PERU: An Introduction to Real Estate
Current Economic Conditions of the Real Estate Sector in Peru
The Peruvian real estate sector maintained a steady and growing share of the national economy during 2024, representing 9.2% of formal investment, according to the information provided by the former Peruvian Association of Real Estate Companies (ASEI, by the Spanish acronym), now called the Confederation of Real Estate Developers of Peru (CODIP, by the Spanish acronym).
This stability is reinforced by the strong performance of the Metropolitan Lima market, which closed 2024 with an annual growth rate of 30%. The sector’s dynamism has been driven, among other factors, by lower mortgage interest rates and the development of social housing (VIS, by the Spanish acronym) projects. These projects are supported either by local regulations applicable to the Lima Metropolitan Area or by rights recognised under earlier national legislation, accounting for 69% of total sales.
VIS regulation
Through the VIS regulation, approved by Supreme Decree No 005-2005-VIVIENDA and effective since 11 April 2005, the technical and legal framework for this type of building project were established with the purpose of guaranteeing the right to decent, adequate and safe housing, in line with Law No 31313 (Law on Sustainable Urban Development) and with urban planning and land-use instruments approved by provincial municipalities.
This regulation reflects the Constitutional Court’s ruling in Judgment No 302-2023 (Urban Planning Parameters, case II), which clarified that national VIS regulations cannot override the authority of provincial municipalities in matters of urban planning, the determination of sustainable zones and maximum heights.
In addition, it is also important to highlight that the Constitutional Court, through Judgment No 16-2025, ruled that the nullity of VIS projects approved under prior sectoral regulations – previously declared void by Sentence No 302-2023 – may only be declared by a court, within procedures that allow due debate and evidentiary stages, provided there are no third parties (namely, buyers) affected who have acquired rights over such projects.
Subsequently, Law No 32379 (Social Housing Law), in force since 12 June 2025, repealed various articles of Law No 31313 related to VIS and mandated the adjustment of the aforementioned VIS regulation to its new framework, emphasising prioritising citizens living in extreme poverty, poverty or social vulnerability. Among the main innovations introduced by this law is the authorisation for provincial municipalities to designate Special Social Interest Zones through Municipal Ordinances, without needing to wait for their incorporation into urban development plans, and to establish special urban planning and building parameters. Additionally, supervisory and sanctioning powers are conferred upon the Ministry of Housing, Construction and Sanitation, with respect to the promotion and compliance with the VIS housing commercialisation regulation.
The Social Housing Law and the previous VIS regulation – which remain in force under the new law – continue to delegate the VIS projects’ development to private developers. However, following Judgment No 302-2023, the Regulation does not provide special parameters or concrete benefits that encourage private sector investment in such projects. Instead, the issuance of implementing regulations is left to different government levels (national, regional and local), according to their respective competencies.
Finally, considering that the annual demand for new housing is approximately 100,000 units, the gap between demand and supply is expected to widen due to the change in the VIS development model. This new model reduces project profitability by setting fixed minimum dimensions and conditioning benefits on local regulations, which are unlikely to be enacted nationwide in the short term. As a result, the use of the regular housing scheme will become necessary, which, due to its dimensions and other requirements, may ultimately be more costly for end consumers.
Elimination of bureaucratic barriers and real estate market strengthening
The National Institute for the Defense of the Competition and Protection of Intellectual Property (INDECOPI, by its Spanish acronym) has maintained a key role in countering arbitrary municipal actions, which not only undermine legal certainty in the real estate sector but also delay the execution of pending real estate projects. In line with Legislative Decree No 1256 (Law on the Prevention and Elimination of Bureaucratic Barriers), INDECOPI has the authority to declare illegal any acts, provisions or measures that restrict the rights of free private initiative and free enterprise.
In this regard, significant rulings have been issued, such as Resolution No 053-2025/SEL-INDECOPI, in which the Specialized Chamber for the Elimination of Bureaucratic Barriers declared as illegal the bureaucratic measures contained in Municipal Ordinance No 630-2024- MDB, issued by the District Municipality of Barranco. These measures concerned (i) the suspension of building permits approved by urban reviewers through favourable technical reports, based on alleged doubts about their technical and legal viability, and (ii) the suspension of commencement and execution of works for projects approved under such permits.
Another relevant case is Resolution No 093-2025/SEL-INDECOPI, which declared illegal the prohibition against hiring a private works supervisor in the construction process. This alternative, provided for in national legislation as a substitute for the traditional municipal inspector, had been effectively blocked, resulting in unjustified technical observations that delayed project progress. The Chamber ruled this prohibition illegal, as it contravenes the express provisions of the Consolidated Text of Law No 29090, which empowers developers to appoint a private works supervisor to carry out the functions of the municipal inspector.
Legislative projects impacting the real estate market
The Executive Branch ordered the publication of the Regulation of Legislative Decree No 1568’s draft (New Horizontal Property Regime), which sets forth the operational provisions to ensure proper application of the horizontal property regime in real estate complexes subject to this modality. The purpose of these provisions is to foster adequate coexistence among property owners in such residential complexes. One of the key measures is the recognition and regulation of “de facto horizontal property”, as well as the simplification of legal regularisation procedures for buildings or condominiums. The draft also regulates the sanctioning powers of Owners’ Associations and grants authority to record encumbrances on property registries when owners fail to pay at least three ordinary maintenance fees, while also creating a Registry of Maintenance Fee Debtors.
Similarly, the Executive Branch recently ordered the publication of a draft Ministerial Resolution to amend certain definitions contained in Technical Standard G.040 of the National Building Regulations (RNE, by its Spanish acronym) and to incorporate new definitions into Technical Standard A.020 of the RNE. The objective is to clarify provisions regarding residential buildings and their typologies, specifically in relation to the regime applicable to VIS and Collective Housing (VUC, by its Spanish acronym).
In this regard, with respect to VIS, the Executive Branch reiterates its current policy of setting the minimum floor area of housing units at 40.00 m², with no possibility of extension. Meanwhile, the new definition of VUC establishes that this building typology cannot be subject to the horizontal property regime (ie, it cannot be individually registered), and may only be developed in conjunction with other compatible non-residential typologies (such as multi-family housing and residential complexes). Furthermore, its implementation will depend on the enactment of provincial ordinances approving the corresponding urban planning instruments that provide for its development.