An introduction to the Peruvian real estate market

This time, we did the interview with Rafael Fernández Crossety, Sales Coordinator at RE / MAX Excellence, who will speak to us, based on his extensive career and experience, about the current situation in the real estate market in Peru.

HalloCasa: “It is a pleasure for us at HalloCasa to have you here with us, Mr. Rafael, that is why we want to thank you for your time, kindness and willingness. It will be very pleasant for us and our audience to know relevant data on the real estate market in Peru.

Rafael Fernandez Crossetty:  “Thank you very much it is a pleasure for me to be able to converse with you.”

HalloCasa: “As a first instance, we want to know you, to hear from you both personally and professionally, about what you want to tell us.”

Rafael Fernandez Crossetty:  “I am a Graduate of the Faculty of Economics and Planning of the National Agrarian University La Molina in the career of Statistical and Computer Sciences, Registered Real Estate Agent in the Ministry of Housing, Construction and Sanitation of Peru, since September 2010 with the Registration No. PN-0975, Currently associated with RE / MAX Excellence ”.

HalloCasa: “Currently you are a Sales Coordinator at RE / MAX Excellence as well as an Associate Real Estate Agent. Would you like to tell us more about what your business is about and what is your specialty in the real estate market? ”

Rafael Fernandez Crossetty: “RE/MAX is a worldwide real estate system of franchised and proprietary offices, made up of independent affiliated professionals. Dedicated to advising on the acquisition, rental and / or sale of real estate. Inside those offices is UpLink SAC, a company that opted for a franchise and under the commercial name of RE / MAX Excellence, has been working successfully since 2013. ”

HalloCasa:  “You live in Lima, right? The beautiful and booming capital of Peru. Tell us, please, what is this city like? How much does it affect the real estate market, the fact of being the Peruvian capital? “

Rafael Fernandez Crossetty: “Lima, as the capital of Peru, is a modern, tourist city, with a mix of past and present where traditional colonial balconies are combined with new architecture as well as being privileged to be bathed by beautiful beaches.

Approximately 30% of the population of Peru live in Lima, making most of the real estate businesses take place in the capital. ”

HalloCasa:  “Thank you very much for this valuable information that you have given us. Now, let’s go to the real estate topic. How is the current situation in the Peruvian Real Estate market? Has it changed in the last five years? What do you consider to be those significant changes that have potentiated the real estate market? ”

Critical elements that contribute to the expansion of the real estate market in Peru

Rafael Fernandez Crossetty: “After the negative effects caused by the natural disasters that have occurred. The Real Estate Market is expected to grow due to the fact that there is a great opportunity for property revaluation, with a projected 40% in an average of 5 years. In addition, the government will continue to support the strengthening of the real estate market, focusing on housing programs that generate favorable conditions, reducing the value of the reserve requirement so that mortgage loans can be granted at lower rates. 2012 was perhaps the best-selling year in the real estate sector, but in the following years the economic decline coupled with the disproportionate increase in property prices caused the property market to suffer a considerable drop. After a sincere pricing and improvement in the conditions for the acquisition of homes, expectations have been better. ”

HalloCasa: “Just as there have been significant changes in favor of the real estate market, what are those aspects that have reduced the sale of surfaces and in what areas?”

Rafael Fernandez Crossetty: “World economic situation (price of minerals), natural disasters, presidential elections (2016), as well as the current political situation.”

HalloCasa:“On what aspects does the profitability of each business in the Peruvian real estate market depend. Please list five aspects and give us information about it? “

Rafael Fernandez Crossetty: 

“1.- Location: An important aspect to achieve profitability is to be able to choose the right place for the real estate project that we want to develop.

2.- The combination of commercial premises and houses is important to achieve a good profitability. Create demand for the area in search of comfort.

3.-Capitalization rate

4.- Subsidies for the purchase of housing by the State.

5.- Demand ”

HalloCasa: “Is it true that 20% of real estate projects are sold at fairs? What does that fact respond to? ”

Rafael Fernandez Crossetty: “That’s right, of the total of new properties that are sold each year in Peru, 20% are bought at fairs. Since real estate fairs are attractive for families looking for a variety of offers, that is why in Lima a great variety of physical and virtual fairs are held each year.” 

HalloCasa:“What are the important differences between a physical real estate fair and a virtual one? Which is more desired or for what reasons do you think this happens? ”

Rafael Fernandez Crossetty: “The physical real estate fair gives people the opportunity to attend with the family, in addition to touring a wide variety of stands comparing conditions and purchasing facilities, which in turn is more appealing to be able to negotiate the price. ”

HalloCasa: “Now let’s talk about foreign investors, Mr. Rafael, please. How is a conventional process for a foreigner to invest in real estate properties in Peru? What cities, apart from the capital, are most coveted? Why do you think this is so? ”

How to invest in Peru in real estate? Some tips for foreign investors

Rafael Fernandez Crossetty: “If the foreigner travels to Peru:

• You must enter the country with a Business Visa, which allows you to sign contracts in Peruvian territory. In case of entering with a Tourist Visa, you must request in the office of the National Superintendence of Migrations that they stamp the passport with the text “Skilled to contract” so that with it you can sign purchase contracts without difficulty.

• If you are married, your spouse must intervene in the purchase of the property since, according to Peruvian law, the acquisition of real estate, in the case of a conjugal partnership, requires the participation of both spouses.

• You must pay the Alcabala Tax that corresponds to 3% of the sale value of the property. This is a Tax on transfers of real estate.

• Then, the regular process that consists of reviewing documents, signing minutes, writing and registration in public records.

Definitely the most attractive place is still Lima, having the largest population in all of Peru. ”

HalloCasa:  “Is it possible to invest in Peru from abroad? What kind of intermediaries is needed to move forward in a real estate purchase process? ”

Rafael Fernandez Crossetty: “If the foreigner does not travel to the country to make the purchase:

• You must grant a consular permission to a person domiciled in Peruvian territory, approaching the nearest Peruvian consulate to the place of residence. At the consulate, they will grant you a permission of attorney so that you can be represented in the signing process. Similarly, if you are married, your spouse must grant the same permission and can do so, to the same attorney.

• This permission will be sent in the form of “consular parties” to Peru, so that the consul’s signature is duly legalized in the Ministry of Foreign Affairs, after which it is sent to the registry of mandates and powers of the corresponding registry office. Once the power of attorney is registered, the agent will be able to sign the sale documents on behalf of the foreigner. After that, the attorney must follow the regular procedures for the purchase of the property, whose registration will be in the name of the foreigner. ”

HalloCasa: “How is the management to invest in border areas? It’s possible? For whom is it easier to acquire land in border areas, for local citizens or foreign citizens living in Peru? ”

Rafael Fernandez Crossetty: “The Political Constitution of Peru guarantees the right to property within the limits of the law, no citizen can be deprived of the acquisition of property unless it is because of state security. This is valid for Peruvian citizens. ”

HalloCasa: “Does that also apply to international investors?”

Rafael Fernandez Crossetty:  “According to the Political Constitution of Peru, foreigners, whether natural or legal persons, are in the same conditions as Peruvians, without, in any case, being able to invoke exceptions or diplomatic protection.

However, within 50 km of the borders, they cannot acquire, or possess by any title, mines, lands, forests, […… ..] directly or indirectly, individually or in society, under pain of losing, for the benefit of the State, the right thus acquired. The case of public necessity expressly declared by Supreme Decree approved by the Council of Ministers in accordance with law is excepted (Chapter III of Property – Article 71) .

But, this week the government has issued Supreme Decree No. 001-2017-RE that establishes the possibility of acquiring real estate for consulates and establishments of international organizations and organizations within the fifty kilometers adjacent to the borders. ”

HalloCasa: “What differences exist within the real estate market between the capital and representative cities such as Arequipa, Trujillo, Chiclayo, Iquitos, among others?”

Rafael Fernandez Crossetty:  “With more than 30% of the population concentrated in Lima, as a consequence of both national and foreign migration, they have made the Lima real estate market more attractive. In addition to the recent natural disasters they have paralyzed already budgeted works. ”

HalloCasa:“The increase in deeds, the revaluation of properties, the increase in brand new footage, represents a great opportunity for investors. Why and which investors will benefit the most? Nationals or internationals? ”

Rafael Fernandez Crossetty: “Laws favor investment for both nationals and foreigners. The generation of attractive offers as well as the existing demand are also important when it comes to investing and generating profitability.”

HalloCasa: “How do you see the suburban market and what are those aspects that put you ahead of the urban market?”

Rafael Fernandez Crossetty:  “The demographic growth in Lima has made investors see in the suburban market a great investment alternative, with low prices and high demand for real estate.”

HalloCasa: “Mr. Fernández, we know that your time is limited. We would like to thank you for this informative and in-depth interview. Would interested readers be able to contact you if they have any follow-up questions? Thank you very much for the interview.”

Rafael Fernandez Crossetty: Yes, of course. Investors can contact me through HalloCasa or by contacting me directly at cell phone number 051 961253478 or email rfernandez@remax-excellence.pe. Thank you.

HalloCasa:  Thank you very much for being with us. Always welcome to HalloCasa.

Rafael Fernandez Crossetty: Thank you very much.

About HalloCasa:

HalloCasa, the marketplace for international real estate properties. HalloCasa’s mission is to build trust for vendors and investors with respect to cross-border real estate transactions.

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