REAL ESTATE EXPANSION MEXICO

In an economically stable environment for growth and inflation, the Mexican real estate industry is expanding. During 2006 and into 2007, the construction industry had a very positive development concluding as one of the industries with stronger growth. In a situation of crisis in many real estate markets over the World, the affects in Mexico seem to be limited and short-lived.

As well known, the U.S. economy does influence the Worlds economy in whatever Industry, so it is inevitable to avoid some influence across the border. According to many recent studies, an adjustment is made in 2007, to once again hit great growth. The Mexican economy will resist long-term affects of the real estate industry because its different situations.

First of all, the U.S. real estate market has reached a mature, fully developed state. In Mexico, most of its land is still virgin and unexploited, because of a past of limited incentives to stimulate the industry. Only some few years have past since the government started to make a real effort to create the possibilities for the emerging Middle Class to live well and to stimulate foreign investment. Since then, the situation has changed dramatically. Foreign investment has grown substantially and Mexico is today considered one of the most important “paradise-destinations” for Global Construction Companies, searching to make cross-border investments. 

Second of all, the main reason for the U.S. real estate market is the Mortgage Bubble that has blown up from the extreme accessibility to credits. In Mexico, on the other hand, instruments permitting mortgage loans to Mexican citizens are just starting to be affordable and accessible. Banks started to offer mortgages again (after the economic crisis in 1995) as late as 2004! Hence, the purchases of property in Mexico have been financed mostly in real values, cash and there is no bubble.

Finally, the Mexican President Felipe Calderón has decided to make Tourism one of the major growth industries. With enormous possibilities and many factors collaborating such as the investments in infrastructure, the immense increase of foreign investment, stable macroeconomic environment, the increase of effectiveness and transparency of real estate, the Mexican real estate market is in strong expansion.