City Overview

City: Lima Country: Peru Region: South and Central America

Snapshot

- Lima is the capital city of Peru and part of the Lima Metropolitan Region. The Region comprises six suburban areas, namely Lima Norte, Lima Sur, Lima Este, Residential Lima, Central Lima, and Callao, covering a total area of 2,820km2.

- The total population of the Lima Metropolitan Region stood at 9.6 million in 2014, up by 1.5% from 9.5 million in 2013. The Region has a population density of 3,435 people per km2. The population is expected to grow at 1.5% annually and reach 11.3 million by 2025.

- The Metropolitan Region's nominal GDP stood at PEN255.7 billion (US$90.0 billion) in 2014, accounting for 44.3% of the national GDP. The GDP per capita of the Lima Metropolitan Region reached PEN26,400 (US$9,300) in 2014.

- The local economy of the Region is mainly driven by the service sector, contributing about 68.1% of the total GVA. Within the service sector, the wholesale and retail trade, transport and information, restaurants and hotels sectors accounted for 26.4% followed by government services (9.0%) and other services (31.0%).

- Jorge Chávez International Airport, also known as Aeropuerto Internacional Jorge Chávez, is the major aviation hub in Peru that handles both international and domestic flights. The airport is located in Callao (a city to the west of the Lima City), about 11km from the City Centre. The airport handled 15.6 million passengers in 2014.

Key Facts

Population (million): 9.6 2014, Estimates

Area (km2): 2,820 Population Density (people/km2): 3,435 2014, Estimates

Nominal GDP (US$ billion): 90.0 2014, Estimates

Int'l Arrivals (million): 3.9 2014, actual

Average Hotel Rate: US$119.0 2014, actual

Nominal GDP per Capita (US$): 9,300 2014, Estimates

Real GDP Growth: 3.3 2014, Estimates

Construction and Real Estate

Investment

- Construction is a key industry in the LMA. The sector accounts for around 6% to the local economy and has been growing at a rapid pace in recent years.

- Construction is one of the key industry sectors in the Lima Metropolitan Region contributing 6.2% of the total regional GDP in 2014. Increases in foreign direct investments (FDIs) in the service and construction sectors are stimulating growth in the Region. The construction sector in 2014 grew by 7.6%, slower compare to 9.7% in 2013. The sector contributed PEN15.9 billion (US$5.6 billion) to the regional economy in 2014. The construction sector is expected to grow at an annual average of 7.7% over the next ten years (2015-2025) and contribute PEN36.0 billion (US$11.2 billion) to the Region's economy in 2025.

- The total number of residential building permits issued in the Region during 2013 decreased to 8,211 from 10,696 in 2012. Of the total permits issued in 2013, 5,505 permits were issued for single family houses and 2,706 for multifamily houses, down from 7,482 and 3,214 permits in 2012 respectively.

- The Ministry of Housing, Construction and Sanitation of Lima took up a housing development programme to benefit the poor people with housing at low prices. During 2011 and 2014, the program supplied about 248,415 housing units, benefiting low income groups in the Region. Under a government scheme, taken up by the Ministry of Housing, Construction and Sanitation of Lima, 36,229 mortgage loans worth PEN757.3 million (US$266.7 million) were given to people in 2014.

- Some of the major infrastructure projects under planning as of 2015 in Lima include the Lima Metro Line 3, valued at US$6.0 billion; MTC La Molina Miraflores Road Development, valued at US$500.0 million; EMAPE Periferico Vial Norte, road construction from Lima to Callalo, valued at US$500.0 million, and SN Power Cheves Hydropower Plant valued at US$400.0 million.

- The construction industry in the Region employed 352,000 people in 2014, accounting for 7.1% of the total employment. The growth of employment in the construction sector over the next 10 years (2015-2025) is set to average 2.2% annually. The construction sector is projected to employ about 436,000 people by 2025.

Credit by Housing Fund Companies in Lima Region: Lima:

Date Credit by housing fund companies 01 Jan, 2007 38,524 01 Jan, 2008 120,937 01 Jan, 2009 194,718 01 Jan, 2010 443,142 01 Jan, 2011 670,962 01 Jan, 2012 734,315 01 Jan, 2013 908,034

Sale of Cement in Lima Region: Lima:

Date Sale of Cement 01 Jan, 2001 1,638,231 01 Jan, 2002 1,781,489 01 Jan, 2003 1,797,416 01 Jan, 2004 1,840,497 01 Jan, 2005 2,068,456 01 Jan, 2006 2,241,546 01 Jan, 2007 2,510,932 01 Jan, 2008 2,785,080 01 Jan, 2009 2,863,070 01 Jan, 2010 3,207,530 01 Jan, 2011 3,371,577 01 Jan, 2012 3,472,616 01 Jan, 2013 3,590,636

Real Estate Market

- The Lima Metropolitan Area's housing market has been gradually increasing. Migration of the Peruvian rural population seeking employment in Lima is the main reason for the increasing demand in the real estate market.

- According to the Global Property Guide Price Index, the average price of homes sold in the Lima Metropolitan Region grew by 7.6% in 2014 to PEN289,260 (US$90,700). The hike in prices was greater in the Region, compared to other suburban and rural areas.

- The average property price in the Region for a 120m2 apartment in 2014 was US$248,880 to buy while the monthly rental stood at US$1,206, at a yield rate of 5.8% per annum. The yield rate increases for a smaller apartment (7.6% per annum for 75m2 apartment) and gradually decreases for bigger apartments (to 5.2% per annum for 200m2).

- The average residential apartment price per m2 in Lima in 2014 was US$2,270, which can be compared with Bogota priced at US$2,379 per m2 in 2014.

- The prime office rent in the Lima Metropolitan Region in 2014 remained constant compared to the past two years. The prime office rent in Class A locations ranged from US$22 toUS$30 per m2 per month while the rent in Class AB locations ranged from US$19 to US$27 per m2 per month, according to the Office Outlook report published by JLL.

Political

- The Metropolitan Municipality of Lima (Municipalidad Metropolitana de Lima) is the regional and provincial government of the Lima Metropolitan Region. It consists of the Council, the Mayor of Lima and the Metropolitan Assembly. The mayor and members of the metropolitan assembly are elected through municipal elections.

- Óscar Luis Castañeda Lossio is the present Mayor of Lima for the term from January 2015 to December 2018. He was elected as the Mayor for the third non-consecutive term (first term being from January 2003 to October 2010) preceded by Susana Villarán (2011-2014). Luis Castañeda belongs to the National Solidarity Party (Partido Solidaridad Nacional) and serves as the president of the party.

- The province of Lima is divided into 43 districts, each of which is headed by a district mayor. However, all these districts are in turn headed by the Mayor of Lima. The City Council consists of various departments, each managed by municipal managers. Some of the key departments include department of metropolitan municipal management, management of social communication and public relations, department of finance management and department of social development.

- The province of Lima has a local budget planned for every two years and the latest budget was planned for 2014-16. The latest budget allocation in the financial year 2014 was PEN17,634 million (US$6,555 million). The main allocations made in the latest budget include 46.0% for transportation, 15.0% for education, 10.0% for health and 6.0% for farming and agriculture.

Economic

- The Lima Metropolitan Region's real GDP is forecast to grow at an annual average rate of 4.9% over the next decade (2015-2025). The Region, which is Peru's economic and financial hub, is home to headquarters of a number of national and international multinationals. The Region's economy is dominated by the services industries such as financial institutions, trade and telecommunications. The other key sectors of the economy include metal mechanics, textiles, chemicals, agricultural products, fertilizers, fishing pharmaceuticals, machinery, and tourism. The Region's projected real GDP growth over the next decade (2015-2025) is higher, compared to other major metropolitan regions in South America such as Santiago, Chile, which is projected to grow at an annual average of 3.2% (2015-2025) followed by Rio de Janeiro, Brazil (2.8%), and Sao Paulo, Brazil (2.6%).

- Peru is one of the fastest growing economies in Latin America expanding by 5.5% in 2014. The real GDP of the Region grew by 3.3% in 2014. The nominal GDP of the Lima Metropolitan Region in 2014 stood at PEN255.7 billion (US$90.0 billion) in 2014, compared to PEN238.4 billion (US$88.2 billion) in 2013. The Region's GDP is the largest contributor to the national economy and added 44.3% of the total GDP in 2014.

- Of the total regional GDP, in 2014, the service sector contributes PEN174.1 billion (US$61.3 billion), accounting for the biggest share of 68.1%, followed by the industry sector contributing PEN75.3 billion (US$26.5) or 29.5% and the agriculture sector generating PEN6.2 billion (US$2.2 billion) or 2.4% of the total GDP.

- Within the service sector, the wholesale and retail trade, transport and information, restaurants and hotels added PEN67.4 billion (US$23.7 billion) contributing 26.3% to the overall regional GDP followed by government services, which added PEN23.0 billion (US$8.1 billion) or 9.0% of the local economy. Other services like banking, financial services, information technology, healthcare and hospitals accounted for 32.7% (PEN83.6 billion /US$29.4 billion).

- The Region's GDP per capita in the Country stands at PEN26,400 (US$9,300) in 2014, and is expected to increase to PEN38,000 (US$11,800) by 2020 and to PEN50,000 (US$15,600) by 2025. The Region's nominal GDP per capita is considerably lower compared to other major metropolitan regions in South America such as Sao Paulo with GDP per capita of US$20,100, followed by Rio de Janeiro (US$14,300) and Santiago (US$13,500) in 2014.

- The Region's unemployment rate rose from 4.7% in 2012 to 7.3% in 2014, as a result of the slowdown in international trade with trade partners such as Venezuela and Argentina. However, the unemployment rate is expected to improve over the next five years and reach 6.9% by 2020. The Region's unemployment rate is comparatively higher when compared to the national average of 4.0% in 2014.

- The total employment growth in the Region was 2.1%, on par with the labour force growth (2.2%) in 2014. The total employed persons in the Region reached about 4.9 million in 2014. Key sectors driving the Region's employment are the industrial sector and services sector recording a growth of 2.0% and 2.1% respectively in 2014. In the same year, about 101,000 jobs were created and since 2008 more than 553,000 jobs have been generated in the Region.

- Of the total employed persons in the Region, in 2014, about 74.9% are employed in the services sector. Public administration and other sectors account for 38.8% of the total employed persons followed by the wholesale and retail trade, hotels and restaurants and transportation sector employing 36.1%. The manufacturing sector employs about 14.0% and the construction sector employs 7.1% of the total people employed in the Region.

Lima: Economic Growth:

Date Real GDP , Total (US$, 2010) Real GDP , Per Capita (US$, 2010) 01 Jan, 2013 78.48 8,225.20 01 Jan, 2014 81.54 8,415.43 01 Jan, 2015 83.36 8,473.16 01 Jan, 2016 86.32 8,642.44 01 Jan, 2017 91.91 9,066.01 01 Jan, 2018 97.37 9,464.52 01 Jan, 2019 101.90 9,762.52 01 Jan, 2020 106.54 10,062.56 01 Jan, 2021 110.97 10,333.34 01 Jan, 2022 115.48 10,605.59 01 Jan, 2023 120.18 10,888.43 01 Jan, 2024 125.12 11,184.51 01 Jan, 2025 130.17 11,484.47

Lima: Economic Structure:

Date Agriculture Manufacturing, mining Construction Services & utilities 01 Jan, 2013 2.14 20.52 5.49 60.10 01 Jan, 2014 2.07 20.06 5.49 62.80 01 Jan, 2015 1.88 18.24 5.14 58.60 01 Jan, 2016 1.71 16.44 4.78 53.98 01 Jan, 2017 1.76 16.64 4.99 55.92 01 Jan, 2018 1.83 16.89 5.22 57.85 01 Jan, 2019 1.90 17.18 5.47 59.91 01 Jan, 2020 1.99 17.47 5.74 62.10 01 Jan, 2021 2.08 17.78 6.03 64.47 01 Jan, 2022 2.18 18.11 6.34 66.95 01 Jan, 2023 2.30 18.47 6.67 69.57 01 Jan, 2024 2.43 18.84 7.02 72.70 01 Jan, 2025 2.58 19.25 7.40 75.95

Lima: Real GDP Growth Comparison (Index 2010=100), 2000-2025:

Date Lima Arequipa Trujillo Piura Ica 01 Jan, 2013 122.22 112.05 116.84 116.93 123.57 01 Jan, 2014 126.99 113.59 120.04 119.51 130.71 01 Jan, 2015 129.83 116.78 124.46 123.03 138.37 01 Jan, 2016 134.44 120.59 129.35 126.97 146.62 01 Jan, 2017 143.14 125.16 134.58 131.20 155.66 01 Jan, 2018 151.65 129.31 140.09 135.31 164.92 01 Jan, 2019 158.71 133.42 145.67 139.61 174.05 01 Jan, 2020 165.93 137.69 151.38 143.93 183.20 01 Jan, 2021 172.82 141.97 157.17 148.35 192.22 01 Jan, 2022 179.84 146.36 163.06 152.82 201.76 01 Jan, 2023 187.17 150.85 169.10 157.52 211.56 01 Jan, 2024 194.86 155.41 175.22 162.33 221.33 01 Jan, 2025 202.73 160.04 181.46 167.34 231.25

Social

- The metropolitan population is expected to reach 11.3 million by 2025, with an average annual growth rate of 1.5% (2014-2025). The increase will be mainly the result of continuous internal and external migration to the Region for better employment opportunities.

- The Region's population grew by 1.5% in 2014 to 9.6 million people, from 9.5 million in 2013. The Region's population accounts for 31.5% of the nation's population. The population of the Lima Metropolitan Region can be compared with other major metropolitan regions in South America such as Rio de Janeiro (12.1 million) and Santiago (7.1 million) in 2014.

- Classifying the population based on various age groups, the working-age (15-64 years) population constitutes the major proportion of about 68.0% of the total population. The age group of 0-14 years constitutes 24.7%, followed by age group of 65 years and above, accounting for 7.3% of the total population in 2014. However, the proportion of male and female population is observed to be 48.7% and 51.3% respectively in the Lima Metropolitan Region.

- Lima is a mix of complex racial and ethnic groups. Mestizos (people having Native American and European ancestry) form the largest ethnic group. European Peruvians of Spanish, English, French, German, and Italian descent, make up the second largest ethnic group of the local population.

- The National University of San Marcos in Lima was founded on 12 May 1551 during the Spanish colonial regime and is considered to be the oldest functioning university in the Americas. The other major universities in Lima include Universidad Nacional de Ingeniería (UNI), Universidad Nacional Federico Villarreal, Universidad Nacional Agraria La Molina, Pontifical Catholic University of Peru (oldest private university) and Universidad de Lima.

People

Lima: Population By Age:

Date Under 15 15-64 Over 65 01 Jan, 2013 2,384,859 6,473,283 682,854 01 Jan, 2014 2,390,724 6,588,309 709,978 01 Jan, 2015 2,396,715 6,702,840 738,696 01 Jan, 2016 2,403,054 6,816,692 768,246 01 Jan, 2017 2,409,600 6,929,452 798,755 01 Jan, 2018 2,416,381 7,041,471 830,133 01 Jan, 2019 2,423,263 7,152,496 862,486 01 Jan, 2020 2,429,318 7,262,973 895,730 01 Jan, 2021 2,435,222 7,373,647 929,730 01 Jan, 2022 2,441,019 7,482,677 964,600 01 Jan, 2023 2,446,395 7,590,852 1,000,291 01 Jan, 2024 2,451,409 7,698,261 1,036,812 01 Jan, 2025 2,456,242 7,804,380 1,074,105

Technological & Infrastructural

Communications

- The regional information and communication sector is fast growing with technological and infrastructural development. The information and communication sector (along with transportation) contributed about PEN35.1 million (US$12.4 million) to the total regional GVA in 2014 , an increase of 11.2% from PEN31.6 million (US$11.1 million) in 2013.

- Lima has numerous Wi-Fi hotspots across the City with the majority of the cafes, restaurants, hotels, shopping malls and public places offer free Wi-Fi connection. Many locations in the City, including Miraflores, Av Santa Cruz, Calle Alfredo Salaza and Calle El Parque provide free Wi-Fi hotspots.

- Lima has the fastest internet connection in Peru. According to Ookla Net Index, the City is served with an average internet speed of 5.56 Mbps in 2014. Some of the well-known internet service providers in the Region are Optical IP, Red Cientifica Peruana, Viettel Peru SA and Telmex Peru. Optical IP provides the fastest internet service at a speed of 12.31 Mbps.

- According to the National Institute of Statistics and Information (INEI), in 2013, about 40.0% of residents in the Region had internet connectivity while the national average stood at 22.0%. The telephone connectivity in Lima is also wide spread, with 90.3% of households having mobile connections against the national average of 84.9% in 2014.

Internal Transport Networks

- The public transport system in Lima is moderately developed when compared to other metropolitan cities in South America. The City has a good network of bus transport system and numerous taxis, which mainly serve public transit. In July 2014, Lima's metro, El Tren Eléctrico was made accessible to the public.

- The most frequently used mode of public transport in Lima is the bus system (including Bus Rapid Transit - BRT), followed by metro and micro taxis (operated by private individuals).

- Lima's bus network, called Metropolitano Lima, operates about 400 articulated and feeder busses across 38 stations. The network operates three routes connecting the districts of Cercado de Lima, Chorrillos, Barranco, Miraflores, Surquillo, San Isidro and Lince y La Victoria, Breña, Rímac, San Martín de Porres and Independencia.

- Metro de Lima (El Tren Eléctrico) started operating fully functional metro services from July 2014. The project actually started in 1990, but was not continued due to various political reasons. However, in 2009, the Ministry of Transport and Communications took up the responsibility to complete the project. As of 2014, Metro de Lima operates Line 1 with 26 stations connecting 9 districts covering a total length of 34.5km. On a typical weekday, Line 1 of Lima Metro serves about 240,000 passengers.

Lima - Mass Transit Network Indicators, 2014 Network Length Stations Metro de Lima (Lima Metro) 34.5 km 26 Metropolitano Lima (Lima BRT) 33.8km 38 Source: Ministry of Transport and Communications Ports

- El Callao (Port of Callo) is the major commercial sea port of Peru situated in the district of La Punta, about 12km from the Lima City Centre. The Port of Callo is one of South America's natural harbours in the Pacific Ocean, lying on the tip of a peninsula, protected by offshore island of San Lorenzo.

- The north Pier Terminal of Port of Callo has a capacity to handle 900,000 TEUs and 8 million tonnes of non- containerized cargo. There is an expansion plan already in progress, aimed to increase the capacity to 2.9 million TEUs and 9.9 million tonnes of non-containerized cargo by 2022.

- Other than handling bulk cargo, the Port of Callo also has a cruise terminal, Cruise Poratao, Lima's main cruise terminal. The port hosts major cruise lines like Royal Caribbean and Princes Cruises, in addition to which Callao cruise terminal also serves many local cruise ships offering a variety of packages to visitors.

- According to Empresa Nacional de Puertos S.A ENAPU, the total vessel traffic in the Port of Callo was 14,875 ships, including 390 ocean going vessels and 14,485 minor ships in 2014.

- The port handled 4.7 million metric tonnes of cargo, including 3.2 million metric tonnes of imports and 1.5 million metric tonnes of exports. The container volume in 2014 was 4,418 containers.

Airports

- The Aeropuerto Internacional de Lima Jorge Chávez (Jorge Chávez International Airport, JCIA) is located in Callao, about 11km from the Lima City Centre. The airport is the main international and domestic airport for Peru.

- The airport was awarded as the Best Airport for passenger handling in South America, consecutively from 2009 to 2014, by Skytrax World Airport Awards.

- According to the official statistics by Lima Airport Authority, JCIA handled a total of 15.6 million passengers during 2014 up by 5.1% compared to 14.9 million passengers in 2013.

- The total aircraft movements at the airport increased by 1.3% and reached 155,094 in 2014 from 153,100 in 2013. The aircraft movements in the JCIA rose by about 115.0% over the past 14 years from 72,200 aircrafts in 2001.

- The total number of international travelers from Chávez International Airport in 2014 summed up to 7.1 million, including 2.9 million departures, 2.9 million arrivals and 1.3 million transit passengers. The international passenger traffic increased by 1.7% over the previous year.

- The number of domestic passenger movements in the airport was about 8.4 million in 2014 with 4.2 million arrivals and 4.2 million departures. The domestic passenger movement increased at 7.1% compared to the previous year.

- The airport also handled 302,405 metric tonnes of cargo in 2014 up by 2.0% from 296,517 metric tonnes of cargo in 2013.

- The airport provided services to airlines operating on 38 non-stop international routes and to about 20 non-stop domestic destinations in 2014. The airport serves as the hub for several airlines such as Avianca Peru, LAN Peru,

Peruvian Airlines, Star Perú, and LC Perú. Some of the international airlines operating from JCIA include Air Canada, Air France, Air Europa, Iberia, and Aeroméxico.

Jorge Chávez International Airport - Key Airport Indicators, 2014 Airports Passenger Flights International routes s Jorge Chávez International Airport 15.6 million 155,094 38 Source: Lima Airport Authority

Business Environment

- San Isidro (Lima 27) is the central business district (CBD) of Lima. San Isidro is considered as one of the key financial centres in Latin America. The district is surrounded by Lince, La Victoria in the north, Jesús María in the east, Surquillo and Miraflores in the south, Magdalena del Mar and The Pacific Ocean in the west. San Isidro's CBD covers an area of 11.1km2.

- San Isidro is a well-known financial centre in Lima. Many large banks in Peru such as Banco de Credito del Peru, Interbank, Banco de la Nación (Peru), Banco Continental, MiBanco, HSBC, Citibank, Inter Finance, Financial Bank, Bank of Commerce and Scotiabank have their headquarters in San Isidro. Also various insurance companies, such as Rimac Seguros, Mapfre Peru, Interseguro, Pacific Insurance and La Positiva are located in the financial centre.

- Miraflores is another business district, which is mainly known for the presence of many shopping centres and hotels. About 50.0% of the tourists visiting Lima stay in Miraflores. Huaca Pucllana, Parque central de Miraflores (Central Park), Centro comercial Larcomar are some key areas in Miraflores.

- Peru was ranked 35th in the world and 2nd in South America (after Colombo) for ease of doing business by The World Bank in 2015. Starting a business in Peru requires six procedures, takes about 26 days, costs 9.2% of income per capita and does not require paid-in minimum capital of income per capita. The corporate statutory tax rate in Peru is 30.0% and with 23.0% of taxable profit as a tax base.

- The prime office rent in Lima CBD in 2014 ranged from US$22 per m2 per month to US$30 per m2 per month and remained constant compared to the previous year. This is relatively less expensive compared to other Latin American cities such as Mexico City (US$40 per m2 per month) and Sao Paulo (US$60 per m2 per month) in 2014, according to the office outlook report published by Jones Lang LaSalle (JLL), a professional services and investment management company.

Lima - Office Rents, 2014 Location Rent (US$/sq m/month) Lima CBD 22 - 30 Source: Jones Lang LaSalle