Real Estate Investment: A Strong Asset in Mexico

In terms of investment, 2019 is seen as a prosperous year for Mexico’s real estate sector. According to real estate consultancy CBRE Mexico, investment will increase approximately 7 percent, due to accelerated population growth, a high level of exports and the emergence of markets such as e-commerce.

“What we are seeing from investors is, certainly, a need to expand their real estate, their occupancy, their new projects,” says Yadira Torres-Romero, director of market research at CBRE Mexico.

She stresses that this year could be key to the recovery of real estate investment, because the uncertainty in recent years, following Donald Trump’s becoming president of the USA, the renegotiation of NAFTA, trade tensions between the USA and China and falling oil prices, had unnerved investors.

“We are thinking that 2019 is going to be a year of recovery, because in the case of a country like ours, which is mainly focused on manufacturing, practically all markets were very cautious, especially in real estate investment.”

She indicates that, despite the uncertainty, one of the factors that kept investment in the country afloat in recent years was that investors understood that the market remained very active, despite what was happening.

“In 2017, we had very good results in terms of exports, due to the changeover, and that led to a lot of manufacturing activity. The investors who said they were not going to invest or were not going to have any new construction continued doing it because there was demand.”

The specialist listed the top five countries most interested in investing in Mexico: USA and Canada (“This has to do, of course, with NAFTA; it is not by chance.”), China (“due to the growth of investors”), Japan and Germany.

At the national level, Torres-Romero says that, in addition to cities such as Guadalajara, Mexico City and Monterrey, metropolises such as Tijuana, Mérida, Querétaro and León are becoming hubs of development, attractive for investment due to the high level of economic activity they are experiencing.

“The big factor for companies that want to get established in a city is that there is enough population for occupancy.”

Return of Investors

Torres-Romero explains that, for sectors such as industrial real estate, the commercial tensions between the USA and China have caused Asian companies to see Mexico as an attractive option for investment, especially on the northern border and in the Bajío area.

“Today, they are coming back because the best way to deal with the trade restrictions the United States is imposing is to produce in Mexico; all this is why we believe that investment in real estate will experience a recovery during 2019.”

She reports that in the 13 industrial markets monitored by the consultancy, which represent 80 percent of the entire country’s activity, there are under construction more than 21 million square feet of industrial premises, as well as logistics and distribution of e-commerce, the latter a rapidly growing market.

“In Mexico City we are seeing how five years ago the average size was about 129,000 square feet. Today, the average size in Mexico City to serve e-commerce, logistics and distribution is almost 345,000 square feet. E-commerce, logistics and distribution are great news for industrial real estate investment.”

Office Development

Torres-Romero says that real estate investment also has been strongly focused on the development of work offices in cities such as Guadalajara, Monterrey and Mexico City, this last presenting an overdemand for workspaces.

“It tells you about the confidence of investors, who know that every year there is a record demand for these spaces; then they say I will continue to build,” says the specialist, who notes that it is estimated there are currently 1,700,000 office spaces in Mexico City.

She explains that in recent years this demand has caused investment for the development of workspaces to increase 10 percent and that one of the greatest factors underpinning this development has been the inclusion of usage value components such as mixed use.

Finally, she stresses that investors are acting cautiously because “they will not build more than necessary, but if they see a good panorama, they will continue.”

7 percent growth in real estate investment is estimated during 2019.

Real Estate Investment: A Strong Asset in Mexico, Guadalajara Real Estate Guide

In cities such as Guadalajara, Monterrey, Mexico City, Querétaro, León and Tijuana, there is great development of mixed spaces, work offices and industrial plants that seek to satisfy the population’s high demand.