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Peru Real Estate Report Q1 2013

Peru Real Estate Report Q1 2013

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Additional Information

Price	$1,175.00
Publisher	Business Monitor International
Date of Report	Sep 1, 2013

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Quick Overview

The Peru Real Estate report examines the commercial office, retail, industrial and construction segments
throughout the country in the context of increased risk across political, economic and security spheres.
With a focus on the principal cities of Lima and Arequipa, the report covers the rental market
performance in terms of rates and yields over the past 18 months and examines how best to maximise
returns in the commercial real estate market, while minimising investment risk and exploring the impact
of strong economic growth and rising demand. Our growth outlook for Peru's commercial real estate
sector over the next few years remains relatively strong due to robust infrastructure and mining sector
project pipelines and a growing consumer story. Construction has proved particularly resilient since a dip
in activity in mid-2011. However, the current market is not all positive, and our latest data collection
covering market performance over H112 has revealed less than impressive year-on-year (y-o-y) results,
albeit in the aftermath of a particularly strong start to 2011.
Key Points:
?? While we anticipate headline growth in Peru to slow in the coming years, as China's hard
landing feeds through into a more moderate expansion of the mining sector, we continue to
expect the country's economy to remain one of the most dynamic in Latin America. Moreover,
we see a number of interesting investment opportunities at the sector level.
?? We have previously highlighted the risks to investment in Peru which could derail billions of
dollars of planned infrastructure investment. Growing instances of violent protests opposing
development projects could deter much needed private and international investment. The recent
suspension of a new airport project illustrates our concerns.
?? Peru's construction sector has experienced strong growth over the first half of 2012, prompting
us to revise up our full-year 2012 real growth forecast to 12% y-o-y. High value investment
plans to expand Peru's infrastructure over the next five years should continue to drive strong
growth; however, cracks in the business environment cannot be ignored and may erode growth
potential over the medium term.
?? Following strong economic data in the year to date, as well as indications that private
consumption and fixed investment will bolster economic activity more than we had previously
expected in the next few years, we have revised up our 2012 and 2013 growth forecasts for Peru.
We now forecast real GDP growth of 5.6% (from 4.8%) in 2012 and 5.2% (from 4.8%) in 2013.

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 6
Peru Real Estate/Construction SWOT .................................................................................................................................................................. 6
Peru Political SWOT ............................................................................................................................................................................................ 7
Peru Economic SWOT .......................................................................................................................................................................................... 8
Peru Business Environment SWOT ....................................................................................................................................................................... 9
Real Estate Market Overview ........................................................................................................................ 10
Real Estate Market Analysis - Office ........................................................................................................... 16
Supply And Demand............................................................................................................................................................................................ 16
Rents And Yields ................................................................................................................................................................................................. 16
Table: Historic Office Rents, 2011-2012 (US$/m2 a month) ............................................................................................................................... 17
Table: Net Office Yields, 2011-2012 (%) ............................................................................................................................................................ 17
Table: Terms Of Office Rental Contract/Lease, H112 ........................................................................................................................................ 17
Industry Forecast Scenario ...................................................................................................................................................................................... 18
Table: Forecast Office Rents, 2012 (US$/m2 a month) ....................................................................................................................................... 18
Table: Forecast Net Office Yields, 2010-2017 (%) ............................................................................................................................................. 18
Real Estate Market Analysis - Retail ............................................................................................................ 19
Supply And Demand............................................................................................................................................................................................ 19
Rents And Yields ................................................................................................................................................................................................. 19
Table: Historic Retail Rents, 2011-2012 (US$/m2 a month) ............................................................................................................................... 20
Table: Net Retail Yields, 2011-2012 (%) ............................................................................................................................................................ 20
Table: Terms Of Retail Rental Contract/Lease, H112 ........................................................................................................................................ 20
Industry Forecast Scenario ...................................................................................................................................................................................... 21
Table: Forecast Retail Rents, 2012 (US$/m2 a month)........................................................................................................................................ 21
Table: Forecast Net Retail Yields, 2010-2017 (%) ............................................................................................................................................. 21
Table: Peru Retail Sales Indicators .................................................................................................................................................................... 21
Real Estate Market Analysis - Industrial ..................................................................................................... 23
Supply And Demand............................................................................................................................................................................................ 23
Rents And Yields ................................................................................................................................................................................................. 23
Table: Historic Industrial Rents, 2011-2012 (US$/m2 a month) .......................................................................................................................... 24
Table: Net Industrial Yields, 2011-2012 (%) ...................................................................................................................................................... 24
Table: Terms Of Industrial Rental Contract/Lease, H112f ................................................................................................................................. 24
Industry Forecast Scenario ...................................................................................................................................................................................... 25
Table: Forecast Industrial Rents, 2012 (US$/m2 a month) ................................................................................................................................. 25
Table: Forecast Net Industrial Yields, 2010-2017 (%) ....................................................................................................................................... 25
Forecast Scenarios ....................................................................................................................................... 26
Infrastructure Report ............................................................................................................................................................................................... 26
Table: Peru Construction And Infrastructure Industry Data, 2010-2016 ............................................................................................................ 26
Table: Peru Construction And Infrastructure Long-Term Forecasts, 2015-2021 ................................................................................................ 27
Construction and Infrastructure Outlook and Overview ..................................................................................................................................... 29
Macroeconomic Outlook .......................................................................................................................................................................................... 32
Table: Peru - Economic Activity ........................................................................................................................................................................ 34
Real Estate Risk/Reward Ratings ................................................................................................................. 35
Real Estate/Construction Risk/Reward Ratings ....................................................................................................................................................... 35
Table: Real Estate Risk/Reward Ratings ............................................................................................................................................................. 35
Peru's Business Environment .................................................................................................................................................................................. 35
Table: BMI Business And Operation Risk Ratings .............................................................................................................................................. 35
Institutions .......................................................................................................................................................................................................... 36
Table: BMI Legal Framework Rating ................................................................................................................................................................. 37
Infrastructure ...................................................................................................................................................................................................... 38
Table: Labour Force Quality .............................................................................................................................................................................. 40
Market Orientation ............................................................................................................................................................................................. 41
Table: Trade And Investment Ratings ................................................................................................................................................................. 43
Operational Risk ................................................................................................................................................................................................. 44
Competitive Landscape ................................................................................................................................ 45
Company Profiles .......................................................................................................................................... 47
Abengoa .............................................................................................................................................................................................................. 47
Cemento Andino.................................................................................................................................................................................................. 48
Cementos Lima ................................................................................................................................................................................................... 49
Cementos Pacasmayo ......................................................................................................................................................................................... 50
Centros Comerciales del Peru (CCPSA) ............................................................................................................................................................. 52
Cosapi ................................................................................................................................................................................................................. 53
Graña y Montero (GyM) ..................................................................................................................................................................................... 54
Inversiones Centenario ....................................................................................................................................................................................... 56
Negocios e Inmuebles ......................................................................................................................................................................................... 57
Demographic Data ......................................................................................................................................... 58
Table: Peru's Population By Age Group, 1990-2020 ('000) ............................................................................................................................... 59
Table: Peru's Population By Age Group, 1990-2020 (% of total) ........................................................................................................................ 60
Table: Peru's Key Population Ratios, 1990-2020 ............................................................................................................................................... 61
Table: Peru's Rural And Urban Population, 1990-2020 ..................................................................................................................................... 61
BMI Methodology .......................................................................................................................................... 62
How We Generate Our Industry Forecasts .............................................................................................................................................................. 62
Construction Industry .............................................................................................................................................................................................. 63
Bank Lending ........................................................................................................................................................................................................... 64
Real Estate/Construction Business Environment Rating .......................................................................................................................................... 64
Table: Weighting Of Indicators .......................................................................................................................................................................... 65
Sources .................................................................................................................................................................................................................... 67