The Business Year

Mexican mixed real estate companies have to remain nimble to respond to unpredictable challenges in the market.

Luca Piccolo

CEO, VENIT Investments

With every problem comes an opportunity, even during this volatile period. Demand for housing is still going to grow since people still need places to live in, a fact buoyed by our demographics. Housing is one place where we will always be looking for opportunities. For now, the industrial sector is still growing, and there is a lot of foreign investment that is going to be difficult to take away from Mexico. We have to be very careful, but there are opportunities there. Mexico City, Monterrey, and Guadalajara are more at risk than other cities because of the size of the market, and they will feel a lot more from a contraction. We still believe firmly in Bají­o and are starting to analyze the Mexico-US border at Tijuana, Hermosillo, and Juárez. We are also analyzing Mérida. It does not have a strong industry, but a lot of services and tourism; hence, it is a different kind of opportunity that we are carefully watching. The pie is getting bigger, and there is room for everyone. In 2019, we will be finishing that and are launching two new projects. One is our flagship where we are trying to make something completely different: a mixed-use space with a strong housing component along with offices, hotels, and a commercial area. It is in Querétaro, and 70% of the project is housing.

Eduardo Garza Palacio

Partner, Evalor Patrimonio Inmobiliario

When times of instability arrive, Mexicans invest in real estate. The average investor who does not have many investment alternatives takes refuge in land, houses, and apartments when he sees uncertainty in the market and volatility in the exchange rate or interest rates. Moving forward, there is a chance that the new administration will subsidize social housing. At present, the banks are still active and offering fixed rates on real estate and mortgage projects. The risk comes into play when the rates rise disproportionately and when there is no limit. The average investor is buying property as hedge and as an important share for their portfolio distribution. Overall, we expect real estate prices to maintain their upward trend. Up to 2007, we received substantial investment from individual clients from the US and Canada in the Riviera Maya or Cancún. In 2007, American banks were even giving credit to individuals to buy a second home in Cancún. Due to the housing crisis, people who bought their beach houses in Mexico left and did not return. Fortunately, those days have gone, and more foreign investment is coming to Tulum and Playa del Carmen. Moreover, institutional investors continue to invest in Mexico; however, on a larger scale, most of the foreign investment in real estate has been replaced with domestic institutional investment.

Dieter Lorenzen Maldonado

President, Dieter Lorenzen Maldonado

Punto Valle is located in San Pedro Garza Garcí­a, which is the municipality with the highest income per capita in Mexico. However, the city lacks a point where people can go for a walk or enjoy services and amenities in an open environment. The land we bought with a group of Mexican investors was near the area that is considered downtown, so we tried to create a concept that would work. Punto Valle is more a town center than a shopping center. There are spaces to walk, a hotel, a business area, family areas, a green area, restaurants, retail, and an event room. There has been an effort to reform the surroundings to keep harmony between the development and the public space. Additionally, a project of this size generates value for the surrounding areas and generates benefits for the community. The commercial strategy was defined in phases, and as of now we have met close to a 100% of the targets of the current phase. We are proud of the fact that we are opening Punto Valle at 85% occupancy. There are certain specific zones that we have left for the last phases. We are very optimistic that by the end of 2019, we will reach close to 100% occupancy rate. We consider ourselves a successful project because our occupancy rate is high, the design and construction are unique, and we have a leading hospitality brand, Westin Hotel, on board.

Manuel Lebrija

Partner, Visa Desarrollos

I started working with my grandfather, who was one of the first urban developers in Monterrey. He developed neighborhoods such as Pí­o X, Mitras Centro, Anáhuac and a large part of San Nicolás, and Nueva Lindavista. I had the opportunity to work with him and learn from his vision. Loma Desarrollos began 27 years ago when the company started making houses. I bought my first 50 lots and built 50 houses. I had the opportunity to buy two plots in the Chepevera neighborhood, next to the Regiomontano Institute. Some lots of these plots faced the avenue, and I talked to the Urban Development Secretary to change the land use from commercial to residential. He told me that it was not possible because the area needed commercial space. Because of this, I developed the first two commercial plazas: Plaza La Salle Norte and Plaza La Salle Sur in 1999. Soon I realized that there is a need for a shopping center, as well as gyms, restaurants or banks. So far Loma Desarrollos has made more than 1,200 commercial plots with a business model based on the sale of certain premises, while keeping others for rent. One of the milestones in the company has been establishing a cohabitation agreement with the supermarket chain Soriana, in Cancún. We bought some land next to a Soriana where we started to develop the Heroes Shopping Center.

Ignacio Bezares

Regional Manager Mexico & Peru, Grupo Lar

Mexico is one of the most attractive and largest markets that we are present in; the country represents around 20% of the company’s activities. In the region, we have been in Mexico since 2004, as well as in Peru, Brazil, and Colombia. The country’s demographic market has many advantages, such as a high demand from its young population. Mexico City alone represents a quarter of the country’s housing demand; however, house prices have surged in the last few years, while apartments and living spaces have become smaller. Mexico is unique as the demand from the middle-class population is not being met simply because this group does not have the purchasing power to buy a house in Mexico City. This is not the case in the other countries we are in. The increase in prices per sqm has caused the average price of our apartments to exceed the budget of a middle-class family. We see this as an opportunity to meet demand by offering houses at lower prices. Since land prices are high in Mexico City, we need to build projects in areas where land is cheaper. This allows us to build apartments at a lower price. Considering that the apartments must be small to reach the target prices, it is essential to have large common and green areas that can compensate for the size. We offer families a space inside the property development where they can spend time together.

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