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Peru Real Estate Report Q1 2012
Business Monitor International, Jan 2012, Pages: 53
The outlook for Peru’s property market is positive, underpinned by strong economic growth and rising domestic consumption combined with low unemployment. However, deteriorating global economic growth, and a consequent higher aversion to riskier assets by global investors, could present risk to our optimistic forecasts over the next year or so. Peru is export-dependent and therefore would be adversely affected by a double-dip recession or in particular a hard landing in China, its second largest export market. Peru is also heavily dependent on its mining industry, which may see a minor setback in the short term due to recent protests and escalating violence as a result of the planned extension of the Yanacocha mine in the country’s north-west.
Key Opportunities In The Real Estate Market:
- Real GDP growth in Peru is forecast by BMI to be at 6.7% in 2011 and 5.8% in 2012. Economic growth is being largely driven by domestic consumption, business confidence, exports and construction. This backdrop provides strong support for property demand.
- According to a recent survey by Global Property Guide, Lima is a ‘spectacular’ destination for buy-tolet properties, with high rental yields of 10-11%. Public accolades of this kind could increase commercial investor interest in both the city and the country as a whole.
- Peru ranks first in Latin America for improving business regulation, according to a November 2010 report by the International Finance Corporation and the World Bank. Peru has moved up 10 places in the global ranking of 183 economies. However, according to Jones Lang LaSalle’s Global Real Estate Transparency Index 2010, Peru is ranked poorly, at 72nd out of the 81 countries surveyed in 2010.
- China has made significant trade inroads into Latin America, largely as a result of its appetite for minerals. Among other partnerships in the region, China has become Peru’s second largest trading partner for imports and exports, after the US, as of December 2010.
Key Risks To The Real Estate Market:
- Both China and the US are potentially risky export destinations at present, with the wider global economy seeing debt fears and regional fiscal crises. This could have a knock-on effect on Peru’s real estate development.
- Peru’s dependence on mining means that if protests continue around the Yanacocha mine there could be a short-term decrease in productivity, which could affect numerous other branches of the country’s economy.
Business Monitor International's Peru Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Peru's Real Estate industry.
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