The Mexico Real Estate report examines the commercial office, retail, industrial and construction sectors throughout the country after the election of business-friendly candidate Enrique Peña Nieto in the first presidential polls the country has seen since the global recession.
With a focus on the country's principal cities including Mexico City, Tijuana, Guadalajara, and Monterrey, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk.
In our most recent round of in-country interviews, conducted in July 2012, commercial rental growth in Mexico had been fairly stable, particularly in the office and retail sub-sectors. Minimal growth in rents is expected in the second half of 2012, amid a continued slowdown in the US that has increased caution among international investors. Nevertheless, we maintain an overall positive view about the potential of the commercial real estate sector in Mexico.
- In the wake of Mexico's July 1 presidential election, we are revising up our 2012 real GDP growth forecast, from 3.4% to 3.8%, as the victory of business-friendly Enrique Peña Nieto bolsters investment. However, while investment will continue to rise in 2013, we expect that a weaker external environment will weigh on demand for Mexican exports and start to sap consumer confidence, which will slow headline growth substantially.
- We maintain our view that improvements to the tax, labour and energy sectors promised by Mexico's president-elect will be subject to a slow, piecemeal reform process. Indeed, Peña Nieto has recently been forced to reorder his agenda, prioritising anti-corruption measures over economic reforms in the face of widespread student protests and increasing antagonism from Mexico's opposition parties.
- We anticipate that Mexico's construction industry will continue to make a steady recovery from the recession which took hold in 2008. While there remain weaknesses in the market, the outlook is more stable than many others in the region, with private investment expected to grow in light of the new PPP law. Over the medium term, the promise of a second National Infrastructure Plan, which will look to tap alternative sources of financing, is underlying our annual average construction industry value growth forecast of 4.3% between 2012 and 2016.
- 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. However, oversupply of office space, particularly in Mexico City, may continue to depress rents there and dissuade developers from building higher-quality properties.
Rental growth has also been minimal at best in the past year, and while growth is currently expected in the second half of 2012, the overall real estate market remains subdued.
The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.