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 growth and sector performance compared to the 2018 survey.


There are no restrictions on foreign investment in real estate in Peru, but there are constitutional regulations regarding ownership or occupation of real estate, including ownership of shares in real estate holding companies for national security reasons. Foreigners also cannot acquire real estate near national borders unless the Council of Ministers has expressly declared it to be a public necessity.

Real estate income tax in Peru has a flat rate of 30%, the third highest in the Latin America region after Chile and Guyana. This rate is double that of Brazil (15%) and Argentina (14.7%). In addition, leasing real estate is subject to a 18% value-added tax, while capital gains of non-residents selling property in Peru is taxed at 30%. However, property transaction costs are relatively low in Peru, at around 6-9% of the sale price, while agents’ fees are typically 3-5%. Rental laws are largely in favour of tenants, who receive a strong security of tenure, and the legal proceedings for eviction are typically lengthy.

Performance & Size

Given its deficit of formal housing, which the Ministry of Housing, Construction and Sanitation estimates to be around 1m houses, Peru’s real estate has significant potential for growth. The sector is currently in recovery mode after three years of economic downturn, with sales driven by government initiatives for social housing up 27% in the first half of 2018 compared to the same period of 2017, according to the Real Estate Developers Association of Perú (Asociación de Desarrolladores Inmobiliarios del Perú, ADIPERU). One-third of the sales in the first half of 2018 were in social housing projects. Sales in urban areas drove much of the growth, with a report from the Peruvian Chamber of Construction (Cámara Peruana de la Construcción, CAPECO) finding the number of homes sold in Lima reached 15,240 in 2018, the highest figure since 2014. In addition to the spike in home sales, mortgages grew by 9.7% in 2018.

Growth is likely to continue into 2019, and ADIPERU expects home sales to increase by 8-9% on the strength of lower interest rates on mortgages, state subsidies for social housing and unmet demand. Scotiabank Perú predicts sales of housing in Lima alone will exceed 17,000 and expects that home prices will increase by 8% over the course of the year. Construction of new homes is also expected to pick up outside of the capital real estate market, in secondary cities such as Arequipa, Trujillo, Piura and Chiclayo.

Government programmes to assist low-income homebuyers include Fondo Mivivienda; Mivivienda Verde, designed to promote financially and ecologically sustainable homeownership; and Techo Propio, Fondo Mivivienda’s low-income plan. These programmes are expected to grant credit for around 11,000 homes in 2019. Home buying is expected to receive a boost by a scheme to allow individuals to allocate up to 25% of previously untouchable pension funds for housing and new mortgage products. Spanish bank BBVA Continental, which also operates in Peru, expects its portfolio of loans for social housing to grow from 5% in 2019 to 20% by 2020. This optimism contrasts with the caution shown by lenders since 2015 as a result of the economic slowdown.

The housing sector began to stabilise in 2018, however, with an increase in the number of mortgages and falling vacancy rates in the office segment. “The real estate market has good growth prospects for the coming years, taking into account what was achieved in 2018,” Carlos Asmat, analyst at Scotiabank Perú, told local press in March 2019.


Housing prices are seeing a recovery after a downturn, beginning in 2014, that put downward pressure on rental yields, which at 4.9% make Peru a less attractive buy-to-rent market than other Latin American countries such as Brazil and Argentina. Peru’s average residential price per sq metre is $2692, ranking it fifth in Latin America, behind Brazil, Argentina, Panama and Chile, according to the Global Property Guide, an international real estate consultant. Going-in capitalisation rates in Peruvian real estate are between 8.5-9%, according to US services firm Logan Consulting. Prime office locations with US dollar-denominated leases command high levels of investor demand, and recent transactions of prime locations have registered cap rates closer to 7.8-8%. Logan Consulting also noted the industrial segment has not historically been an active sector for investment amid uncertainty about capitalisation rates.

Housing Finance

The mortgage market is still relatively small, at around 6.2% of GDP in 2017, but the number of mortgages granted is estimated to have grown by around 10% in 2018, according to Scotiabank. Mortgage rates have also fallen amid greater competition among banks for clients. According to the Superintendency of Banking, Insurance and Pensions, interest rates for mortgage loans fell from 10.1% in April 2010 to 7.5% in January 2019. Homes can also be purchased through government social housing programmes, which provide mortgages or subsidies to buy or construct a house. The number of mortgages granted in 2019 is expected to grow again by 10%, driven by lower interest rates and increased private investment, which has fuelled job creation.


Peru is an attractive real estate investment destination due to the country’s strong fundamentals, sustainable economic growth, increasing domestic consumption and greater housing affordability. Lima’s most sought-after residential property districts are San Isidro, Barranco, Miraflores, San Borja and Surco, which have the highest prices per square metre, according to ADIPERU. The average price in San Isidro is PEN8831 ($2673) per sq metre, almost double the capital city’s average price of PEN4957 ($1500) per sq metre. Looking to the future, ADIPERU expects Lima’s residential real estate prices to remain stable in 2019. “We saw housing sales grow around 15% during 2018 compared to 2017, reducing stock by 12%, which is a strong recovery,” Carola del Carmen Pacheco Mendoza, general manager of ADIPERU, told OBG. “We are expecting a similar performance in 2019,” she added, attributing the increase in sales to GDP growth and job creation. The housing deficit remains high, with the current stock covering only 5%. Several housing development projects in the pipeline and government subsidies for low-income homebuyers should lower the deficit. For these positive trends to continue, however, Peruvians need to be made aware of the importance of saving to make a down payment. “The government must also provide land with electricity and water connection to enable developers to construct social housing and simplify the bureaucracy for land acquisition and construction, as well as implement greater controls to prevent illegal land occupancy,” Mendoza told OBG.

Office Space

Peru’s commercial and office space segments have also driven development in the country’s real estate market. Lima’s office space is centred around the San Isidro central business district, which hosts 32% of the city’s office real estate, followed by Lima Este with 26%, Miraflores with 16% and San Isidro Occidente with 13%. Lima added around 20,500 sq metres of class-A office space in the fourth quarter of 2018, giving the city over 1.3m sq metres in inventory, according to US real estate advisory firm Newmark Knight Frank. The capital’s office market had a vacancy rate of 22.4%, comparable to Sao Paulo’s 21.8% but above the Latin American average of 17.5%. Quarterly absorption measured in at 50,800 sq metres, while annual absorption was 162,778 sq metres and average asking rent measured in at $16.45 per sq metre per month, below the regional average of $21.45.

While there has been growth in office supply in recent years, it was not met by a rise in demand, which resulted in a surplus in stock, especially in Lima. This trend has eased. “In 2018 stock begun to be absorbed, and the vacancy rate fell,” Cristian Onetto Larraín, CEO of commercial real estate agency Grupo Patio Perú, told OBG. “This has led to a recovery in rents.”


Peru’s warehouse capacity is undergoing expansion. The country has four main areas of warehousing: the western zone in the port of Callao; the central zone in Lima; the eastern zone, comprising Lima’s districts of San Juan de Lurigancho and Lurigancho; and the southern zone, comprising the districts of Villa El Salvador and Lurín. The southern and western zones account for 88% of stock, with the southern zone catering for industrial use and the western zone being the traditional cluster for imports and exports given its proximity to the port and airport. The eastern zone accounts for 7% of stock and the central zone for 6%. The average of warehouse rents ranges from $5 per sq metre per month in Lurín to $11.10 per sq metre per month in Callao.

Warehouse stock grew in 2018 as firms developed space to meet demand. In the southern zone’s Villa El Salvador district, Aldea Logística Global is developing 17,648 sq metres, of which 14,128 sq metres will be warehousing, while in Lurín, LatAm Logistics Properties opened its Parque Logístico Lima Sur complex in 2018, with warehouse space totalling 66,000 sq metres. Meanwhile, Bodegas San Francisco added 27,000 sq metres to its Centro Logístico Portada de Lurín, the country’s largest warehouse complex.

Increases in warehouse stock are also driven by growth in the e-commerce market. The country’s e-commerce sales reached PEN11.5bn ($3.5bn), contributing 5.8% to GDP, according to the Peruvian Chamber of Electronic Commerce. In Peru – as seen across the Latin America region – a boom in e-commerce has incentivised companies to open warehouses in the region, closer to their customers. “[Multinational companies] are improving their warehousing reach and changing their supply chains to reduce lead times,” Diego Rodríguez, director of logistics practice at Americas Market Intelligence, told the press in June 2018. “ This is benefitting the expansion of warehousing facilities in Latin America.”


Improved conditions in Peru’s formal labour market and increasing consumer spending are fuelling retail sales and the segment’s real estate expansion. “The year 2018 was good for retail, with growth of around 9-10% after a poor year in 2017 due to El Niño,” Larraín told OBG. “As a result, we are seeing the retail segment grow, with plenty of projects in the pipeline.” Around 15 new malls are set to be developed between 2018 and 2023, 12 of which will be in Lima and three in Iquitos and Cusco. Five malls are slated to be opened before the end of 2019, adding 250,000 sq metres of retail space with a combined investment of $400m. These malls will add to the 98 shopping centres spread across the country as of July 2018, 53 of which are in metropolitan Lima and 45 in the provinces.

While there is a deficit in retail space per inhabitant in Lima, there is space for growth outside the central areas and in Peru’s second-tier cities. “There is space in Lima’s periphery, but the biggest potential for growth is in the central areas of the country’s secondary cities,” Larraín explained, noting that retailers such as H&M and Zara expanded outside the capital to capture a growing upper middle class.

Juan Carlos Chiappe, commercial manager of shopping centre chain MegaPlaza, told local media in March 2019 that the most significant shopping centre growth in Peru would be outside of Lima, as international brands such as Miniso and Kentucky Fried Chicken expand throughout the country to meet increasing consumer demand. “The provinces in general have a good level of growth,” Chiappe said. “On average they grow more than those in Lima, in the double digits.” Investors and international brands are taking note. In November 2018 BBVA Research ranked Peru’s retail sector ninth out of 30 countries and number one in the Latin America region in terms of attractiveness for investment.


The pace of growth in Peru’s real estate sector quickened in 2018 as performance in several segments improved. Government incentives and facilitation of mortgages and housing finance are expected to fuel continued residential real estate demand. While the office space segment is in surplus, the volume of excess supply is falling as absorption rates improve. Warehousing expansion is being driven in part by e-commerce sales growth, and a widening middle class is attracting investment and international brands to malls and the retail segment. Challenges like a systemic housing deficit and low mortgage penetration rates remain, but the uptick in the real estate sector is expected to continue in the coming years.