Perspectives on the Mexican Real Estate market in 2023

Foto: (Freepik)

The real estate sector in Mexico could have growth of up to 1% in 2023 and the figure could even be much higher in the 10 submarkets where tourism predominates.

This is according to Gene Softec, executive partner of Softec, a firm that is dedicated to real estate research.

Softec helps Real Estate Developers, investors, and land owners create the best and most successful projects.

In this interview, Softec also referred to new projects, areas of opportunity, and other market trends.

_ : What is the current outlook for the real estate sector, specifically in new projects?

Softec: OK, Let’s start with housing… In housing, we have a somewhat contradictory situation because housing [contracts] continue, but the start-up of housing projects has stopped. I think it has stopped because many people are concerned about the operational legal uncertainty in Mexico and so what we have been doing is depleting inventories in all segments.

What we are going to see is a continued contraction of the sector, in which developers start new projects. I hope they start happening next year. It is a situation of a demanding market, relatively stable and with a somewhat weak offer from developers in housing.

_ : And what happened to the commercial area in recent years?

Softec:  In the commercial real estate part of the market, projects that were scheduled to start in 2020 have postponed their entry into operation until 2021.

_ : What is the current situation of the industrial segment?

Softec:  One challenge with the industrial side is that there is a demand for space, but not enough cheap housing is being built in these places. This occurs in markets where a lot has been invested recently: Monterrey [in the state of Nuevo León], Ciudad Juárez [Chihuahua], Tijuana [Baja California] and the Valley of Mexico. In the absence of cheap housing, there is a limitation in the growth of industrial demand because there is no place to house the workers.

_ : What is happening in the hotel industry?

Softec:  The fastest growing market is the vacation market, as this year it grew 15%, and we estimate that next year it will grow between 10% and 15%. It is growing in a very important way. The markets with the greatest displacement are not necessarily where the most new projects are starting, but they are the ones that sell the most.

_:  Which were the states with the highest number of projects?

Softec:  The biggest market in 2022 was the Valley of Mexico market. We estimate that it had sales of 87.6 billion pesos [close to US$4.5 billion]. It is followed by Cancun [in Quintana Roo] with 44,284 million pesos, then Monterrey with 35,371 million, Guadalajara [in Jalisco] with 28,891 million, the city of Querétaro in the state of Querétaro with 16,465 million, Puerto Vallarta in Jalisco with 15,741 million, Mérida [in Yucatán] with 14,904 million, Mazatlán [in Sinaloa] with 9,721 million, Tijuana with 8,559 million and Los Cabos [in Baja California Sur] with 8,438 million.

Those are the top 10 by market value.

_ : What is the outlook for 2023?

Softec:  I believe that the economic scenarios that I have seen suggest that we are going to have growth of between -2% and +1%.

One of the great opportunities for Mexico is the issue of what is happening with the departure of so many companies from China.

About Softec:

We create information tools on the real estate and mortgage sectors to help our clients understand and manage market risk; and with this, help them make better investment decisions. We are one of the main companies specializing in real estate consulting and research in Mexico.