Mexico Real Estate Report Q4 2011
Includes 3 FREE quarterly updates
Under pressure from the US’ economic strife, some of Mexico’s real estate sub-sectors will see only limited growth throughout 2011 and 2012. Despite solid export performance so far, the country is likely to remain an economic underperformer for the duration of our 10-year forecast period. Mexico is blighted by cartel activity, and needs significant tax or energy reform on the horizon to be able to overcome its structural fiscal weakness. However, demand for Mexican real estate is picking up in a pattern that started two years ago. Colliers International reports that demand for industrial space is being driven by the automotive industry. Guadalajara had the highest occupancy rates in the country, meaning the other three cities (Mexico City, Tijuana and Monterrey) had higher levels of vacant space – up to 30% for retail and office space.
Mexico has a huge housing shortage (somewhere around 9mn families are in need of suitable homes), and the government provides developers with subsidies and buyers with access to mortgages from the state agency, Infonavit, which provides up to 70% of the country’s mortgages. One of the house-builders whose focus is on low-income housing is Corporacion GEO. It had a very successful first half of 2011, achieving a 10.6% increase in revenue.
Some of the key opportunities currently in the real estate market are:
Under pressure from the US’ economic strife, some of Mexico’s real estate sub-sectors will see only limited growth throughout 2011 and 2012. Despite solid export performance so far, the country is likely to remain an economic underperformer for the duration of our 10-year forecast period. Mexico is blighted by cartel activity, and needs significant tax or energy reform on the horizon to be able to overcome its structural fiscal weakness. However, demand for Mexican real estate is picking up in a pattern that started two years ago. Colliers International reports that demand for industrial space is being driven by the automotive industry. Guadalajara had the highest occupancy rates in the country, meaning the other three cities (Mexico City, Tijuana and Monterrey) had higher levels of vacant space – up to 30% for retail and office space.
Mexico has a huge housing shortage (somewhere around 9mn families are in need of suitable homes), and the government provides developers with subsidies and buyers with access to mortgages from the state agency, Infonavit, which provides up to 70% of the country’s mortgages. One of the house-builders whose focus is on low-income housing is Corporacion GEO. It had a very successful first half of 2011, achieving a 10.6% increase in revenue.
Some of the key opportunities currently in the real estate market are:
- Bloomberg commented in August 2011 that as long as subsidies and support systems for building residential property are in place, developers stand a good chance of doing well.
- The Wall Street Journal explained that more than 70% of housing loans granted in H111 were for properties that had energy and water efficient features, offering real incentive for developers to build in that fashion.
- The International Finance Corporation (IFC) is investing US$25mn in a real estate fund for the building of environmentally sustainable communities in Mexico. It is thought that the fund, run by Artha Capital, will help provide 60,000 new homes as well as providing economic benefits from the construction projects themselves.
- Mexico’s own REIT, Fibra Uno, started trading in March 2011 and by August had 675,917 square metres of gross leasable area in its Mexican portfolio, across 16 properties, with 90% occupancy. The largest proportion of the property is industrial space. Some key risks to the current real estate market are:
- Reuters points out that much of the industry has faced rising costs so far in 2011 and is likely to continue to face them throughout the rest of the year.
- Over-supply of office space, particularly in Mexico City, may continue to depress rents there and dissuade developers from building higher quality property.
Contents
Executive SummarySWOT Analysis
Mexico Real Estate/Construction SWOT
Mexico Economic SWOT
Mexico Business Environment SWOT
Real Estate Market Overview
Real Estate Market Analysis
Table: Mexico’s Real Estate Market – Rentals, 2010 And 2011 (per m?/month, US$)
Table: Mexico’s Real Estate Market – Net Yield, 2011 And 2012 (%)
Table: Mexico’s Real Estate Market – Terms Of Contract/Lease, Mid-2011
Industry Forecast Scenario
Real Estate Outlook
Table: Mexico’s Real Estate Market – Rentals, 2011-2012 (per m?/month, US$)
Table: Mexico’s Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Construction And Infrastructure Industry Outlook
Table: Mexico Construction And Infrastructure Industry Data, 2007-2015
Table: Mexico Construction And Infrastructure Industry Data, 2012-2020
Macroeconomic Outlook
Mexico – Economic Activity, 2008-2015
Business Environment
Mexico’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Latin America, Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations, 2002-2009
Company Profiles
Cemex
Corporacion Moctezuma
Desarrolladora Homex SA
DINE SAB
Empresas ICA
Grupo Cementos de Chihuahua (GCC)
Urbi Desarrollos Urbanos SA
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
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