Construction & Real Estate
From The Report: Peru 2014
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The construction sector grew 14.8% in 2012, far more than the 3% recorded in 2011, and continued to expand at a rate of 13.23% in the first half of 2013. Investor confidence remains strong, with investment in current projects rising by 5.79%, most notably in the areas of housing and infrastructure, and public-private partnerships remain the favoured model for developing public works. Likewise, in the real estate sector mortgage credit has continued to expand in recent years. By June 2013, mortgages had grown by 24.7% year-on-year to reach $27.8bn. Though the number of self-built homes has more than doubled, rapid demand is creating a growing housing deficit. A new law to strengthen regulation in the sector and reduce bureaucratic challenges for construction firms should ensure continued growth in the years to come. This chapter contains an interview with René Cornejo Díaz, Minister of Housing, Construction and Sanitation, and José Graña Miro Quesada, Chairman of Graña y Montero.

Articles from this Chapter

Overview

Building confidence: Major infrastructure deficits drive sector growth
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If physical structures reflect the process of building a strong economy, then Peru has engaged in related programmes with a passion that should continue for many years to come. According to the National Statistical Institute (Instituto Nacional de Estadística e Informá tica, INEI) the sector grew by 15.17% in 2012, far more than the 3.43% recorded in 2011. The sector continued to grow at a rate of 15.64% as of the first half of 2013. Investor confidence and trust has returned after the initial…

Overview

SOLID DEMAND:
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Local cement consumption grew by 15.76% in 2012 and continued rising in the first half of 2013, at monthly rates of 3-24%. Dante Carhuavilca, chief of economic and social studies at the National Society of Industries, told OBG, “Cement production will continue to be propelled by growing demand, in infrastructure, roads, public works in general, malls and housing for all social classes.” Cement output for 2012 totalled 9.8m tonnes, including 200,000 tonnes in exports mainly to Bolivia, Chile and Ecuador, according to the Association of Cement Producers. In the first six months of 2013, some 5.89m tonnes were produced, with more than 108,000…

Interview

OBG talks to René Cornejo Díaz, Minister of Housing, Construction and Sanitation
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Interview:René Cornejo Díaz Are recent rapid property price rises indicative of excessive speculation and a potential bubble, and what is the risk in the long term? RENE CORNEJO DIAZ: The significant rise in housing prices recently is in fact a correction in a market in which prices have been suppressed for the past 30 years. The fundamentals of the market are strong, and economic indicators within the sector go against any claim of a market bubble. There is a housing deficit, estimated…

Interview

OBG talks to Jose Graña Miro Quesada, Chairman, Graña y Montero
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Interview:Jose Graña Miro Quesada Given the infrastructure deficit across the board, where should the state’s priorities lie? JOSE GRAÑA MIRO QUESADA:It is difficult to identify priorities when the infrastructure deficit is so dramatic. Priority should be given to projects that are key to maintaining continued and consistent growth. While the economy has been growing impressively over the past decades, investment in infrastructure until now has not been sufficient to maintain this…

Analysis

Bridging the gap: Public-private partnerships drive highway infrastructure development
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Substantial economic growth over the past decade has resulted in greater focus on Peru’s deficient infrastructure. Of the estimated deficit, approximately $13bn is attributed solely to highway construction, an essential component that often encounters difficulties due to the country’s complicated terrain, especially in the Andes Mountains and Amazonian jungle. According to the latest figures from the Ministry of Transportation and Communications, Peru has about 130,000 km of roads, divided among…

Overview

House hunting: Credit is pushing home purchases, while there are ample opportunities in social housing
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A large unresolved housing deficit is one important factor that will continue to generate activity for both the construction and real estate sectors. While consistent economic growth has paved the way for long-term development, many Peruvians continue to live in conditions that belie the country’s wealth and which authorities are determined to change. A Healthier Landscape Subsidies and increased mortgage penetration have strengthened the potential for many first-time homebuyers, and the provision…

Analysis

On the verge of stability: New prime office buildings look to satisfy high demand
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The prime office market is a segment to watch. Even after adding six new buildings with more than 51,000 sq metres to Lima in 2012, the initial vacancy rate for prime office space dropped to 2.2% in 3Q 2013, down from 2.4% in 3Q 2012. Such high demand has limited market options for leading companies doing business in Peru, but it is also laying the foundations for future buildings that will change the face of Lima. Rentals “There are virtually no products for prime office space on the market…