Real estate growth in Mexico, the key to investing

Property

Real estate growth in Mexico, the key to investing

The global crisis due to COVID-19 (coronavirus) affected the financial market at a general level, causing an economic imbalance in the countries of the world.

Some were able to weather the crisis better than others by implementing beneficial economic strategies, such as the economic reactivation after the first months of the pandemic.

Despite the situation that the country experienced during 2020 due to the COVID-19 pandemic, analysts on the subject projected a rebound in economic growth in Mexico from 2021, when appropriate public policies are implemented and action plans that respond to current demand.

The Blue World City was one that were given priority in matters of economic reactivation in its respective state since it remained stable during the crisis and responded better than others.

In this article we will talk about the current conditions of the country in economic matters, and the projections for its growth in the real estate sector.

Current economic outlook in Mexico

According to financial specialists, including the Bank of Mexico (Banco), they estimate that the national economy will advance 6% in 2021, it could even be 7% due to the strength it provides to national and foreign investors. In case the circumstances are not entirely favorable, the advance could be 5%.

However, the Ministry of Finance and Public Credit (SHCP) estimates more encouraging figures, forecasting a 6.5% advance in GDP by the end of 2021. This is based on the good rhythm of the national vaccination program for COVID-19, added to the fact that in the first quarter of the year the GDP remained on the rise.

As the vaccination process progresses, it will be possible to reactivate other sectors of the economy, as well as remove restrictions on businesses that have participated in the first waves of economic reactivation.

Taking into account the supply and demand of homes, premises, industrial buildings, among other types of real estate, the real estate market in Mexico was considered essential and was part of the first stage of economic reactivation.

Reopening the construction industry was a wise decision, as it consolidated an investment opportunity for many, both in the residential sector as well as in the commercial and industrial sectors.

What are the expectations for 2022?

Despite the great advances that are being made in 2021, the forecasts for the following year are still reserved, as the economy is estimated to grow at 3%, a figure that could range between 2% and 4%. However, as the 2021 quarters and vaccination progress, this picture may improve.

Naturally, the uncertainty derived from the pandemic continues to be present in some economic sectors, which have not been able to carry out their functions in their entirety. However, this panorama will change over the months, which can benefit the statistics for 2022.

However, the specific growth of the real estate sector in Mexico remains optimistic, thanks to the fact that important projects in various parts of the country are starting.

Demand for properties, promoter of real estate growth

As we mentioned at the beginning, real estate properties have always represented a safe investment even in times of crisis, as it is more in these situations when the trending sectors receive a greater flow of investments.

Unlike other assets that, due to speculation and inexperience of first-time investors, can give rise to a financial bubble, real estate can hardly fall within this economic phenomenon.

As a result of the pandemic and the changes that people had to adapt to, especially in the workplace, the residential segment began to have a greater boom derived from the home office modality – especially – in segments of social interest.

With the arrival of the ‘home office’ which allows you to work from anywhere with the internet, it caused a high demand for properties in real estate portals, through which real estate companies migrated to the digital medium to continue offering houses, apartments, premises, offices, land and more.

This modality also allows people the possibility of starting a business alongside their jobs, which has been reflected in the rise in demand for commercial premises, for those who decide to start their own business, or in any case undertake with a commercial land.

Other factors that have benefited the increase in real estate demand are the adjustment of interest rates and the ease of obtaining loans granted by financial institutions in the middle of the pandemic.

Despite the fact that the peak of inflation soared in the month of April to 6.07% -more than forecast for 2021-, experts assure that inflation is stable and will maintain figures within the expected standards for the remainder of the year, and the same for interest rates until the beginning of 2022.

Economic growth in the Mexican southeast

Now, taking into account all of the above, the real estate sector has benefited more in some parts of the country than others, such is the case of southeast Mexico where real estate investment indices have remained on the rise despite the crisis sanitary.

Due to the high level of infrastructure and its strong tourism industry, the Mexican southeast represents an important pillar in the country’s growth.

Within the favorable outlook projected by this area, Yucatán and Quintana Roo are the states where the greatest impetus has been given to these industries to continue strengthening their economy.

Below we will talk about the economic outlook of both states and why they are an excellent option to diversify your portfolio of real estate investments.

Economic and real estate panorama of Quintana Roo

Each year, Cancun, Playa del Carmen and Tulum generate a significant economic spill derived from the tourism sector, which is why Quintana Roo has managed to remain the second most dynamic economy in the country.

In April, the AMPI Cancun Investment Summit 2021 Real Estate Expo was held, where the state governor commented that more than 15 thousand jobs have been recovered after a year of pandemic and that the tourism sector continues to rise.

At the same time, the real estate industry has positioned itself as a trigger for the state’s economic growth and the generation of new jobs.

Based on the economic growth plans in our country that are contemplated until 2021, the state began strategies focused on industrialization, promoting digital media to face the pandemic.

These measures are expected to help attract more investment to the state with new projects, such as those forecast for the 2019-2021 period where investment is around 2 million dollars for real estate projects.

These numbers are a sample of the enormous potential that Quintana Roo offers for the real estate sector, since these projects will place the state in first place in the Caribbean and third nationwide in real estate investment.

The cities with the highest investment rates are Cancun and Playa del Carmen, which contribute greatly to the state’s GDP and maintain high rates of real estate supply and demand.

From buying real estate in Playa del Carmen to acquiring land in Cancun, the opportunities to receive an interesting return on investment are high.

Yucatan economic and real estate panorama

Thanks to the high security and promotion rates that have been provided to Yucatán, the state has stood out for offering certainty to national and foreign investors, and encouraging them to establish their industries in the state.

These investments have been a key part of the positive outlook that has been registered in terms of the generation of sources of employment and economic development.

As in Quintana Roo, foreign investment is a fundamental pillar in the Yucatan economy, since even the capital received from international companies such as Leoni, Walmart’s Latin American Cedis, Amazon’s Cedis, among others.

In 2021, the entity will continue to invest in the security issue to strengthen the attraction of investments through the Yucatán Seguro project, in which 2.6 billion pesos will be allocated to infrastructure and surveillance equipment.

With these actions, Mérida, Yucatecan capital, hopes to continue diversifying its economy and promoting the sectors that most influence the growth of the region, in addition to maintaining its place within the most important cities to start a business in Mexico and consolidate itself as a pole of attraction for national and foreign businessmen.

Yucatán is an ideal place for real estate investments, and proof of this is the large number of residential and commercial projects that have been the source of new jobs for the state.

One of the most important projects is The Sky, the first skyscraper in southeastern Mexico, which is a mixed-use corporate office tower, where clinics, offices, commercial areas, restaurants are contemplated; with first-class amenities.

At the beginning of June, the first stone of the Aqua Avenue complex was laid, an ambitious project that brings together various concepts in one place: commerce, tourism, lifestyle and work. It has a privileged location in the north of Mérida, close to exclusive shopping malls and high-level hospitals.

These examples are clear proof of the great real estate potential that the state has, and one of the reasons why you should invest in Mérida.

Advantages of the southeast economy in the real estate sector

The stability and growth of Yucatán and Quintana Roo have had a positive impact on various sectors, with real estate and construction being the ones that have registered the greatest growth to respond to the demands of the region, taking advantage of the favorable conditions presented by the real estate industry.

Below we briefly mention some of the most important advantages of investing in the southeast of the country:

1. Land costs

Unlike other cities, the cost per square meter in the Mexican southeast is lower due to the recent boom in the real estate sector, especially in Mérida; which is why it is the ideal time to invest in land in the region.

In Mérida, it is possible to find commercial lots 50% cheaper than in Jalisco, Nuevo León and Mexico City, which has been used by investors to open various businesses such as:

  • Commercial squares.
  • Business.
  • Corporate offices for the transformation, aerospace, information technology and oil industries.

For its part, in Quintana Roo, the costs are similar to those in Yucatán, in addition to the fact that there are greater business opportunities in destinations that are booming and do not yet have such a saturated market, such as Playa del Carmen and Cancun.

2. Goodwill

Although it is a fact that the growth and development registered in the Mexican southeast greatly influences the capital gains of real estate, there are infrastructure works that will also have a positive impact on their value and the clearest example in the region is the project of the Mayan Train.

At the end of 2018, after announcing the construction of the Mayan Train, the capital gain in the Mexican southeast was 15.37% on average. A year later, specialists estimate that the cost per square meter in the area has increased by almost 400% due to the opportunity it represents for the establishment of restaurants, hotels and shops.

Despite the pandemic, growth rates remain stable and with good forecasts for the end of 2021 and 2022.

This type of infrastructure, together with the constant growth of the area, has encouraged investors to bet on the affordable costs of the real estate industry, and ensure returns up to 15% higher than those generated in the bank, for example.

3. Ease of business

In order to continue strengthening the region’s economy, the governments of Quintana Roo and Yucatán have focused on implementing actions that encourage investment and provide greater confidence to the sector.

In addition, both states actively participate in promoting government programs focused on entrepreneurship for small and medium enterprises (SMEs).

In the case of Quintana Roo, it is planned to continue working to guarantee legal certainty and transparency to investors and entrepreneurs; while in Yucatán the business sector can access certain financing and quickly open their businesses.

The perfect opportunity to invest in the southeast

Now that you know the trends that economic growth will follow in Mexico for 2022, you have greater certainty about the areas that offer the greatest potential to diversify your investments.

At BMF inversions we have highly profitable real estate projects, located in the areas of southeastern Mexico that have registered the greatest growth and business opportunities.

 

The global crisis due to COVID-19 (coronavirus) affected the financial market at a general level, causing an economic imbalance in the countries of the world. Some were able to weather the crisis better than others by implementing beneficial economic strategies, such as the economic reactivation after the first months of the pandemic. Despite the situation that the country…