Peru » Market Report

Peru is taking on a new identity as one of Latin American’s most dynamic economic and trade centers and as an increasing important market for American firms, fueled by strong economic growth. Peru represents one of the most rapidly expanding global markets for American exporters. Over the past six years, Peru has achieved GDP growth rates averaging five percent, reaching 8% in 2006.

As a result of this strong economic performance, Peru is a growing market for U.S. companies. Between 2002 and 2006, U.S. exports to Peru increased by 88% from $1.6 billion to $2.9 billion, outperforming overall U.S. export growth, which was 14% for the same period. In the first six months of 2007, American exports to Peru have increased an additional 24%. Peru is currently the 43rd largest export market for the U.S. goods. In Latin America, Peru is the United State’s 12th largest trading partner.

Peru property Prices are at historical highs after the last few years of increases. Many properties in Peru for sale to foreigners are actually overpriced in terms of their market context and comparables. This is especially true of the resale market where individual sellers largely decide the asking price, but can also be true of new developments.

The average rental yield for a property in Peru is about 10% to 12% a year, over the value of the property, for permanent rentals. Residential prices have been rising more slowly in Peru in the past six years. Foreigners can freely buy properties in Peru. Real estate investments do not need prior approval from the governments except for properties near the borders.

Property prices rose substantially in the mid and late 1990s, following the decisive elimination of the hyperinflation that had raged in the early 1990s. In the mid-1990s, residents of Peru’s informal settlements held about $20 billion in ‘sleeping capital’; without legal registration of their properties, they could not put their own assets to work. Without legal title, property is not secure. People do not invest in homes or communities where they are insecure. They cannot sell them or pass them on to their children. Perhaps worst of all, without property titles, homeowners cannot use their dwellings as collateral to borrow money that would help them escape poverty.

In the mid-1990s, residents of Peru’s informal settlements held about $20 billion in ‘sleeping capital’; without legal registration of their properties, they could not put their own assets to work. The original investors see their marketplace as a secure source of income, as their rentals of stalls to other merchants generates a sustained return on their up-front investment.

According to International Property Brokers the future prospects for property investment in Peru are good as the economy is getting stronger, there are signs of more private investment and consumer confidence is higher than ever. The country after a long period of stagnation t has been picking up quite fast and would continue to do so in the near future. Peru saw strong economic growth with 8.5% GDP growth in 2007.  Prices of residence are rising with the passing time. Lima specially is proving to be quite a hotspot for property investing as a lot of new building, shops etc are emerging.