For globetrotters Peru is home to Machu Picchu. For lovers of good food, Peru is the birthplace of Gastón Acurio, an immense variety of ceviches and delicious desserts. For professional investors, the Peruvian economy is one of the strongest in the region, growing steadily since the mid-nineties. For jurists, Peru is one of the few Latin American countries where there is real justice for all.
It’s no secret the devastating impact the COVID-19 pandemic has had on Latin America. Although the Inca country has not been the hardest hit in the region, its economy has. According to figures from the Inter-American Development Bank, Peru has registered an 11.20% drop in GDP in 2020. But the collapse is not only due to the virus, political instability since 2018 and the victory of Pedro Castillo have also contributed.
Although it is still very premature to conclude that the current president will have an economic management similar to that of Nicolás Maduro in Venezuela, markets and investors have shown signs of nervousness. For example, by August 2021 the Peruvian sol was the second most devalued currency in the world according to The Economist magazine’s Big Mac Index. The good news is that there are already signs of recovery.
The first sector to show an improvement was real estate: from mid-2020 to the first quarter of 2021 sales have increased. In their favor, low interest rates on mortgage loans have played, going from 7.86% in January 2020 to 5.90% in June 2021, according to figures from the Central Reserve Bank of Peru.
It is important to note that, at the same time, interest on term deposits was at 0.48% in June 2021 when in January 2020 they were at 2.96%.
Leaving money in the bank is no longer an option. Aware of this reality, many Peruvians have decided to invest their savings in real estate. The price index published by the Central Bank shows that, on average, the square meter in Lima has gone from $ 1,703 dollars in 2015 to $ 1,823 in 2021. And it is expected to continue to increase.
Where the economic crisis has impacted has been in the price of rents. Until the first quarter of 2020 where the economic crisis has impacted has been in the price of leases. Until the first quarter of 2020 in Lima they grew on average 4% each year. But in the following quarters, the value has fallen more than 3%. That is, there is more supply than demand.
The current difficult economic situation is evident. Everyone wants to have their money in a safe place, but there are no clients for the properties, there are still no clear returns on investments in the short and medium term added to the nervousness of the markets before the possibility of a deeper crisis. Even so, the country’s institutions have proven to be solid: in their favor they have gone from an inflation of 2,178.49% in 1,990 to 1.83% in 2,021.
At this time it is better not to risk it. Especially when the specter of further devaluation and hyperinflation is present. Fortunately, the geographical proximity to Miami, the unofficial capital of Latin America, makes the possibility of real estate investment outside the country a reality, with the additional attraction of having returns in dollars and almost immediately.
The real estate market in Miami is attractive wherever it is analyzed: it is estimated that every month more than 900 people arrive in the city, more than 50% of the inhabitants do not own their place of residence, there are sectors of the city where properties have been valued up to 70% in the last five years, It has world-class architectural projects, personalities from the technology sector have come to invest and live in the city, etc.
In Miami, the Latino does not become an immigrant within the American Union, but to be relevant people within the community. The city’s economy has also proven to be strong and diversified: it depends not only on tourism but on banking, logistics services, high-tech medicine, and more.
The biggest advantage is the possibility of receiving returns almost at the time of buying the property: getting tenants in Miami is very easy. To which is added the tranquility of protecting the patrimony against a devaluation, or the possibility of an even more devastating economic crisis. In times of uncertainty it is necessary to bet on the safest options such as the real estate market of the capital of the sun.
Investments in Miami give returns almost immediately, while in Peru the returns can be in the medium or long term. In case of any eventuality it is better to opt for the safest alternatives, which precisely offers the American city. In PFS Realty Group given our real estate activity we are focused on advising those individuals and families who are interested in making investments of this type in Miami and South Florida, we have been working for more than twenty (20) years and for this, twenty (20) years that give us a specialty in what we do, If you want to explore real estate investment opportunities, we can schedule a meeting, face-to-face or virtual, to expand this information. Write to us at info@pfsrealty.kinsta.cloud and also visit our www.pfsblog.kinsta.cloud website to learn more about us.
