Navigating the Short-Term Rental Landscape: A Broker's Guide to Buying Property in Arequipa

As a licensed Peruvian real estate broker specializing in the Arequipa market, I've observed a significant trend impacting property investment: the proliferation of short-term rentals (STRs) like Airbnb and Booking.com. This phenomenon, fueled by Arequipa's growing tourism and digital nomad appeal, presents both unique opportunities and considerable challenges for property buyers. For foreign investors and expats, understanding the nuances of purchasing a unit in a building with many STRs is crucial for making a sound investment.

This comprehensive guide will walk you through the pros, cons, and essential due diligence steps, grounded in Peruvian law and local Arequipan context, to help you make an informed decision.

I. Understanding Short-Term Rentals in Arequipa's Property Market

Short-term rentals, generally defined as stays shorter than 30 days, have transformed the accommodation sector globally, and Arequipa is no exception. From colonial apartments in the Historic Center to modern flats in Yanahuara, properties are increasingly being adapted for tourist and transient guest use.

Why the Rise in Arequipa?

Arequipa, with its UNESCO World Heritage historic center, vibrant culinary scene, and proximity to natural wonders, attracts a steady stream of national and international tourists. The convenience and personalized experience offered by STRs often appeal more than traditional hotels. For property owners, the potential for higher yields compared to long-term rentals is a significant draw, especially in prime locations.

Legal Landscape in Peru:

It's important to note that while some countries and cities have specific, comprehensive regulations for STRs, Peru's legal framework in this regard is still evolving and can be ambiguous at the national level. There isn't a unified, overarching law explicitly dictating the legality or limitations of STRs within residential buildings nationwide. This means that, in practice, the internal regulations of a specific building (Reglamento Interno) and the general principles of property law often dictate the permissibility of STRs. This absence of clear, specific state regulation places an even greater emphasis on diligent review of a building's internal rules.

II. The Pros of Buying in a Building with Many Short-Term Rentals

Investing in a building with a high concentration of STRs can offer several advantages, particularly if you also intend to use your property for short-term leasing.

Potentially Higher Rental Yields (for Your Own STR): If your goal is to generate income through short-term rentals, being in a building that already supports this model can be beneficial. The presence of other STRs often indicates a location in demand by tourists, potentially leading to higher occupancy rates and nightly rates compared to properties in purely residential zones. For example, a well-located apartment near Santa Catalina Monastery might command nightly rates of S/150-S/250 (approx. US$40-US$70), significantly higher than typical long-term monthly rent divided by 30 days.
Enhanced Building Amenities and Services: Buildings that cater to a tourist demographic often boast superior amenities to attract guests. These can include 24/7 concierge services, robust security systems, swimming pools, gyms, co-working spaces, and professional cleaning services for common areas. These facilities directly benefit all residents, including owner-occupiers.
Professional Building Management: Managing the high turnover and diverse needs of short-term guests often necessitates a more professional and responsive building administration, usually overseen by the Junta de Propietarios (Owners' Association). This can lead to better maintenance of common areas, quicker resolution of issues, and more efficient financial management of the building's common funds (gastos comunes).
Vibrant, Dynamic Atmosphere: For some, the constant flow of new people and the multicultural environment can be an appealing aspect. Such buildings tend to be more active and lively than traditional residential blocks.
Potential for Stronger Re-sale Value: If the STR market remains robust in Arequipa, properties within well-managed STR-friendly buildings might hold stronger appeal to future investors seeking similar income-generating opportunities, potentially enhancing re-sale value.

III. The Cons of Buying in a Building with Many Short-Term Rentals

Despite the potential upsides, purchasing property in a building with many STRs comes with significant drawbacks that can impact your quality of life and long-term investment.

Increased Noise and Disruption: This is perhaps the most frequently cited complaint. Frequent guest arrivals and departures, luggage dragging, late-night socializing, and unfamiliarity with building rules can lead to significant noise disturbances. For residents seeking peace and quiet, especially in neighborhoods like Yanahuara or Cayma, which traditionally offer a more tranquil residential environment, this can be a major issue.
Elevated Security Concerns: More transient occupants mean more unfamiliar faces in the building. While good security systems can mitigate some risks, the constant flow of non-residents can lead to a reduced sense of security and make it harder to identify who truly belongs on the premises.
Accelerated Wear and Tear on Common Areas: High traffic from numerous guests, often less mindful of shared spaces than long-term residents, can accelerate the degradation of elevators, lobbies, hallways, gyms, and other common facilities. This leads to more frequent maintenance and repair cycles.
Higher Homeowners' Association (HOA) Fees: To cover the increased maintenance, cleaning, security, and administrative overhead associated with high guest turnover, gastos comunes (common expenses) are typically higher in such buildings. These fees can significantly impact your monthly budget.
Diminished Sense of Community: The transient nature of STR guests makes it challenging to foster a cohesive residential community. Neighbors are less likely to know each other, leading to a more anonymous living experience.
Risk of Future Regulatory Changes: While Peru's STR regulations are currently evolving, future municipal or national legislation could impose stricter controls, taxes, or outright bans on STRs in residential zones. Such changes could significantly impact your property's profitability and even its legality for STR use. This is a critical risk factor.
Financing Challenges: Some Peruvian banks and financial institutions might view properties in buildings heavily reliant on STRs as higher risk, potentially affecting loan terms or even approval, particularly if the building starts to resemble a commercial hotel rather than a residential complex.

IV. Due Diligence: Essential Steps Before Committing to a Purchase

Given the complexities, rigorous due diligence is paramount. My professional advice, rooted in years of experience in the Arequipa market, emphasizes a multi-layered approach.

Step 1: Deep Dive into the Building's Internal Regulations (Reglamento Interno)

This is the single most critical document. In the absence of clear national STR legislation, the Reglamento Interno governs the use of units within a condominium.

Action:

Request a Certified Copy: Demand a copy of the officially registered Reglamento Interno from the seller or the building administration. This document is typically registered at SUNARP (Superintendencia Nacional de los Registros Públicos).
Professional Legal Review: Crucially, have a qualified Peruvian real estate lawyer meticulously review this document. Look for specific clauses regarding:
- "Uso de la Propiedad" (Property Use): Does it explicitly state the units are for uso residencial (residential use only) or uso mixto (mixed use)?
- "Alquiler Temporal" (Temporary Rental) or "Hospedaje" (Lodging): Does it permit, restrict, or outright prohibit short-term rentals? Some regulations might specify minimum rental periods (e.g., no less than 30 days) or require specific registration with the administration.
- Fines and Penalties: Understand the consequences for violating the rules.

Warning:

The absence of an explicit prohibition does not necessarily equate to explicit permission for STRs. Ambiguity in the Reglamento Interno leaves room for future disputes among residents or changes in policy by the Junta de Propietarios. Your lawyer will advise on the interpretation of any vague clauses based on existing legal precedents.

Step 2: Engage with the Building Administrator (representing the Junta de Propietarios)

The administrator holds invaluable operational insights. While the Junta de Propietarios (Owners' Association) sets the policies, the administrator is the one who executes them daily.

Action:

Schedule an Interview: Request a meeting with the current building administrator.
Key Questions to Ask:
- What percentage of units are currently operating as STRs?
- Are there any ongoing complaints or disputes related to STRs?
- Are there any planned or proposed changes to the Reglamento Interno concerning STRs?
- What is the current amount of gastos comunes (HOA fees), and have there been any significant increases recently or planned special assessments (derramas)? High turnover can lead to unexpected maintenance costs.
- What security measures are in place?

Step 3: Speak with Existing Residents

There's no better way to gauge daily life than from those living it.

Action:

Discreetly approach and speak with several long-term residents in the building to get their unfiltered perspective on noise, security, community, and the overall impact of STRs.

Step 4: Verify Property Records at S.U.N.A.R.P.

While not directly related to STRs, this is a standard, non-negotiable step for any property purchase in Peru.

Action:

Obtain a Copia Literal: Your lawyer will obtain a certified Copia Literal from SUNARP (Superintendencia Nacional de los Registros Públicos) for the specific unit and the building's common areas.
Confirm Legal Status: Verify that the property is registered as a departamento (apartment) for residential use, not a local comercial (commercial premise), unless you are intentionally buying a commercial unit. This document also reveals any encumbrances, mortgages, or liens on the property.

Step 5: Conduct a Local Market Analysis

Understand the economic viability.

Action:

Compare Rental Yields: Research average long-term and short-term rental rates in the specific Arequipan neighborhood (e.g., Historic Center, Yanahuara, Cayma). Platforms like Airbnb and Booking.com can provide insights into average nightly rates and estimated occupancy for comparable properties.
Factor in Operating Costs: Beyond HOA fees, consider cleaning, utilities, platform commissions (typically 3-5% for hosts, more for guests), Peruvian income tax on rental income (currently 5% applied to 80% of the monthly gross rent for individuals, or different tax regimes and rates if operating as a registered business with a RUC number, plus municipal taxes), and potential property management fees (often 15-25% of gross rental income for full service).

Step 6: Security Assessment

Consider the implications of high turnover on security.

Action:

Evaluate the building's access control, surveillance cameras, and the presence of security personnel. Is the security robust enough to handle a constant flow of unfamiliar individuals?

V. Local Context/Warning: Arequipa Specifics

Arequipa, with its unique blend of historic charm and modern growth, has particular considerations.

Arequipa's Historic Center Restrictions: If you are considering a property within the UNESCO World Heritage Centro Histórico, be aware that local municipal regulations are stricter regarding property modifications, usage changes, and commercial activities. While STRs are common here, any significant change in the property's uso (use) might require special permits that are difficult to obtain, potentially impacting your ability to operate an STR. Always verify with the Municipalidad Provincial de Arequipa.
Traditional Residential Areas (Yanahuara, Cayma): Neighborhoods like Yanahuara and Cayma are primarily known for their peaceful, family-oriented residential character. A sudden influx of STRs in a particular building could lead to strong resistance from long-term residents and, potentially, future municipal ordinances aimed at preserving the residential integrity of these areas. While currently less restrictive than the Historic Center, this sentiment could evolve.
Peruvian Law Ambiguity Remains: As stated, the lack of a clear, unified national law regulating STRs in residential buildings means the Reglamento Interno is king. However, this also implies a degree of legal uncertainty and potential for future legislative shifts at national or municipal levels.
Notary Process: Remember, all property transfers in Peru, including in Arequipa, must be formalized through a Peruvian Notary Public. Ensure that all due diligence, including the review of the Reglamento Interno, is completed before signing the Minuta (private purchase agreement) and especially the Escritura Pública (public deed), which legally transfers ownership. The notary will ensure all parties understand the terms, but they won't interpret ambiguous regulations for you.

VI. Conclusion: Making an Informed Investment Decision

Buying a property in a building with many short-term rentals in Arequipa offers a unique investment proposition. While the potential for attractive rental yields and access to superior amenities can be tempting, the significant downsides—noise, security concerns, higher costs, and the looming risk of regulatory changes—demand a cautious and meticulously planned approach.

My professional advice as a broker is clear: do not proceed without comprehensive due diligence. The Reglamento Interno is your bible, and a local Peruvian real estate lawyer is your guide. Understanding these factors will allow you to navigate the complexities and make a truly informed decision that aligns with your investment goals and lifestyle preferences in the White City.

⚠️ Legal Notice: Consult a Local Lawyer. This article provides general information and guidance based on Peruvian real estate practices and legal frameworks. It is not a substitute for professional legal advice. Before making any investment decisions, you must consult with a qualified, independent Peruvian real estate lawyer specializing in property law and a tax advisor to understand the specific implications for your situation. Laws and regulations can change, and individual circumstances vary.

Ready to explore Arequipa's diverse property market with expert guidance? Visit ArequipaRealEstate.com to connect with experienced brokers who can help you find your ideal property and navigate the unique investment landscape of Arequipa.