BajaNews - 8-30-2010 at 08:27 PM
http://www.sdbj.com/news/2010/aug/30/investors-see-value-mex...
By Lou Hirsh
August 30, 2010
While its once-high-flying residential condo market is being pronounced dead, Mexican real estate still has pockets of activity — in selected
industries in certain geographic areas — that continue to draw investors on the commercial side.
At a real estate forum Aug. 24 in San Diego, presented by the Urban Land Institute’s San Diego/Tijuana chapter, experts noted that steady cross-border
trade continues to keep Mexico industrial properties, including manufacturing and warehouse buildings, as well as leased spaces, in relatively high
demand.
Meanwhile, a glut of office buildings and resort hotels, which came on-line just before the economic crash of 2008, sit empty or remain slow to sell
in several once-bustling regions.
And the condo market, which had San Diego County residents flocking across the border less than five years ago for housing bargains, has ground to a
halt, with unfinished projects dotting the landscape throughout Mexico, including many in coastal settings.
“Residential development is basically dead right now,” said David Wiesley, a locally based vice president of multinational business development with
Stewart Title Guaranty Co.
Worth Watching
U.S. real estate-related companies have seen their Mexican transactional volume plummet from pre-recession peaks. Still, potential investors, and the
companies that service real estate transactions, might want to keep an eye on Mexican sectors that could be among the first to bounce back as the
economy recovers.
Wiesley noted, for instance, that the Mexican government is looking long term to boost affordable work-force housing, particularly near key industrial
centers such as Tijuana and Mexicali.
Also, retiring U.S. baby boomers, with savings portfolios still under siege from stock market gyrations, will continue to seek lower-cost housing
options across the border, particularly in well-placed golf, tennis and beachfront developments with upscale offerings.
Concerns of Violence
Aside from the economy, demand for Mexican real estate is being suppressed by concerns of violence fueled by drug trafficking. And there remain some
cost and procedural barriers to acquisition of properties by U.S. entities.
John McNeece, a local attorney in the law firm Luce Forward Hamilton & Scripps LLP, who handles transactional issues for clients doing business in
Mexico, said the country is making gradual progress in combating government corruption and organized crime.
“Lately, the government has been setting the narco-traffickers back on their heels,” McNeece said.
Since the North American Free Trade Agreement took effect in 1994, Mexico has been relaxing real estate-oriented barriers, such as restrictions
against majority ownership of large properties by foreign entities.
Leasing, Not Buying
Other experts, who were not at the ULI forum, noted that leasing is generally seeing more activity than buying in major border-adjacent Mexican
markets, especially in the industrial sector.
Joe Smith, a broker with Cushman & Wakefield who deals with Tijuana and Mexicali industrial real estate, said leasing activity has picked up
considerably in the past year.
Because competitive pricing trends favor tenants, as landlords compete to lure them, industrial-oriented firms prefer leasing over buying in the
current market. Smith said companies that are most active in acquiring new leased space include manufacturers of medical devices and consumer
electronics.
A couple of years ago, a number of multinational companies, many from Asia, were buying Mexican land throughout the border region to build factories.
“That’s not happening now — they’re leasing, not buying,” Smith said.
Smith noted that industrial leasing activity in Mexico has tracked closely in the past decade with increases in international cargo traffic coming
through Southern California regional ports, including those at Los Angeles, Long Beach and Otay Mesa.
“Tijuana is tied into a much bigger picture — it’s not just about the Mexico-San Diego border area,” he said.
wilderone - 8-31-2010 at 07:27 AM
“Lately, the government has been setting the narco-traffickers back on their heels,” McNeece said.
Would he care to qualify that statement with some facts? That is BS
Bajahowodd - 8-31-2010 at 01:48 PM
"Meanwhile, a glut of office buildings and resort hotels, which came on-line just before the economic crash of 2008, sit empty or remain slow to sell
in several once-bustling regions."
Built with laundered drug money. They can afford to wait.
wessongroup - 8-31-2010 at 02:04 PM
Would have to agree with "Investors see "value" in Mexican Commercial Real Estate".. it sure as hell ain't something you want to have your money in
... up in the states..
All that commercial "crap" along with it's ludicrous "values" arrived at through the truly amazing process of "appraisal" is getting ready to re-index
and/or renew too, just like the SFR ... gee, now who's going to bail out this mess.. of inflated and BS numbers.. which is also leveraged past
Pluto...
Or, will we get to vote on this, issue, just like we did on the last "Bail Out".. of trillions and trillions of dollars .. won't even start on the
numbers.. as some don't seem to count the same as others...