Infrastructure works build the base for long-term development in Guanajuato

The wide-reaching transport infrastructure that connects the state’s industrial areas and population centres is one of Guanajuato’s key strengths. In fact, Guanajuato is widely considered to be one of the top-five states in terms of the quality of its infrastructure. Even more importantly, the investment practices implemented so far are likely to help the state draw in stronger levels of investment for further expansions and upgrades.

Unlike most Mexican states, Guanajuato is unique in that its population and industrial centres are spread out along a corridor of cities, rather than being concentrated in one main urban hub. While states such as Baja California, Jalisco and Nuevo León have the bulk of their economic activity and residents concentrated in just one city – i.e. Tijuana, Guadalajara and Monterrey, respectively – Guanajuato’s population is more evenly dispersed.

Wide Network

Although the state has a sizeable population – which is expected to surpass 6m by 2020 and 6.3m by 2030, according to government estimates – only one city has over 1m residents. “In Guanajuato development isn’t concentrated in just one city – it’s an industrial corridor,” Arturo Durán Miranda, secretary of public works of Guanajuato, told OBG. “We have an ecosystem of cities.”

The are eight cities that make up this industrial corridor: León, which has almost 1.6m residents; Irapuato, with 574,000 residents; Celaya, with 494,000; Salamanca, with over 273,000; Silao and Guanajuato City, which both have around 180,000; San Miguel de Allende, a popular tourist destination, has over 170,000 residents; and Dolores de Hidalgo has an additional 150,000. Collectively, these cities have a population of over 3.3m residents, accounting for around 58% of the state’s population.

Because of its dispersed population, the state authorities have built up an impressive road network that links its major cities. It provides the benefits of connectivity, without the problems of congestion and urban sprawl that tend to affect mega-cities. In addition to having quality roads connecting its main cities within the state, there is also a solid network of export routes connecting to other parts of Mexico and the US border.

Out of Town

In total, the state has some 2750 km of state motorways and 1200 km of federal motorways. Given the convenient location of Guanajuato in central Mexico, this network of motorways makes the state an important cross-roads for the country’s trade. “Mexico’s two most important motorways cross through Guanajuato,” Santiago Villanueva, CEO of local construction firm Grupo Vise, told OBG. “It’s the best-connected state in the country.”

The state sits along Highway 45, a route managed by the federal Ministry of Transportation and Communication that connects with the neighbouring state of Querétaro and runs north-east through Celaya, Salamanca, Irapuato and León, before crossing into Jalisco and passing north all the way to the US border crossing in Ciudad Juarez. Highway 57, meanwhile, runs through the eastern part of the state, connecting with Querétaro and Monterrey, two of Mexico’s most important industrial cities, and also links to Highway 85, the shipment route that runs through the US border in Laredo.

Another strength is the state’s proximity to Mexico’s key centres. Guanajuato is ringed by a collection of Mexico’s most important urban economies, including Mexico City, Monterrey, Guadalajara and Querétaro. The surrounding area accommodates as much as 49% of Mexico’s population and approximately 51% of its GDP. Guanajuato enjoys the advantage of being located right at the mid-point of this central economic hub. “Guanajuato is in the middle,” Luis Quiroz Echegaray, CEO of Puerto Interior, one of the key inland port facilities in the state, told OBG. “We are connected to Mexico’s main nodes.”

Investment

Guanajuato has invested in an abundance of infrastructure projects in recent years. Since 2012 the state government has invested more than MXN22bn ($1.2bn) in infrastructure works, MXN17bn ($918.7m) of which went to motorway expansion and upgrade projects. In this period the state government has built or modernised some 314 km of motorways, and built 50 new transit bridges and 18 new pedestrian bridges, amounting to a total of some MXN2.3bn ($124.3m). The government also paved or improved 760 km of rural roads. In addition, the state now has eight industrial parks, which are designed to strengthen supply chains by forming clusters. “Guanajuato has made a lot of investments in its infrastructure and industrial parks,” Guillermo Romero, secretary of sustainable economic development of Guanajuato, told OBG.

In particular, the dry port Puerto Interior has served as a major catalyst for industrial investment as it is a critical connector. “Because we have a railroad, an airport, a Customs office, a main motorway, a university, numerous industrial parks and 120 businesses, Puerto Interior is of paramount importance,” Quiroz told OBG. Since its inception, the park has attracted approximately $380m of investment and now boasts over 1.5m sq metres of factories, including several suppliers for Mazda and Toyota. Italian tyre producer Pirelli launched its $200m facility ahead of schedule in early 2018. The port now supports more than 17,000 jobs and is expected to continue to expand and add new businesses over the next decade.

Real Estate Boom

The dynamic growth in Guanajuato’s agri-business and automotive industries has catalysed a boom in the state’s real estate sector. In 2015 the nation’s Association of Real Estate Developers (Asociación de Desarrolladoras Inmobilarias, ADI) announced that it considered the Bajío region – in which Guanajuato is located – to be one of the most dynamic and attractive markets in Mexico for real estate investment. Recent industry figures have backed this assessment, with the Bajío region receiving 15% of the Mexico’s total real estate investment as of March 2018.

Furthermore, the ADI ranked Guanajuato and Querétaro as the most attractive states for real estate investment in Bajío. Out of the states in the Bajío region – Aguascalientes, Jalisco, Guanajuato and Querétaro – Guanajuato has the third-most expensive sale prices for houses and the second-most expensive monthly rents for apartments.

As automotive companies and other industrial employers have opened and expanded their operations across the state, cities have in turn experienced an influx of investment, and this trend is likely to continue. “The sector is growing thanks to high levels of foreign investment, since new residents need housing,” Fernando Barrientos, a professor of political science at the University of Guanajuato, told OBG. These growth prospects contributed to the Mexican Association of Real Estate Professionals forecasting in April 2018 that the real estate sector in Bajío would increase by 6% over the year.

Within Guanajuato, the city of León is the principal driver for new investment in residential housing. León’s population increased by over 142,000 between 2010 and 2015. As of 2015 León had 386,977 housing units, and this number is expected to increase dramatically in the coming years as León’s population is forecast to swell to 1.7m by 2030. Real estate development appears set to forge ahead in other cities in the state was well. Irapuato’s population is expected to grow to over 620,000 by 2030, while Celaya’s is set to rise to 542,000 people, which will push up housing demand. As Guanajuato’s major cities expand, developments for housing and infrastructure will continue to attract investment.

Down the Road

While Guanajuato has an impressive base of infrastructure, the authorities have many plans for future developments. Up until now most infrastructure investment has been concentrated in roadways, housing and offices, and industrial parks. Moving forward, the state government has set out to improve connectivity and public transportation with a plan called Guanajuato 2040. The plan outlines a roadmap for the construction of a passenger train to connect the cities along the Highway 45 corridor to Guadalajara and Querétaro, which are the two largest cities in the neighbouring states of Jalisco and Querétaro, respectively. The project may launch with the construction of an 8-km section of rail that runs from the centre of León out to the city’s periphery, a link that would later be expanded to additional towns and cities along the industrial corridor. The new light-rail system for passenger transit would also significantly improve the transport services in Guanajuato. Although the project is still in the proposal phase, the state government has stated its intention to commence construction, saying it could be completed by 2035.

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The Report: Mexico 2018

Guanajuato chapter from The Report: Mexico 2018

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