Why are There so Many Unfinished Buildings in Peru?

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Likely one of the first things you’ll notice upon landing in Peru, besides the reduced oxygen in the air, is the prevalence of unfinished homes everywhere. You think: these cities have around for centuries, is it possible that they are still expanding? A quick google search will reveal that it has looked unfinished for decades. With exception of the wealthy neighborhoods in Lima, this problem is widespread throughout Peru. But why?

Unfinished Homes in Peru

Let’s start with a bit of history on Peru, beginning with the 1980s. After Peru experienced a series of wars and military rule, a new president was elected. Any positives of the beginning of his presidency were overshadowed by a failing economy. The Peruvian economy (and much of Latin America) was dealing with consistent hyper-inflation. With a currency that was becoming increasingly worthless, the Peruvian government switch currency from the sol to the inti and then to the sol again in 1991.

1 inti was worth 1,000 soles. And 1 new sol was worth a billion old soles.

This coincided with a drastic decrease in Peruvian citizens’ annual average income to $720. To add insult to injury, Peru also had to deal with flooding from an El Niño event around this time. Poverty was at an all-time high and Peruvians who were in the process of building homes were not able to finish. The savings they thought they had to build and expand became valueless. Construction was halted and Peruvians had to make do with the dwellings they had.

Unfinished Homes in Peru

In 1990, a new president, Fujimori, took office. Among his top concerns was stabilizing the economy. He enacted a series of neoliberal policies that he called Fujishock. While extreme, many of the policies were necessary to fix the devastated economy. One of his policies was aimed at the unfinished buildings. Fujimori had noticed all of the unfinished homes and that the homeowners just did not have the money to complete them. To help the homeowners, a new policy did away with property taxes while homes were being constructed. This was done to encourage construction, which would provide jobs for workers and finished homes for residents.

While this might have worked in a few cases, the abundance of half-finished homes clearly demonstrates it wasn’t really successful. The law was ripe for abuse. Peruvians could finish their homes just enough to be comfortable to live in but not all the way, so they can avoid taxes.

Still to this day, countless of these homes exist with inhabitants in the lower floors but incomplete upper floors. While they may look abandoned, if you go inside, you’ll see the first floor is completely furnished and decorated. Often the upper floor is used for a water tank, laundry, or just an outdoor patio – despite all the rebar hanging around or half walls.

Fujimori’s policies did lead to economic recovery, but due to human rights violations, he was ousted in 2001. Since Fujimori, Peru’s economy has continued to prosper with less Peruvians in poverty conditions. However, since residents still do not have to pay property taxes on unfinished homes – they never finish their homes. Since so many building owners do not pay property taxes and reversing the law would affect a large percent of the population, I guess the current politicians see it as political suicide. That is why over 30 years later, we still see so many half-finished properties.

Unfinished Homes in Peru

While we were visiting, the cities were not only full of unfinished homes but inundated with political banners, graffiti, and posters for upcoming regional elections. Political banners the size of buildings. Each party has a mascot and an over optimist name hyping up how much they advocate for Peru. A quick list of some of these parties: Peru Wins, Possible Peru, National Solidarity, We Are Peru, and Union for Peru.

As a tourist, it is a bit depressing to see the unfinished neighborhoods. In the heart of the city, you have beautiful buildings crafted with care hundreds of years ago. Just a few blocks over, you see bare window openings and roof lines covered in rebar. For a country who throws endless celebrations, it is sad to see the same pride is not carried over to neighborhood aesthetic.

Now, don’t get me wrong, Peru is gorgeous. This one country has lush coastlines, remarkable arid deserts, the Andean mountain highlands, and the Amazon Rainforest. The cultural center of the major cities (Lima, Cusco, Arequipa, Puno, etc) themselves are rich with history and charm. While it is occasionally difficult to overlook the derelict buildings, there is enough beauty in the surroundings that it can be easy to forget.