.6%. Construction will grow despite complications following…

Interview

Under one roof: Guido Valdivia, Executive Director, Peruvian Chamber of Construction (Cámara Peruana de la Construcción, CAPECO) on the private sector’s contribution to the residential market
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Interview:Guido Valdivia What are some of the challenges Peru faces in securing sufficient investment for infrastructure? GUIDO VALDIVIA: Peru operates in a difficult climate for public investment in infrastructure. In previous years the government implemented fiscal stimulus measures that allowed a significant number of infrastructure projects to start or be completed until 2018. While public investment did not meet the target of 12.5% of GDP that year, it hit 8.5%, which was above the average…

Analysis

Build the base: Infusion of investment to reinforce infrastructure development
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President Martín Vizcarra Cornejo pledged renewed infrastructure investment to drive economic growth and restore investor confidence. As such, the authorities are working to increase infrastructure spending from 4.5% of GDP in 2016 to 6% by 2021, with much of the momentum originating from the National Infrastructure Plan (Plan Nacional de Infraestructura, PNI) 2016-25, which estimated the cost of closing the country’s infrastructure gap at 8.6% of GDP in 2019, rising to 8.9% in 2021, after…

Overview

Strong foundations: A growing mortgage market and social housing development are boosting home ownership rates
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After a slow 2017, growth in Peru’s real estate sector picked up in 2018 due to social housing development, attractive mortgages, expansion in the warehousing and retail segments, and improvements in office space absorption rates. Investor sentiment is also picking up: according to the 2019 GRI Barometer Survey of regional real estate leaders, 69% of respondents were interested in investing in the country. The survey showed a sharp improvement in optimism among respondents regarding economic…