Market Trends of Commercial Real Estate Industry In Mexico
Growth in Tourism is Fostering Developments in Commercial Real Estate
Tourism accounts for nearly 10% of Mexico’s GDP and is expected to do well in the future. The industry is estimated to reach almost USD 17 billion in two years.
According to World Tourism Organization (WHO) data, Mexico has secured ninth place in the world in foreign exchange earnings per international visitor for 2022. According to the forecasts for 2023, Mexico will capture USD 31.3 Billion from international visitors, which is 11.4% more than in 2022. In 2022, 38.4 billion international tourists arrived in Mexico, representing a growth rate of 21.2% compared to that observed in 2021.
Mexico City, Tulum, and Merida regions are becoming the preferred destinations for real estate investors due to the growth of the tourism sector in this region. Further, these regions are experiencing a rise in urban growth and investment in eco-tourism. This boom has led to many real estate projects, such as museums, shopping malls, and concert halls.
Mexico also offers a charismatic lifestyle for foreigners. The country boasts a rich heritage, beautiful beaches, warm weather for most of the year, and delicious cuisine. Hence, Mexico has become a world-famouss destination for both vacationing and living. Therefore, Investors usually rent out their property as a source of income.
Increase in demand for industrial real estate driving the market
The macroeconomic situation may have lost impetus, but the fundamentals of the industrial sector still stayed strong as 2022's third quarter finished. Due to a robust leasing market in 2021, tenants moved in this quarter and occupied almost 123 million square feet of manufacturing area. Despite a minor decline in leasing activity quarter over quarter, the market appeared resilient, with 134.3 million square feet in the area leased in Q3 2022.
The overall vacancy rate in industrial markets decreased for the eighth consecutive quarter, reaching an all-time low of 3.3% in Q3 2022. Development rates are currently in pace with demand as vacancy rates continue to decline. 633.8 million square feet of commercial real estate have been built, an increase from the previous quarter.
It costs more for investors to fund new agreements or refinance current loans, and tighter financial conditions typically directly influence commercial property values by reducing investment in the industry. They might also indirectly affect the industry by slowing down economic growth and lowering demand for commercial real estate like stores, eateries, and factories.
