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It appears that there has been little major new activity in the Mexican real estate market during Q212. The likely reason for this is the upcoming presidential elections on July 1 2012. These mark the first elections since the global recession, and may provide opportunities in a new administration’s policies. Reports suggest that Mexico is poised for a recovery in growth no matter the outcome of the election. In our most recent round of in-country interviews, conducted in December 2011, commercial rental growth in Mexico had been fairly stagnant, particularly in the office and retail sub-sectors. Industrial rental growth was a little more promising throughout 2011 in Tijuana, Guadalajara and Monterrey, but mirrored the other two markets in Mexico City. Minimal growth in rents is expected in 2012, amid a continued slowdown in the US that has increased caution among international investors.
Previously, we raised our forecast for Mexico’s GDP growth in 2012 to 3.4%, above consensus. On the back of strong domestic demand and rising investment inflows, our scenario seems to be playing out.
Commercial and manufacturing data in particular are surprising to the upside, which provides a steady base from which real estate investment can grow. However, the country remains vulnerable to external shocks, particularly in the form of a protracted slowdown in the US.
Key Opportunities In The Real Estate Market:
Key Risks To The Real Estate Market:
It appears that there has been little major new activity in the Mexican real estate market during Q212. The likely reason for this is the upcoming presidential elections on July 1 2012. These mark the first elections since the global recession, and may provide opportunities in a new administration’s policies. Reports suggest that Mexico is poised for a recovery in growth no matter the outcome of the election. In our most recent round of in-country interviews, conducted in December 2011, commercial rental growth in Mexico had been fairly stagnant, particularly in the office and retail sub-sectors. Industrial rental growth was a little more promising throughout 2011 in Tijuana, Guadalajara and Monterrey, but mirrored the other two markets in Mexico City. Minimal growth in rents is expected in 2012, amid a continued slowdown in the US that has increased caution among international investors.
Previously, we raised our forecast for Mexico’s GDP growth in 2012 to 3.4%, above consensus. On the back of strong domestic demand and rising investment inflows, our scenario seems to be playing out.
Commercial and manufacturing data in particular are surprising to the upside, which provides a steady base from which real estate investment can grow. However, the country remains vulnerable to external shocks, particularly in the form of a protracted slowdown in the US.
Key Opportunities In The Real Estate Market:
- The country’s proximity to the US could prove to be an opportunity or a risk for Mexico. Our GDP growth outlook is favourable compared to the US, which may encourage investors looking for more stable markets into the country’s real estate.
- Mexico’s own REIT, Fibra Uno, started trading in March 2011 and by August had 675,917m2 of gross leasable area in its Mexican portfolio, across 16 properties, with 90% occupancy. The largest proportion of the property is industrial space.
- Automotive production remains a promising market for Mexico, which in turn should keep industrial investment and rental growth robust in the face of any caution from the US.
- Cushman & Wakefield has reported that the Americas are likely to lead a recovery in property investment in H212, and highlights the prime opportunities in Mexico’s office, retail and industrial markets.
Key Risks To The Real Estate Market:
- Over-supply of office space, particularly in Mexico City, may continue to depress rents there and dissuade developers from building higher-quality properties.
- Rental growth has been minimal at best in the past year, and while growth is currently expected in 2012, the overall real estate market remains subdued.
- In the short term, a potential slowdown in activity in the run-up to July’s presidential elections may present a downside risk to rental movement. However, this should pick up once the new administration takes office.
Executive Summary
SWOT Analysis
Mexico Real Estate/Construction SWOT
Mexico Political SWOT
Mexico Economic SWOT
Mexico Business Environment SWOT
Real Estate Market Overview
Market Analysis – Office
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (MXN per m2/month)
Table: Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases – Mid 2011
Industry Forecast Scenario
Table: Forecast Rents – (MXN per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Market Analysis – Retail
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (MXN per m2/month)
Table:Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases – Mid 2011
Industry Forecast Scenario
Table: Forecast Rents – (MXN per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Table: Mexico Retail Sales Indicators
Market Analysis – Industrial
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (MXN per m2/month)
Table: Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases – Mid 2011
Industry Forecast Scenario
Table: Forecast Rents – (MXN per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Infrastructure Forecast Scenario
Construction And Infrastructure Industry Outlook
Table: Mexico Construction And Infrastructure Industry Data, 2008-2016
Table: Mexico Construction And Infrastructure Industry Data, 2013-2021
Construction and Infrastructure Forecast Scenario
Macroeconomic Outlook
Table: Mexico - Economic Activity, 2011-2016
Real Estate Risk/Reward Ratings
Real Estate/Construction Risk/Reward Ratings
Table: Latin America Real Estate Risk/Reward Ratings
Mexico’s Business Environment
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
Table: Latin America, Annual Fdi Inflows, 2006-2008
Table: Trade And Investment Ratings
Table: Top Export Destinations, 2002-2009
Operational Risk
Competitive Landscape
Company Profiles
Cemex
Corporacion Moctezuma
DINE SAB
Empresas ICA
Grupo Cementos de Chihuahua (GCC)
Demographic Data
Table: Mexico's Population By Age Group, 1990-2020 ('000)
Table: Mexico's Population By Age Group, 1990-2020 (% of total)
Table: Mexico's Key Population Ratios, 1990-2020
Table: Mexico's Rural And Urban Population, 1990-2020
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Sources
SWOT Analysis
Mexico Real Estate/Construction SWOT
Mexico Political SWOT
Mexico Economic SWOT
Mexico Business Environment SWOT
Real Estate Market Overview
Market Analysis – Office
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (MXN per m2/month)
Table: Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases – Mid 2011
Industry Forecast Scenario
Table: Forecast Rents – (MXN per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Market Analysis – Retail
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (MXN per m2/month)
Table:Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases – Mid 2011
Industry Forecast Scenario
Table: Forecast Rents – (MXN per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Table: Mexico Retail Sales Indicators
Market Analysis – Industrial
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (MXN per m2/month)
Table: Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases – Mid 2011
Industry Forecast Scenario
Table: Forecast Rents – (MXN per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Infrastructure Forecast Scenario
Construction And Infrastructure Industry Outlook
Table: Mexico Construction And Infrastructure Industry Data, 2008-2016
Table: Mexico Construction And Infrastructure Industry Data, 2013-2021
Construction and Infrastructure Forecast Scenario
Macroeconomic Outlook
Table: Mexico - Economic Activity, 2011-2016
Real Estate Risk/Reward Ratings
Real Estate/Construction Risk/Reward Ratings
Table: Latin America Real Estate Risk/Reward Ratings
Mexico’s Business Environment
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
Table: Latin America, Annual Fdi Inflows, 2006-2008
Table: Trade And Investment Ratings
Table: Top Export Destinations, 2002-2009
Operational Risk
Competitive Landscape
Company Profiles
Cemex
Corporacion Moctezuma
DINE SAB
Empresas ICA
Grupo Cementos de Chihuahua (GCC)
Demographic Data
Table: Mexico's Population By Age Group, 1990-2020 ('000)
Table: Mexico's Population By Age Group, 1990-2020 (% of total)
Table: Mexico's Key Population Ratios, 1990-2020
Table: Mexico's Rural And Urban Population, 1990-2020
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Sources
