Peru: yields have fallen from excellent to moderate

Residential Valuation Specialist | January 31, 2019

Last Updated: Jan. 31, 2019
LIMA - Apartments YIELD (p.a.) PRICE/SQ.M. (US$)
TO BUY MONTHLY RENT
Barranco 4.80% 2713 1,075
Nuevo Barranco   2802 1,099
Barranco Cultural   2786 1,198
Barranco Traditional   2614 995
Chorrillos 5.10% 1431 601
Chorrillos Centro Y Norte   1510 637
Chorrillos Centro Y Este   1177 595
Chorrillos Este   996 445
La Molina 4.50% 1478 564
La Planicie - El Sol de Molina   1579 572
La Molina Vieja   1567 n.a.
Constructores   1528 588
La Molina Rinconada   1403 n.a.
La Molina Vinas   1391 504
Miraflores 4.60% 2450 939
Miraflores Este   2599 973
Miraflores Noreste   2593 935
Miraflores Sureste   2557 958
Miraflores Sur   2510 952
Miraflores Centro   2338 964
Miraflores Aurora   2270 806
Miraflores Norte   2268 913
San Isidro 4.10% 2554 891
San Isidro Sur   3147 974
San Isidro Oivar   2680 954
San Isidro Centro   2646 886
San Isidro Este   2502 866
San Isidro Norte   2241 850
San Isidro Noreste   2184 849
San Isidro Financiero   2156 839
San Borja 4.20% 1915 687
San Borja Centro   1929 707
San Borja Sur   1750 n.a.
San Borja Norte   1708 n.a.
Surquillo 5.20% 1890 761
Surquillo Commercial   2033 760
Surquillo Norte   1748 n.a.
Surquillo Centro   1721 n.a.
All yields are gross - i.e., before taxes, repair costs, ground rents, estate agents fees, and any other costs. Net yields (what you´ll 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 $2,600-$2,800 per square metre (more for larger apartments) while costs fall to $1,200-$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 4% to 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%-5% is maybe not a bad yield, but it is certainly 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

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.

Login or Register to submit a comment!
In order to promote open and spam-free conversations, Global Property Guide moderates commetns on all articles. You can expect that your comment will be published within 24 hours.