Capital Attraction, Expectations, and Signals of Reconfiguration:
Evolution and Current State of the Local Institutional Real Estate Market
In this article, the author reviews the recent evolution and current situation of the institutional real estate market in Peru, based on the results of a survey addressed to institutional investors as well as asset managers and developers. The survey makes it possible to assess the size and composition of assets under management, return expectations for institutional investors, and capitalization rates by segment from the managers’ perspective.
The institutional real estate market in Peru is undergoing a phase of adjustment and stabilization following the correction observed between 2022 and 2024, after a period of high volatility. In this context, real estate is once again positioning itself as a long-term strategic asset, with a more selective and disciplined capital allocation focused on asset quality, cash flow strength, and managers’ execution capabilities.
Within this framework, the Peru Investment Report 2025, prepared by LOGAN Valuation, has been developed. The report analyzes the institutional real estate market from a comprehensive perspective, combining information on assets under management with surveys of institutional investors and managers. Its objective is to provide a strategic reading of the sector and contribute to greater market transparency by making aggregated and standardized information available, serving as a foundation for long-term decision-making by institutional investors, insurance companies, investment funds, and family offices.
Evolution of Assets Under Management
The analysis of assets under management (AUM) represents a key starting point for understanding the depth, structure, and dynamics of the institutional real estate market in Peru. AUM allows for measuring the volume of committed capital, identifying prevailing strategies, and evaluating portfolio evolution over time.
As of the end of 2024, institutional real estate AUM in the country amounted to USD 2,026 million, reflecting the current size of the market and its growing relevance within the alternative investments space (see Chart 1).
However, when compared to more developed markets in the region, such as Chile and Colombia, Peru’s AUM level remains significantly lower, highlighting a relevant gap and, at the same time, an opportunity for growth in the country’s institutional real estate investment market. In this context, strengthening local investment vehicles and the structural role of institutional investors emerge as key factors to channel capital, deepen the market, and gradually close this gap relative to other regional markets.
In recent years, AUM managed by regulated vehicles has shown moderate growth, constrained by a volatile political environment and rising global financing costs. Nevertheless, projections for 2026 and 2027 point to a more favorable scenario, provided that greater macroeconomic stability consolidates and investor confidence gradually recovers. This environment could translate into increased investment activity, as well as renewed interest in institutional real estate assets offering stable cash flows, clear risk structures, and appropriate corporate governance standards.
Investment fund management companies (SAFI) continue to play a central role in channeling capital into real estate and alternative assets. The evolution of their AUM reflects both investor appetite and managers’ ability to structure vehicles aligned with increasingly demanding criteria in terms of risk, liquidity, and transparency.
Regarding portfolio composition, SAFIs show a clear concentration in income-generating assets, led by the office segment (44.2% of AUM), followed by the industrial–logistics sector (27.9% of AUM). This distribution reflects both the historical weight of offices within the institutional market and the growing attractiveness of logistics, driven by more resilient demand fundamentals and greater cash flow visibility.
A particularly relevant component of real estate AUM is represented by insurance companies, which account for 65% of total investments. This high participation responds to a structural need for long-term investments, associated with the sustained growth of liabilities and the search for assets that allow duration matching, predictable returns, and portfolio diversification.
The dominant presence of insurance companies reinforces the idea that there is a solid base of available institutional capital that could play an even more active role in the development of the real estate market, provided that the supply of institutional-grade assets expands and stable regulatory frameworks are consolidated. A significant portion of insurers’ AUM is recorded at historical cost, which understates the true economic value of their real estate portfolios and provides a conservative view of the effective size of the institutional market.
Survey of Institutional Investors
The results of the institutional investor survey show a clear preference for lower-risk strategies, with Core and Core Plus approaches accounting for nearly 50% of real estate investments in the domestic market. This distribution reflects a more conservative stance among institutional investors, focused on prioritizing cash flow stability and tighter risk profiles amid persistent uncertainty.
Return expectations associated with each strategy reinforce this interpretation. According to the survey results, institutional investors expect long-term returns of approximately 7.5% for Core strategies and 9.5% for Core Plus, levels that function as minimum hurdle rates to justify capital allocation to stabilized assets or those requiring limited operational improvements. In contrast, higher-risk strategies present higher return expectations, with an expected internal rate of return (IRR) of 11.2% for Value Add and 15.5% for opportunistic strategies, reflecting the premium required to assume greater risks associated with repositioning, development, or special situations.
From a geographic perspective, the results continue to show a structural preference for real estate investment abroad, supported by better risk-adjusted returns, greater market depth, and larger investment scale. Exposure to the Peruvian market, while relevant, plays a complementary role within global portfolio strategies, particularly for pension funds (AFP), whose decisions are constrained by specific regulatory frameworks.
This dynamic poses a challenge for the local market, which must compete for institutional capital by offering high-quality assets, efficient structures, and managers with consistent execution. In this context, manager selection is critical to attracting institutional capital, with preference given to those with a proven track record and strong operational capabilities.
Survey Results from Managers
From the perspective of professional managers and developers, the survey results reveal a more tactical reading of the market, where the evolution of net capitalization rates (cap rates) has become one of the main benchmarks for assessing investment opportunities, relative risk, and valuation expectations by asset type. Overall, the data show a general trend toward cap rate compression between 2024 and 2025, consistent with a gradual improvement in risk perception and more favorable expectations regarding cash flow stability (see Table 1).
The office segment shows a reduction in cap rates from 8.88% in 2024 to 8.52% in 2025, representing a compression of 35 basis points. This evolution suggests that, despite ongoing challenges in the sector, managers are beginning to anticipate a gradual recovery, particularly in higher-quality assets and consolidated submarkets. Vacancy stabilization and a slowdown in new project development reinforce this view, positioning offices as an attractive alternative for countercyclical strategies.
In the retail sector, cap rates also show a downward trend, decreasing from 8.25% in 2024 to 8.07% in 2025, with a compression of 18 basis points. This dynamic reflects a gradual recovery in consumption and greater operational stability of retail assets, especially those in established locations with an adequate tenant mix. Although the sector still faces structural challenges, the data suggest an improvement in managers’ risk perception.
The industrial–logistics segment stands out for exhibiting one of the most significant compressions during the analyzed period. Between 2024 and 2025, cap rates declined from 8.61% to 7.97%, a compression of 64 basis points. This behavior confirms strong investment appetite for logistics assets, supported by solid demand fundamentals, low vacancy, and greater cash flow resilience, consolidating the sector as one of the main pillars of the institutional real estate market.
In the rental housing segment, cap rates show the greatest compression among the analyzed sectors, decreasing from 8.25% in 2024 to 7.50% in 2025 (–75 basis points). However, this trend occurs in an still nascent market, where Lima currently has only three operating multifamily projects, limiting market depth and knowledge. In addition, significant structural challenges remain, particularly an unfavorable urban planning framework and a tax treatment that requires institutional investors to pay VAT, creating a disadvantage relative to the shadow market and limiting access to appropriate financing. These factors constrain the pace of consolidation of the segment, despite its potential as a long-term defensive asset.
The healthcare sector, meanwhile, shows more moderate compression, with cap rates decreasing from 8.54% in 2024 to 8.32% in 2025, a reduction of 22 basis points. This evolution is consistent with the sector’s defensive nature, growing structural demand, and high barriers to entry that limit new supply, maintaining an attractive risk–return profile for long-term institutional investors.
Overall, cap rate evolution reflects a market that is beginning to internalize a scenario of greater stability, with increasingly clear differentiation across assets and sectors. The observed compression—particularly in logistics and rental housing—suggests that managers are willing to accept lower initial returns in exchange for greater cash flow visibility and lower risk, while sectors such as offices and retail show early signs of recovery that could translate into selective investment opportunities in the coming years.
Final Remarks and Market Outlook
The institutional real estate market in Peru is in a transition phase, following the incorporation of asset repricing and return expectation adjustments into investment decisions. With institutional real estate AUM of approximately USD 2,026 million and a significant participation of insurance companies—accounting for nearly 65% of capital—the market has a solid base of long-term resources that can drive its development in the coming years.
Survey results reflect a clear preference for Core and Core Plus strategies, along with cap rate compression in key segments such as industrial–logistics and offices. This scenario presents an opportunity to deepen the real estate capital markets by strengthening the channeling of institutional capital into assets with greater transparency, stronger corporate governance standards, and professional management. The consolidation of a stable macroeconomic environment and consistent regulatory frameworks will be decisive for the real estate sector to fully deploy its potential as a destination for long-term institutional investment.
To explore the analysis in greater depth, we invite you to consult the Peru Investment Report, where you will find the main indicators and trends shaping the institutional real estate market and investment opportunities.
This article was originally published in Procapitales magazine (January edition) and written by Carlos Neuhaus, Managing Director of LOGAN Peru. It is reproduced here with authorization, as part of LOGAN’s commitment to disseminating technical analysis and value-added content for the real estate sector.