Ep. 25 Kyle's Take - Mexican Real Estate Markets

Global Real Estate Dealmakers

This Kyle’s Take features commentary on the recent performance of Mexican real estate across the residential and commercial spectrum, insights from the interview with Jaime Fasja, poll results, and a preview of the next guest.

00:15 – Introduction
Kyle sets the stage for the episode by describing the context of his surroundings at the Ritz Carlton in Mexico City.

1:28 – BREAKING NEWS

1:32 – Residential Metrics and Drivers
Kyle highlights recent price increases in major Mexican cities that were not only attributed to the pandemic, but also the growth in the middle class and, in some instances, foreign buyers.

3:47 – Economic Decline and Subsequent Rebound
After the Mexican economy plummeted in 2020 to levels not seen since the 1930s, the ratings agencies downgraded the country’s credit. 2021 has offered a brighter picture, however, with GDP up 20% through Q2.

04:27 – Foreign Buyers and Legislation
Citizens of the US, Brazil, and Spain constitute the majority of foreign buyers in Mexico City. In coastal areas, foreign nationals have been able to own real estate via bank trust since a 1993 amendment of investment law.

05:35 – Mexican Lending & Market Statistics
While mortgage rates remain elevated in Mexico, the Mexican Central Bank has made two consecutive hikes in its benchmark rate to address inflation concerns. Industrial activity and the services sector have both flourished this year despite moves by the government that upset investor confidence.

07:23 – Office Performance
High vacancy, a robust new supply pipeline, and tepid leasing activity are projected to weigh on the office market in the coming years, resulting in a tenant-favorable market.

08:48 – Industrial Performance
An improved vaccination campaign, the reactivation of the US economy, stable international trade, and strong e-commerce demand have acted as tailwinds to the Mexican industrial market.

10:17 – Retail Performance
The retail market has shown signs of improvement in 2021, though this progress is occurring at a slower pace compared to other countries.

10:54 – GUEST INSIGHTS

11:03 – Jaime Fasja Commentary|
In Episode 24, Jaime made the following points among others:

1) Thor Urbana capitalized at a very early stage on the reduction in Mexican tariffs on Chinese goods;

2) a new real estate venture can propel itself from obscurity to a $500mm pension fund commitment within a matter of months;

3) Mexican coastal markets feature lodging that is 2x the price compared to inland cities;

4) Thor Urban’s creative structure led to the consummation of the Ritz Carlton deal; 5) the outdoor nature of Thor Urbana’s lifestyle centers helped retain foot traffic during the pandemic.

13: 18 – POLL RESULTS
Kyle reveals the results from his last poll, which was:

When will the major tech companies (Facebook, Amazon, Apple, Netflix, Google) return to office?

1. January 2022 or earlier – 14%
2. February 2022 – 26%
3. March 2022 – 30%
4. April 2022 or later – 30%

The next poll to be featured at kylenaye.com will be:

How long will it take Western European tourist visits to the United States to reach pre-COVID levels?

1. Less than 6 months
2. 6-12 months
3. 1-2 years
4. 2-3 years
5. More than 3 years

14:50 – NEXT GUEST
Kyle provides some closing comments relating to the next guest for Episode 26.

Additional Information
Fideicomiso: https://www.expatsinmexico.com/what-is-the-fideicomiso/