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Nov 15, 2017

Peru: yields have fallen from excellent to moderate


Last Updated: Nov. 15, 2017
LIMA - Apartments YIELD (p.a.) PRICE/SQ.M. (US$)
TO BUY MONTHLY RENT
Barranco 4.90% 2,692 1,055
Chorrillos 5.60% 1,481 667
La Molina 4.60% 1,539 566
Miraflores 4.80% 2,508 969
San Isidro 4.50% 2,636 944
San Borja 4.30% 1,963 680
Santiago de Surco 4.60% 1,886 697
Surquillo 5.90% 1,687 804
All yields are gross - i.e., before taxes, repair costs, ground rents, estate agents fees, and any other costs. Net yields (what youŽll really earn) are typically around 1.5% to 2% lower.
*Based on the average monthly rent of a 2-bedroom apartment with 100 sq m of covered
Source: Urbania Definitions: Data FAQ See also: Update Schedule

Property prices in Peru have risen significantly over the past few years.

Apartments in desirable areas like Miraflores, Barranco and San Isidro may cost $2,500-$2,600 per square metre (more for larger apartments) while costs fall to $1,500 per square metre (sq. m.) in areas like Chorrillos.

How much can you earn? Rental yields in Lima are much less good than they used to be. Yields on smaller apartments have fallen over several years from an amazing 13% to around 5% for 100 sq. m. apartments. By regional standards house price to rent ratios in Peru are comparatively high, so you earn more in many other Latin American countries. 4.50%-5.50% is maybe not a bad yield, but it is not great either. Smaller apartments are likely to yield more.

The currency risk. Peru’s Sol depreciated during the period 2013-2015, but has been stable since. Over the past decade it has done much better the Chilean Peso, Brazilean Real, let alone (heaven forbid!) the Argentinian Peso.

Round trip transaction costs are moderate in Peru. See our property transaction costs analysis for Peru and property transaction costs in Peru, compared to the rest of Latin America.






Comments

#1 SUSANA | May 28, 2010

Hi, the rental yield calculation in the article is wrong, it is using the monthly rental for a 120sqm apartment and not the 180sqm one.

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