The Peruvian real estate market seen through the eyes of a real estate agent
This time, we interviewed Carla Toledo Lafosse, an independent real estate agent who will tell us about the Peruvian real estate market, the types of projects with high demand, and the proximity to the big cities as a fundamental aspect with regards to real estate investments.
HalloCasa: “Good afternoon, Miss Toledo. Thank you very much for letting us meet you and hear about the benefits of investing in the real estate market in Peru.”
Carla Toledo Lafosse: “Good afternoon, it’s a pleasure to talk with you, especially about a topic of such importance for the country.”
Carla Toledo Lafosse: “I am a registered real estate agent, with a specialization in negotiation. I have been in sales for more than 20 years and in the real estate business since 2007. I have had the opportunity to work with important construction companies of the Peruvian market before starting as a real estate broker, which constituted an important part of my professional training because one learns to manage, not only the sale of the property and the process, but also a lot of human relations. Apart from that I was able to learn technical things like to read plans, to work with certain software tools, the interpretation of construction systems and finishing. In fact, I can now see that those are very important points to differentiate yourself in the modern market.”
HalloCasa: “Please, tell our audience who Carla Toledo is, how she got started with real estate and what her current business is about.”
HalloCasa: “In what city or cities does your business specifically work?”
Carla Toledo Lafosse: “We operate mainly in the capital, Lima.”
HalloCasa: “What is Lima like.”
Carla Toledo Lafosse: “There is a lot to say about it: tradition, vanguard, development, and potential. Lima is a privileged metropolis due to its geographical location right in the center of South America. Bathed by the fertile waters of the Pacific Ocean and by the roaring Rimac River, it flourishes in the arts, industry, commerce and, especially, in its urban plan in frank expansion. Just like the rest of the country, we have micro-climates that differentiate one district from another, which results in a picturesque variety of styles and real estate alternatives.”
HalloCasa: “Peru is considered one of the fastest growing countries in Latin America. What impact does the real estate market have on this?”
Carla Toledo Lafosse: “The real estate market responds to the fluctuations of our economy. Currently, in a full democracy, with openness to national and foreign capitals and fairly clear rules of the game, we have an almost unlimited potential for growth. “A family, a home” could be the slogan that motivates us to continue the upward trend of the real estate market.”
HalloCasa: “What are the most demanded real estate solutions?”
Carla Toledo Lafosse: “The current demand for housing is mainly focused on B, C and D socioeconomic segments. The requirements of offices and commercial premises show a rebound in the so-called “Boutiques” that innovate with an interesting format, since they are smaller and with commercial premises ready for use by small and medium investors, new professionals and many old professionals who have decided to stop working at home or meeting their clients in cafes. It has also been understood that by buying an office, a similar amount to the one paid for rent is invested monthly.”
The Peruvian real estate market, a point of expansion
HalloCasa: “Ms. Toledo, please tell us about the Peruvian suburban market and how much international investment is given in projects of this kind.”
Carla Toledo Lafosse: “Our suburban market bets on the sale of land and large multifamily projects where large companies with national and foreign capital play defined roles in housing development.
The Peruvian market, in general, is concentrated in an important way in Lima, followed by Arequipa, Ica, Piura and other cities.
In general, the segment of homes and offices has backed down from the year 2016 and it is estimated that it will partially recover from this second semester of 2017 and totally in 2018.
The residential homes and premium offices have calmed their sale, manifesting more investors´ interest in smaller apartments of 1 and 2 bedrooms, as well as small format boutique offices that have greater demand.
During 2016, the housing market did not show signs of an expected boom. The distribution of 25% of the AFP funds was destined to cancel mortgage loans, and not to buy real estate. Additionally, the problem of lack of access to mortgage loans in the sub-segment C remained during the year.”
HalloCasa: “It is said that in Peru there has been an increase in the demand for one-bedroom properties, is that true? Is this fact because people are becoming independent at a younger age? Apart from this potential reason, are there any other reasons?”
Carla Toledo Lafosse: “It’s true, young people are increasingly acquiring housing to live independently. Professionals, employees, they all aspire to have their own home.
But there is another population segment that demands one-bedroom homes. These are elderly people who live on their own or are accompanied only by their partner and live independently from their children. It is profitable for them to sell the bigger house they had to acquire a new one in resemblance to their new situation and to have a remnant of money to enjoy in their autumn years.
Additionally, changing a house for a department gives them an increased social element with close neighbors as well as greater security.”
HalloCasa: “What are the new trends in the sector? What is the market demanding?”
Carla Toledo Lafosse: “It is mainly about affordable housing. Apartments with one or two bedrooms. Not houses. These are being demanded rather by an “A” segment with the ability to also invest in beach and country houses. It is worth noting that this segment is in strong growth with the sustained liberalization of the market.
Although it is true that in the last year the accumulated effect of the indecisions of the previous government was noted, a market reactivation is still expected in the current year.”
HalloCasa: “How do you perceive the Peruvian market for the next year 2018? What will be those projects that will top the lists? “
Carla Toledo Lafosse: “Despite our development in upturn, the previous government created some mistrust due to their mistakes in the decision making, a situation that always generates a bill to pay. In this case, the debt arrived at the end of their governmental period and continues to this date, reflecting in the real estate sector a slowdown in the market.
However, experts’ projections point to an immediate reactivation after having made the appropriate corrections in the guidelines of our macroeconomics. The Peruvian Chamber of Commerce CAPECO estimates that we will recover from the second half of this year, that is, now, expecting a growth of 4% this year and with a more auspicious perspective even for 2018.
On the other hand, the real estate boom goes through cycles and at this moment we start to climb up the slope again.”
HalloCasa: “Please tell us: how the real estate investment process is for foreigners? What requirements and limitations are there?”
Carla Toledo Lafosse: “Sure, in very simplified terms: It has an approximate duration of 15 working days and works via the incorporation of a company. If the partners do not reside in Peru or are not in the country, they must present powers of attorney registered in SUNARP and translated into Spanish.
The corporate constitution file with a non-registered corporate name must be entered into a public notary’s office and they must also open a bank account with the social capital in its entirety or at least 25% of it. Once the company is registered, they must obtain the Taxpayer Registry and legalize the company’s books.
The partners can be from 2 to 750, depending on the type of company they want to set up. If the partners do not reside in Peru, they must present powers of attorney registered in SUNARP and translated into Spanish.”
HalloCasa: “As for new developments and real estate projects in Peru, what could you tell international investors who want to invest in your country?”
Carla Toledo Lafosse: “Peruvian legislation has recognized the need to open the doors to foreign capital, this is how, in addition to our internal legal framework, we have bilateral investment agreements, such as free trade agreements, agreements to avoid double taxation, etc., with the main states and with supranational commercial integration groups, such as the Pacific Alliance, the European Free Trade Association, the Andean Community, the TransPacific Association Treaty, etc. All this effort of commercial integration and legal adaptation for our integration into the global market results in a beneficial investment climate that is safe and profitable.
In this order, there are no percentage limits for foreign shareholders. There is no minimum capital required to establish a company. The average duration of the process of constitution of a company is fifteen working days. There are no restrictions for the foreign investment. Branches can be established with permanent legal representation and management autonomy. There is a free availability for foreign currency, free hiring for foreign personnel up to 20% of the total, and the promotion to investment and tax incentives.”
HalloCasa: “In numbers, Ms. Toledo, how has the development of the real estate market been in the last decade?”
Carla Toledo Lafosse: “All the analyses coincide that Peru, in the last decade, has had an accelerated economic growth with an average of 5.9% and an inflation of 2.9%. In addition to that, Peru had a poverty reduction of 26.2% between 2005 and 2015, from 45.5% to 19.3%, which means that 6.5 million Peruvians left poverty in that period. The World Bank attributes this to the presence of a favorable external environment, prudent macroeconomic policies and structural reforms in different areas.
According to a BBVA analysis, the boom in the real estate sector translated into greater demand for housing is due to:
- The increase of the income in the families.
- Greater credit facilities to acquire a home (lower interest rates and longer terms)
- The housing deficit that exists in Peru
On the supply side, the real estate sector is attractive due to:
- The profitability that it offers
- The largest proportion of homes that are sold before having been finished, which reduces the financial cost of the builder
HalloCasa: “What impact does the internet currently have concerning marketing real estate projects in Peru?”
Carla Toledo Lafosse: “The Internet has positioned itself as an indispensable tool for the commercialization of real estate, both with the advertising in specialized portals, as in the individual search of the buyers, without forgetting the generic information that brings very useful points of view to the investor.”
HalloCasa: “What constructive advances have been made so far this year 2017?”
Carla Toledo Lafosse: “Despite the general good state of our economy, the real estate sector has suffered some deceleration in the first half of this year. However, an upturn is estimated according to some analysts in 2018 and according to others, from the second half of 2017. The truth is that the state has done its part and now it is up to the private sector to do the same. Banking, for example, by making consumer loans more flexible, has caused many potential home buyers not to qualify because they are paying some consumer credit or because they have delayed the payment of a fee. On the other hand, the investors who have retreated due to some erroneous measures of the previous government, can bet on the stability offered by the current administration which is willing to face the challenge of growth, especially if the rules of the game and the legal framework offer full stability.”
HalloCasa: “Ms. Toledo, we know that your time is limited. We would like to thank you for this informative and in-depth interview. Would it be possible for interested readers to get in touch with you if they have any follow-up questions?
Carla Toledo Lafosse: “It has been a pleasure. Investors can contact me through HalloCasa or contact me directly on mobile phone number 969 710 090 or email firstname.lastname@example.org. Thank you.”
HalloCasa: “Thank you so much for being with us. Always welcome to HalloCasa.”
Carla Toledo Lafosse: “Thank you very much.”
HalloCasa, the marketplace for international real estate properties, is being founded by a German in Bogotá. HalloCasa’s mission is to build trust for vendors and investors with respect to cross-border real estate