Opportunities

The real estate market in Mexico is empowered by the demographical growth which projections indicate the population should increase at a 1.4% yearly growth rate. Total population is expected to boost from 106 millions in 2006 to 130 millions in 2020.

As a logical market reaction, the increase in the demand for new homes will proportionally impact on the demand for infrastructure and services such as highways, roads, schools, hospitals, offices, super-markets and leisure facilities.

We believe that the actual macroeconomic conditions will allow the country to keep growing at a conservative 4.5% during the next five years. Then, this rate would increase as long as conditions in the Mexican market remain favorable to foreign investment.

Incentives

All industries are supposed to benefit from this phenomenon and the Real Estate sector is not an exception. Currently, there is a deficit in housing reaching 5.5 millions of homes’ and this data keeps increasing each year. Every year in Mexico, newly wed couples as well as young professionals together generate a demand for new homes reaching an average of one million. The country is facing a supply constraint, since local industry can only provide around 750.000 new homes a year.

The new administration is determined to boost growth in the country through the implementation of structural reforms. The challenge consists in setting new conditions that would appeal to foreign investors.

Stable macroeconomic conditions together with the incentives offered to investors are already succeeding as the number of foreign companies exceeded 25.700 and is expected to grow to 28.000 in 2015. This would make Mexico the world’s fifth country with the highest number of established foreign companies after China, Rumania, Czechs Republic and Hungary.

By 2020, 25% of gross domestic product (GDP) is supposed to come from foreign direct investment.

Another important aspect is that Mexico received a total of 21 millions foreign tourists during the last year, becoming 8th country in the world in terms of number of visitors. In fact, the tourism industry provided 8% of GDP last year.

Another interesting observation is that 90% of visitors came from the United States and almost 40% of them were between age 40 and 55, which tells us that the “Baby-Boomers” phenomenon is already being reflected in the market. We can tell that the Real Estate industry oriented to this specific market, second homes for baby-boomers and American retirees, will become extremely attractive in the next twenty years for investors interested to invest on the Mexican coasts.

How Tellaeche & Arrangoiz Interacts with Foreign Investors

In the last years the firm has served international companies that decided to establish their businesses in Mexico. T&A provided those companies with many services going from legal consultancy in company establishment to advice related to specific business developments in Mexico.

The firm has developed with strength and has achieved high expertise within its Corporate and Real Estate division. The services provided for investors range from land consulting services to acquisitions coaching, due diligences and lobbing with the authorities, all this while always putting as a main priority the protection of clients patrimony and interests.

Gonzalo Arrangoiz
Partner at T&A
MEXICO