Boston, MA -- (SBWIRE) -- 03/09/2013 -- 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.

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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.

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