Q4 2024 Arequipa Real Estate Market Forecast: Analyzing Price Trends and Investment Opportunities for Foreign Buyers

As a licensed Peruvian real estate broker and technical writer for ArequipaRealEstate.com, I am pleased to present a comprehensive analysis of the Arequipa real estate market for Q4 2024, specifically tailored for foreign investors and expats. Arequipa, known affectionately as "The White City" (La Ciudad Blanca) for its magnificent sillar (volcanic white stone) architecture, offers a unique blend of cultural heritage, economic vitality, and a high quality of life. This makes it an increasingly attractive destination for discerning international buyers. However, successful investment hinges on rigorous due diligence, a deep understanding of Peruvian law, and strategic local expertise.

Macroeconomic Overview: Peru & Arequipa in Q4 2024

Understanding the broader economic landscape is crucial for any real estate investment. Peru's economy in Q4 2024 continues to demonstrate resilience, albeit with moderated growth compared to pre-pandemic peaks.

Peruvian Context

The national economy is projected to maintain stable, albeit modest, GDP growth, largely driven by its robust mining sector (copper, gold, zinc) and growing agricultural exports. Inflation has shown signs of stabilization, generally trending downwards from previous peaks, which provides a more predictable environment for long-term investments. The Peruvian Sol (PEN) has historically exhibited relative stability against the U.S. Dollar (USD), typically trading within the S/ 3.70 to S/ 3.85 range per USD. While minor fluctuations are natural, this stability reduces currency risk for foreign investors. Political stability, a perennial concern in emerging markets, has seen periods of calm punctuated by localized issues; however, the overall institutional framework for property ownership remains strong and protected by Peruvian law.

Arequipa Specifics

Arequipa's regional economy is a powerhouse within Peru, consistently ranking as the second-largest economic contributor after Lima. It is predominantly fueled by its vast mining operations, notably the Cerro Verde copper mine and supporting operations for other major projects like Las Bambas. While the controversial Tia Maria project remains in dispute, its potential underscores the region's mineral wealth. This sector attracts significant national and foreign capital, supporting a substantial professional and skilled labor force that contributes directly to housing demand. Beyond mining, Arequipa's fertile valleys, particularly those irrigated by the Chili River, support a thriving agricultural sector known for dairy products, garlic, and onions, among others. Its UNESCO World Heritage Historic Center draws an increasing number of national and international tourists, bolstering the service and hospitality industries. Key infrastructure projects, such as improvements to the city's road network, the Vía Troncal Interconectora, and ongoing modernization of Rodríguez Ballón International Airport, continue to enhance connectivity and urban development, indirectly supporting property values.

Arequipa Real Estate Market Performance: Q4 2024 Price Trends

The Arequipa real estate market in Q4 2024 presents a nuanced picture of sustained demand and appreciating values, particularly in well-established and desirable areas.

Residential Market

Demand drivers for residential properties are diverse, including:

Tourism: Growing numbers of national and international visitors seeking short-term accommodations, often preferring properties with a local charm.
Internal Migration: People moving from rural areas or smaller towns in the southern macro-region for economic opportunities, higher education (e.g., at UNSA, UCSM), and better services.
Growing Middle Class: Increased purchasing power among Arequipa's residents fuels demand for modern, well-located housing.
Foreign Investors/Expats: Seeking retirement homes, vacation properties, or strategic investment rentals due to Arequipa's appealing lifestyle and cost of living.

Supply in the residential market varies significantly by zone. The Historic Center has extremely limited new construction due to stringent heritage protection laws imposed by the Ministry of Culture and the Municipality, leading to high demand for existing, often colonial, properties. Outside the center, newer apartment buildings and gated communities are more prevalent.

Price Trends by Zone (Approximate Q4 2024)

Historic Center (Cercado): Properties here are highly coveted for their historical significance, unique sillar architecture, and prime location. Due to limited supply and strict renovation rules, prices are at a premium. Expect USD 1,800 - 2,500+ per square meter for well-maintained colonial homes or renovated apartments, with potential for significantly higher values for exceptional, fully restored properties. Rental yields can be strong for boutique hotels or short-term rentals, but acquisition and renovation costs are substantial, often requiring specialized expertise in heritage restoration.
Established Residential Areas (Yanahuara, Cayma, Selva Alegre, Vallecito): These neighborhoods are highly desirable, known for their safety, green spaces, proximity to upscale amenities, and quality of life. Yanahuara offers picturesque views and a mix of traditional and modern homes. Cayma is favored for its modern residential developments, shopping centers, and prestigious schools. Selva Alegre provides a quieter, greener environment, while Vallecito combines central convenience with a residential feel. Price appreciation in these areas has been steady. Current values range from USD 1,200 - 1,800 per square meter for modern apartments and houses, depending on age, condition, and specific location within the district. These areas offer excellent potential for both capital appreciation and stable long-term rental income.
Emerging Areas (Cerro Colorado, Sachaca, La Joya - developing plots): These districts offer more affordable entry points and higher potential for future growth, but often require a more thorough assessment of current infrastructure (roads, utilities, public transport) and future development plans. Cerro Colorado is experiencing rapid expansion, particularly towards the north, with new housing complexes. Sachaca offers a more suburban feel, and La Joya is primarily characterized by large plots of undeveloped land slated for future residential or industrial expansion. Prices can range from USD 800 - 1,200 per square meter for residential units or plots of land. Investment here is typically longer-term and may involve higher initial risks or development costs, requiring careful due diligence on zoning and land titles.

Rental Market

Arequipa boasts a robust rental market, driven by students (from its numerous universities), local professionals (especially those in mining, banking, and services), and the booming tourism sector. Properties in well-located neighborhoods like Yanahuara, Cayma, and the fringes of the Historic Center can generate attractive rental yields. For long-term residential rentals, gross yields typically range from 5-8% annually. Short-term rentals (via platforms like Airbnb, Booking.com) can potentially achieve higher gross yields (e.g., 8-12%) in prime tourist locations, but they come with higher management overhead, operational costs, and the need to comply with specific tourism regulations.

Commercial Market

The commercial real estate market is smaller and more specialized. Opportunities exist near major malls (e.g., Mallplaza Cayma, Parque Lambramani) or in high-traffic tourist zones in the Historic Center for retail, gastronomy, and hospitality. This segment is generally more complex for initial foreign investor entry and requires very specific market insights, often linked to business operations.

Land Market

Investing in undeveloped land, particularly in peri-urban areas like parts of Cerro Colorado or La Joya, can offer significant long-term appreciation potential as the city expands. However, this segment carries the highest risk due to complex zoning regulations, the need for extensive due diligence on land titles (many plots are not fully registered or have communal claims known as tierras eriazas), and the long time horizon for infrastructure development. This is typically not recommended for first-time foreign investors without a highly specialized local team experienced in land acquisition and development.

Investment Opportunities for Foreign Buyers in Q4 2024

For foreign buyers, Q4 2024 presents several compelling investment avenues:

High-End Residential Properties (Yanahuara, Cayma): These areas offer a blend of stability, strong appreciation potential, and desirability for both living and rental. Ideal for those seeking a primary residence, a vacation home, or a reliable long-term rental investment. The quality of construction and urban infrastructure is generally high.
Apartments for Short-Term Rentals (Historic Center fringes, Yanahuara, Cayma): With Arequipa's growing tourism, well-appointed apartments in strategic locations can generate substantial income via platforms like Airbnb. Proximity to tourist attractions (e.g., Santa Catalina Monastery, Plaza de Armas), reputable restaurants, and convenient public transport is key. Ensure the property is legally registered and compliant with local short-term rental regulations.
Boutique Hotels/Guesthouses (Historic Center, Selva Alegre): For investors with significant capital and an appetite for hospitality, converting suitable colonial properties into boutique hotels can be highly lucrative. This, however, requires deep knowledge of historic property regulations, substantial renovation budgets, and operational expertise in the tourism sector.

Strategic Considerations

Rental Yields vs. Capital Appreciation: Decide your primary investment goal. Arequipa offers a good balance of both, but some areas lean more towards one than the other.
Property Management: If you are not living in Arequipa, a reliable local property management service is essential for both long-term and short-term rentals, handling everything from tenant screening to maintenance and financial reporting.
Long-Term Outlook: Arequipa's continued economic growth, stable population increase, and rising profile as a tourist destination suggest a positive long-term outlook for real estate values.

Step-by-Step Guide: Navigating the Arequipa Real Estate Purchase Process (for Foreigners)

Purchasing property in Peru as a foreigner is entirely permissible and secure, provided you follow the established legal framework. It is, however, a process that demands meticulous attention to detail and unwavering adherence to due diligence.

Secure Local Expertise. This is your foundational step. Engage a reputable, licensed real estate broker (like ArequipaRealEstate.com) who understands the local market intricacies and, critically, a specialized real estate lawyer with extensive experience handling transactions for foreign clients. These professionals will be your indispensable guides through the entire process, mitigating risks and ensuring legal compliance.
Define Investment Strategy & Budget. Clearly articulate your investment goals: residential, commercial, rental income, capital appreciation, etc. Determine your comprehensive budget, including closing costs (taxes, notary fees, legal fees, which can add 4-6% to the purchase price). Consider financing options; while possible, obtaining a local bank loan as a foreigner without a long-standing credit history or significant assets in Peru can be challenging. Most foreign transactions are cash-based.
Property Search & Pre-Screening. Work closely with your broker to identify suitable properties that match your criteria. Once potential properties are shortlisted, request initial documentation, particularly a Copia Literal (a certified copy of the property's registry entry) from S.U.N.A.R.P. (National Superintendence of Public Registries). This crucial document provides essential information on the registered owner(s), property description, and any existing encumbrances.
Due Diligence – The Non-Negotiable Core. This phase is paramount. Your lawyer will meticulously review all aspects of the property's legal and financial standing.
- Legal Review (by your Specialized Real Estate Lawyer):
  - S.U.N.A.R.P. Verification: This is the most critical check. Your lawyer will obtain an updated Copia Literal and a Certificado Registral Inmobiliario (CRI). These documents confirm the seller's clear and current title, verify the property's legal description, identify any liens (e.g., mortgages, judicial embargoes), easements, or ongoing legal disputes that could affect ownership. Never proceed if the property is not correctly registered in the seller's name at S.U.N.A.R.P. or has significant unresolvable encumbrances.
  - Municipal Records Review: Verify that the property taxes (Impuesto Predial), arbitrios (municipal service fees), water bills (from SEDAPAR, the local utility), and electricity bills (from SEAL, the local utility) are fully up-to-date. Outstanding debts often attach to the property, not just the previous owner. Obtain official certificates of no debt (Certificado de No Adeudo). Also, confirm the property's zoning classification (residential, commercial, mixed-use) matches your intended use.
  - Cadastral Review: Ensure the physical boundaries, dimensions, and layout of the property align precisely with the registered plans and any actual survey. Discrepancies can lead to future legal issues.
  - Historic Property Restrictions (for properties in the Historic Center): If you are considering a property within Arequipa's UNESCO Historic Center, your lawyer must investigate specific regulations imposed by the Ministry of Culture and the Municipality. These rules strictly dictate what kind of renovations or modifications are permissible, often restricting changes to facades, structural elements, and internal layouts. Ignoring these can lead to significant fines and forced restorations.
- Physical Inspection: Conduct a thorough structural and condition assessment by a qualified architect or engineer. Check for issues with plumbing, electrical systems, roofing, foundations, and general wear and tear that might not be immediately visible.
- Appraisal: Obtain an independent professional appraisal (Tasación) to ensure the asking price aligns with the current market value and to support your negotiations.
Offer and Negotiation. Once due diligence is satisfactory, your lawyer will help draft a formal offer letter, typically denominated in USD. Negotiations will cover the purchase price, payment terms, and any specific conditions you require.
Promise to Purchase Agreement (Minuta de Compraventa). Upon reaching an agreement, your lawyer will draft the Minuta de Compraventa – a preliminary private contract. This document legally binds both parties, outlining the agreed terms and conditions of the sale. At this stage, an earnest money deposit (arras or adelanto de precio, typically 10-20% of the sale price) is transferred. This deposit is usually held in an escrow account by the Notary Public, offering security to both buyer and seller.
Notarization and Final Deed (Escritura Pública). This is a mandatory step in Peru for all real estate transactions. All parties (or their legally appointed representatives via Power of Attorney) must appear before a Peruvian Notary Public. The Notary's role is not merely as a witness; they are public officials who verify identities, review all documentation to ensure legal compliance, and formally register the transaction.
- The Notary will draft the Escritura Pública (Public Deed), which is the definitive legal document transferring ownership.
- The buyer will typically pay the Alcabala (Transfer Tax) at this stage. This is 3% of the property's sale value, after deducting 10 Tax Units (UIT - Unidad Impositiva Tributaria). For 2024, 1 UIT = S/ 5,150.
- Foreign buyers will need a valid passport. If you cannot be present, a legally executed and valid Power of Attorney (POA) for a trusted local representative is essential.
Registration at S.U.N.A.R.P. Once the Escritura Pública is signed and Alcabala paid, the Notary will electronically submit the deed to S.U.N.A.R.P. for final registration. This step is absolutely crucial. Your ownership is only fully secured and legally enforceable against third parties once the property is formally registered in your name in the Public Registries. This process can take several days to a few weeks. Your lawyer will track and confirm this vital registration.
Post-Purchase Formalities. After registration, ensure utility accounts (electricity, water, internet) are transferred into your name. Register the property with the local Municipality (Municipalidad Provincial de Arequipa) for annual property tax purposes (Impuesto Predial) and arbitrios.

Local Context/Warning

Informal Property Market

A significant warning: never, under any circumstances, purchase property that is not formally registered at S.U.N.A.R.P. In Peru, particularly in developing or rural areas, many properties may only have "possession rights" (posesión) but not formal "ownership" (propiedad). Purchasing such a property carries extreme risks, including lack of clear legal title, disputes with other claimants, and inability to register your acquisition. Stick exclusively to properties with a clear, registered title (partida registral) at S.U.N.A.R.P.

Historic Center Regulations

As highlighted, properties within the Arequipa Historic Center are subject to strict conservation regulations. Any renovations, modifications, or even specific paint colors may require prior approval from the Ministry of Culture and the local Municipality. Failing to secure these permits can lead to severe penalties, including substantial fines and orders to reverse unapproved changes at your expense. Factor these complexities and potential costs into your investment plan.

Notary Role

Emphasize that the Notary Public in Peru is a critical legal gatekeeper. Their role extends far beyond witnessing signatures; they are public officials responsible for verifying the legality of the entire transaction, ensuring all documents are in order, and that both parties understand the implications. Their involvement is a key safeguard for your investment.

Taxation for Foreign Buyers

Alcabala (Transfer Tax): 3% of the property's sale value (after deducting 10 UIT). Paid by the buyer at the notary. For 2024, 1 UIT = S/ 5,150.
Impuesto Predial (Annual Property Tax): A progressive tax paid to the local Municipality, based on the property's assessed value. Rates typically range from 0.2% to 1.0% annually, plus arbitrios.
Impuesto a la Renta (Capital Gains Tax): If you sell your property and realize a profit, individuals who are not habitual real estate sellers pay 5% of the capital gain. For habitual sellers (those making frequent real estate transactions), the income is treated as business income and taxed at higher corporate rates.
Rental Income Tax: Rental income derived from Peruvian properties is subject to Peruvian income tax. Your lawyer or accountant can advise on the specific rates and filing requirements.

Power of Attorney (POA)

If you cannot be physically present for the entire transaction, a legally drafted and notarized Power of Attorney (POA) is essential. For POAs executed outside Peru, they must be apostilled (if your country is part of the Hague Apostille Convention) or legalized by the Peruvian consulate in your country, and then formally registered and translated by a certified public translator (traductor público jurado) in Peru. This process ensures its legal validity within the Peruvian legal system.

Currency Fluctuations

While the Sol is generally stable, it is prudent to denominate all property prices and agreements in USD to minimize currency risk, as is common practice in the Arequipa real estate market. Ensure all funds transfers are made through legitimate banking channels.

⚠️ Legal Notice: Consult a Local Lawyer.

The information provided in this article is for general informational purposes only and does not constitute legal or financial advice. Real estate laws and regulations in Peru can be complex and are subject to change. It is imperative that all foreign investors engage a qualified, specialized Peruvian real estate lawyer and, if necessary, a tax advisor, before making any investment decisions. ArequipaRealEstate.com strongly advises against proceeding with any property transaction without independent legal representation.

Conclusion

Arequipa's real estate market in Q4 2024 continues to offer attractive opportunities for foreign buyers, driven by a stable economy, strong regional growth, and increasing tourism. Strategic investments in high-demand residential areas or short-term rental properties can yield both capital appreciation and reliable income. However, the path to successful ownership in Peru is paved with diligent preparation and expert local guidance. By understanding the market trends, adhering strictly to the legal purchase process, and prioritizing professional advice, you can confidently navigate Arequipa's dynamic real estate landscape.

Ready to explore Arequipa's investment potential? Visit ArequipaRealEstate.com today for personalized consultation and access to our exclusive listings.