Fast Market Research recommends "Mexico Real Estate Report Q1 2014" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 12/23/2013 -- We are forecasting Mexico's commercial real estate industry to show a consistent, yet unremarkable performance over 2013, with rental rates across all sub-sectors expected to remain flat as the standoff between the market's long-term potential and macroeconomic headwinds continues. The country has one of the most stable growth outlooks in the region, and an operating environment which is seeing tangible improvements and rising longer-term prospects. Nevertheless, the poor financial condition of many of the country's residential developers is a threat. As such, we are forecasting growth to remain flat in the sector in 2014, with the only obvious signs of growth coming in both the office and retail real estate sectors in Tijuana.
A turnaround in fortunes during the second and third quarters of 2013 means Mexico remains in third place in our Real Estate and Construction Risk/Reward Ratings (RRRs) for Latin America as of October 2013. It maintains a score of 66.7 out of 100. While the country is not likely to surpass Chile or Brazil in the pecking order any time soon, this represents an improvement in the rankings from 65.7 as recently as April 2013.
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Mexico's construction sector benefits from a well established local industry. However, a number of larger international players also have operations in the country, especially the Spanish companies that have made a name for themselves in the energy and utilities sector. Mexico scores moderately for Industry Risks, with 63.3 as of the end of October 2013, the lowest in the region for this indicator - albeit a rating which has improved from 60.0 as recently as April 2013.
To the detriment of the near-term growth of Mexico's real estate sector, the macroecnomic backdrop in Mexico is not as strong as it once was. BMI recently revised down its 2013 real GDP growth forecast for the country from 2.3% to 1.6%, due to a weaker-than-expected performance by the manufacturing and construction sectors in recent months. However, we forecast an acceleration in growth in 2014 to 3.3%, driven by an improvement in private consumption and investment in light of the government's ongoing reform drive and stronger US demand.
Our in-country interviews and data confirm the market sentiment that commercial rental growth in Mexico had been fairly stable over recent years, particularly in the office and industrial sub-sectors. Minimal growth in rents is expected in 2013, amid a continued slowdown in the US that has increased caution among international investors. Nevertheless, we maintain an overall positive long-term view about the potential of the commercial real estate sector in Mexico.
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