According to the criteria of
The historical rise of the dollar At the close of the first Monday in June, it was the peak in the recurring scenario of uncertainty that the country is experiencing as a result of the presidential elections.
The rapid rise in the currency, despite being always forecast, does not stop having a direct impact on the price of certain products. In the case of the real estate market in Lima, the effects have been slightly diminished by the inexhaustible demand for housing among Peruvian families.
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Despite this, in the opinion of the players in the sector, it is not totally ruled out that in the medium or short term the market may rearrange itself to avoid the still present exchange rate volatility.
Prices in lima top
The real estate portal Urbania, together with the Center for Research in Finance (CIF) of the Business School of the Universidad Torcuato Di Tella in Argentina, prepared a study that reviews the value of the square meter in 14 cities of 9 countries in Latin America between the months of September 2020 and March 2021.
Luciano Barredo, marketing manager of Grupo Navent, owner of Urbania and Adondevivir, explains that this study uses the value of the square meter in the districts of Miraflores, La Molina, San Isidro, Surco and some areas of San Borja.
Similarly, similar spaces are compared in other cities in the region. “What we are looking for is to see the impact of households in a precisely university sector or young people up to 30 years of age. From 2019 to date, the search traffic made by this young audience has increased between 22% to 24%; mainly because now they leave the house earlier and rent in the company of other young people “says Barredo.
The study reveals that, on average, prices rose 1.6% in nominal dollars and fell 3.2% in real local currency for the region.
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“We have seen a variation in prices and, in the Peruvian case, due to the political issue and its effects on the exchange rate. In our country and in countries like Argentina the issue is that of currency. The dollar it started to go up a lot “, explains Luciano.
Thus, the average sale price per square meter in these areas of Lima Top is US $ 2,038 and its variation is below the average with a decrease of 2% in Dollars and a rise of 0.3% in soles adjusted for inflation.
“Peru has never been among the first three countries where the cost per square meter is higher. It has always been in fourth or fifth place. It has a lot to do with the fact that market development in Peru is still low compared to other cities “explains Barredo.
Despite this, the Navent manager points out that although the average price is US $ 2,038, in some areas of Lima Top it is close to US $ 3,000. Something very similar to prices observed in Santiago or Montevideo.
Measured in nominal dollars, the city in which there was a greater percentage increase in the price is in Santiago de Chile (9.3%). Meanwhile, the greatest falls occurred in Rio de Janeiro (-4.5%), Buenos Aires (-4.4%) and Córdoba (-4.4%).
In real local currency, the cities with the highest increases are Bogotá (2.5%), Monterrey (1.3%) and Montevideo (1.1%). The biggest drops were in Buenos Aires (-14.2%), Córdoba (-14.2%) and Rosario (-12.1%).
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Other districts in Lima
The last measurement carried out by Urbania dates from April of this year, when the average price per square meter in Metropolitan Lima for sale was S / 6,405, which implied an increase of 0.9% compared to the previous month and of 6, 9% compared to the same month in 2020.
Barranco has the most expensive square meter in the capital (S / 9,156), followed by the districts of San Isidro (S / 8,998) and Miraflores (S / 8,620). Meanwhile, the lowest square meter value is found in San Martín de Porres (S / 3,065), Callao (S / 3,587) and Los Olivos (S / 3,686).
Response and scenarios
Miguel Deustua, general manager of Granadero Inmobiliaria, explains that prices have experienced a slight increase over time due to some variables in the cost.
“For example, the cost of steel that rose in the second half [del 2020] going from US $ 500 to US $ 850. It is projected that its value will continue to rise, this will obviously push costs for construction “, asserts the manager in conversation with Day1.
Faced with such a scenario, Deustua affirms that some real estate developers have chosen to modify the prices of their square meter of soles to Dollars. However, it is a change that is not yet massive and that is only possible in some segments. In the particular case of Granadero, it has been applied to a project in Miraflores.
“In some segments it is possible and feasible because people can indistinctly agree on the purchase in dollars or soles at the change of day. However, in the case of living place social is necessarily in soles “he adds.
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Ernesto Durand, general manager of Conforta Inmobiliaria, also warns that some players in the market have chosen to honest their prices in Dollars product of political uncertainty. “People are also waiting to see what happens so, once defined, buy a house. However, we must be clear that Peruvians are used to political noise “he adds.
On the contrary, Durand talks about the opportunities that exist in the market today for the purchase of living place. “The interest rates they are competitive in the market. That can be an opportunity for buyers and not sellers. They have greater bargaining power. To this add that some already have the money from their AFP and will see where to invest. In the face of any crisis, one of the best investments is real estate “, he asserts.
Changes in rent
The rental market is another very dynamic one in the country and, given the volatility of the exchange rateThe contracts have also shown a certain tendency to agree on a stability in the rental value. Luciano Barredo, manager of Navent, explains that 70% of the people who rent were, at the end of 2020, in negotiations with the owner of the property to determine an exchange rate and that the rent goes to soles.
“As we see that the dollar, we will have to do a second survey. In the previous survey, we learned that there were people who began to move from apartments because there was no willingness of the tenant to close a exchange rate that is beneficial for both parties “Barredo explained.
As of April of this year, Urbania records that the average price of rental in Lima it was S / 2,540 per month, 0.5% higher compared to the previous month and 4.1% lower than the same month of the previous year.
Barranco has the most expensive average rental price with S / 3,643 and in Chorrillos is the rental cheaper with S / 1,966 per month. Likewise, La Molina is the district with the highest interannual increase (10.8%). Pueblo Libre (-9.5%) and Lince (-8.8%), on the other hand, were the ones with the greatest decline.
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Regarding the market of rental of offices, Miguel Deustua explains that these contracts are already agreed in Dollars. “The price had already been hit by the high vacancy that existed. The appearance of the second wave has generated that telework has a greater role and prices in offices have not been adjusted so far “, he asserts.
On the other hand, does uncertainty and price volatility delay the occupation of industrial lots by companies? Carlos Montero, vice president of urban development for Grupo Centenario, believes that there will be a delay on the part of large corporations.
“However, lots of small sizes of 5 thousand square meters I think they will not stop because people have to continue eating, dressing, consuming electronics. So small warehouses for small or medium entrepreneurs are always going to be required “, he comments.
That said, in the manager’s opinion, the housing real estate market will continue to be dynamic in the coming months despite price fluctuations and political uncertainty.
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“The housing demand it will always exist. The second point is that social housing programs, whoever wins, are an engine and a factor in people’s satisfaction. Not just in demand, but across the entire social housing workforce. The real estate industry is a strong generator of jobs “, he comments.
This, then, is the main investment motivation for developers. “Companies will have their precautions because in these times you have to take care of the box. However, they will continue to buy earth cloths and prospect earth cloths because there is support to develop social housing”Montero explains.
In summary, real estate developers – beyond the natural optimism in the face of uncertainty – will be waiting for exchange rate volatility. However, this will never stop them from continuing to search for land and generating projects since, in Peru, there is an inexhaustible demand to meet.