Construction & Real Estate
From The Report: Mexico 2017
View in Online Reader

Mexico’s construction industry is changing gears in 2017. It is the fourth-largest value-added activity in the country and constitutes 8% of GDP. A young, growing population and a rising middle class continue to drive demand for homes, shops, factories and offices. The infrastructure industry is preparing for a future where private sector funding takes over from the public sector and becomes the key engine of growth. Furthermore, profits at Cemex, Mexico’s multinational cement company, have reached record levels, and the project to build Mexico City’s new airport – which is now under way – is the biggest of its kind in Latin America. Furthermore, Mexico’s real estate sector is preparing for a period of moderately increased uncertainty over interest rates, inflation and trade. Despite some apprehension, sales continue and medium-term market fundamentals remain positive. There were 10 real estate investment trusts trading on the Mexican stock exchange in 2016, with a combined capitalisation of some $13.3bn. Some property specialists say worries over inflation and a weaker peso may actually create new investment opportunities, and underline the value of property as a secure, long-term holding. This chapter contains an interview with Jerónimo Gerard Rivero, CEO and Founder, Mexican Retail Properties.

Articles from this Chapter

Overview

Building partnerships: The sector is shifting towards more private sector involvement
OBG
plus

Mexico’s construction industry is changing gears in 2017. After recording GDP growth of 1.8% in 2016, the sector faces some short-term challenges. Austerity in public sector budgets has reduced the value of infrastructure projects. There are some macroeconomic concerns including the prospect of higher inflation and tighter interest rates. The worry is that demand for building work across the economy will slow down. Offsetting these concerns, however, are a number of positive signs in the medium-…

Analysis

A hard-working segment: Mexico City offers a variety of high-quality office rental space
OBG
plus

About 90% of large companies present in Mexico secure their office space by renting, leaving just 10% owning their facilities. In 2016 most rents in central Mexico City ranged from $17 to $26 per sq metre, depending on the quality of the space. An estimate by Colliers International placed total office space inventory close to 8.3m sq metres. Around 3.5m is of the highest quality, described as A+; 1.8m is class A; and 3m is class B. Real estate consultancy CB Richard Ellis (CBRE)reports slightly…

Interview

Shifting dynamics: Jerónimo Gerard Rivero, CEO and Founder, Mexican Retail Properties, on opening the market to different types of investors
OBG
plus

Jerónimo Gerard Rivero: Interview How do real estate investment trusts help facilitate access to the sector? JERONIMO GERARD RIVERO: These funds have undoubtedly democratised capital and opportunities in the sector. Before these new mechanisms, access to landmark projects was limited to those with sufficient capital and connections. This has changed, and now any developer or contractor can partner with investment funds to partake in such a development. Real estate investment trusts (fideicomisos…

Overview

Housing interests: Diversification efforts are evident in location and facility offerings
OBG
plus

After years of steady growth, Mexico’s real estate sector is preparing for a period of moderately increased uncertainty over interest rates, inflation and trade. Despite some apprehension, sales continue and medium-term market fundamentals remain positive. Some property specialists say worries over inflation and a weaker peso may actually create new investment opportunities and underline the value of property as a secure, long-term holding. Sector Background Mexico’s residential housing market…