Lack of urban plan means trouble for Lima real estate development

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Peru’s capital city has registered explosive and unorganized growth over the past several decades, especially in the peripheries. Even though there is mounting evidence of a need for one, Lima still does not have a Metropolitan Urban Plan to define issues of zoning, communication, and areas of expansion, among others, claims Guido Valdicia, executive director of the 21st Century Cities Institute of the Ricardo Palma University.

The lack of this plan will affect the development of real estate projects and the prices of Sedapal’s infrastructure, which provides water and sewage services to the city.

“The unplanned growth of the city leads to a growth in the cost of infrastructure,” said Sedapal in a press release.

Sources from the Metropolitan Municipality of Lima (MML) informed Gestión in October 2012 that they had completed the Regional Coordinated Development Plan of Lima 2012-2025, which will serve as the master plan and a road map to guide the city towards orderly and harmonious growth. The sources also said that they have been working on a Land Use Plan, which includes a Metropolitan Urban Plan, but they did not indicate a date on which this plan would be introduced.

The Regional Coordinated Development Plan is itself an update on the Metropolitan Development Plan for Lima-Callao 1990-2010 that the previous administration of Luis Castañeda did not update.

But in the meantime, experts are eager for this plan to be updated quickly so that the city does not continue on its path of unorganized growth. However, they advise that the municipality not create one singular plan, but rather work to create coordination with all of the district offices.

“Urban development plans for approximately 80 percent of the districts of Lima are inconsistent tools, and were prepared by bureaucrats without updated registries,” said a former official of the MML. He also warned that a development plan does not guarantee harmonious and sustained growth in the city if the municipalities work politically rather than technically.

“The Plan is fundamental, because it will help to define zones that will be occupied, and zones that will be protected,” said Guido Valdivia.

It is worth mentioning that, in Lima alone, the housing shortage is approximately half a million homes.

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What does a lack of an urban plan mean in practice?

There is a lack of land in Lima on which to execute big real estate projects, and a lack of price stabilization for sales. There are also often no rules in urban settings for issues such as the allowable heights of buildings, and there have been delays by Sedapal in placing water and sewage systems in new areas, and by Sunarp, the public registry branch of government.

According to Sedapal, the problem is not just in new building sites, but also in zones that are already heavily populated like Lince, Jesus Maria, Breña and San Miguel, because when the population grows in these areas, the pipelines must be updated – by building more or by increasing the existing pipes by diameter. In some cases, the existing infrastructure is up to 40 years old.

For Jaime Rodríguez Larraín, the president of CYJ Constructores, the problem with the lack of an urban plan means that investors are cautious because they don’t know with certainty what land is destined for what purpose.

“We want a rule that says, ‘this zone will be for businesses, this will be commercial, this will be for high-density housing, etc.,’” he said.

In addition, the lack of a master plan means that each district has its own norms and regulations, which creates excessive bureaucratic barriers, and in turn means that there are delays in getting building licenses for construction projects.

The lack of an urban plan affects the development of real estate projects and the cost of building the infrastructure.

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