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.

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