The Mexican real estate sector could grow by up to 1% in 2023, and considerably more in the 10 submarkets where tourism is dominant.
That’s according to Gene Towle, executive partner of Softec, a company dedicated to researching the real estate industry.
In this interview, Towle also talks about new projects, opportunities and other market trends.
BNamericas: What is the current outlook for the real estate sector, especially for new projects? Let’s start with housing.
Towel: In housing, we have a somewhat contradictory situation because housing [contracts] continue but the start of the housing projects has stopped. I think it stopped because a lot of people are worried about operational legal uncertainty in Mexico and so what we’ve done is run out of backlogs.
What we’re going to see is a continued contraction in the sector, albeit one in which developers start new projects. I hope they start performing next year. It is a situation of a relatively stable demand market and a somewhat weak supply market by housing developers.
BNamericas: And commercial?
Towel : In commercial real estate, the projects which were to start in 2020 have been postponed to 2021.
BNamericas: And industrial?
Towel : A challenge with the industrial side is that there is a demand for space but not enough cheap housing being built in these places. This is happening in markets where they have recently invested heavily: Monterrey [in Nuevo León state]Ciudad Juarez [Chihuahua]Tijuana [Baja California] and the Valley of Mexico. Without cheap housing, the growth of industrial demand is limited because there is no room to house workers.
BNamericas: Hospitality?
Towel : The fastest growing market is the vacation market, as this year it grew by 15% and we estimate that next year it will grow by 10-15%. The markets that move the most are not necessarily the ones where new projects start, but they are the ones that sell the most.
Numerical: What were the states with the most projects?
Towel : The largest market in 2022 was the Valley of Mexico. We estimate that he had sales of 87.6 billion pesos [about US$4.5bn]. It is followed by Cancún [in Quintana Roo] with 44.3 billion, then Monterrey with 35.4 billion, Guadalajara [Jalisco] with 28.9 billion, the city of Querétaro in the state of Querétaro with 16.5 billion, Puerto Vallarta in Jalisco with 15.7 billion, Mérida [Yucatán] with 14.9 billion, Mazatlán [Sinaloa] with 9.72 billion, Tijuana 8.56 billion and Los Cabos [Baja California Sur] with 8.44 billion.
These are the top 10 by market value.
BNamericas: What are the prospects for 2023?
Towel : I believe the economic scenarios I have seen suggest that we are going to have growth between -2% and +1%.
One of the big opportunities for Mexico is what’s happening with so many companies leaving China.