Although its fortunes are closely linked with the US, Mexico’s real estate mostly held its own during the latest US market crash due to supply and demand balance. Property bargains in Mexico are attracting buyers who have invested nearly $300 million in a Prudential fund for industrial real estate, but experts warn that prices could fall further or remain suppressed. See the following article from Property Wire for more on this.
The commercial real estate market in Mexico has remained remarkably stable in the face of the downturn in the US economy following the global financial crisis of late 2008, a new report shows.
Mexican property developers have done a surprisingly good job at matching new supply of real estate with demand but any improvement in conditions for the economy in general or the commercial Real Estate sector in particular will be gradual, says the report from Companiesandmarkets.com.
The exposure of Mexico’s economy to trade with the US means that the recovery through 2014 is likely to be fragile. ‘In particular, we see no sign of an upturn in investment. Nor do we see evidence of a sustainable recovery in consumer spending. The risks are to the downside,’ it says.
Nevertheless, the various protagonists in Mexico’s diverse markets for commercial real estate have lived with the challenges of fluctuating growth in the US and changing perceptions of risk within Mexico for a long time. For the time being, we remain optimistic that protagonists will continue astutely to balance supply and demand over the next five years,’ it continues.
‘Consequently, our base case is that yields will remain broadly unchanged over the next five years or so. However, there is a risk that yields slip sharply, in at least one of the sub sectors or cities for which we have data, as a result of a slide in rents relative to capital values,’ it adds.
The report, the latest edition of a new series of industry reports published by BMI that seeks to identify the key dynamics of the real estate sectors of 44 countries around the world, looks at both the long and the short term prospects.
More investors from the US are looking at property in Mexico as prices are lower. Experts are still not certain if prices have bottomed out yet, and some warn that the low prices will just stay that way for quite some time.
Property prices in Mexico have, on the whole, been far less affected by the US housing bubble and the international recession than those across the border. In certain tourism hot spots prices fell more because of a glut of new construction. But according to agents price reductions are disappearing and sellers are listing their properties back at prices seen at the end of 2007, beginning of 2008.
Meanwhile, a fund geared to buying industrial real estate in Mexico has raised $293.3 million from investors. Prudential Real Estate Investors said it will invest in developing industrial sites and acquire portfolios or individual properties with a focus on tenants that distribute or manufacture goods to Mexican or US consumers.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.