In an exclusive preview of the 2019 edition, Mexico Infrastructure & Sustainability Review spoke to Javier Lomelín, CEO of Colliers International Mexico about development trends and opportunities in mixed-use and rental housing.
Q: What are developers and investors looking for when they contract companies such as Colliers International and what is your advantage?
A: Our clients demand extremely specialized talent. It is not enough to be familiar with the real estate market; it is critical that we know our clients’ businesses to provide personalized advisory services. This has made the service provision sector a lot more demanding and competitive. Colliers International has integrated the wide scope of services offered within the real estate industry and we can do anything from project management, appraisal and commercialization to maintenance and operation of assets. Third-party appraisals are becoming more and more important, as the integration of investors into the real-estate market demands transparency and an independent perspective. Land use, fiscal implications, density and regulations are always factors that impact the success of a real estate project.
Q: What areas are developers setting their sights on for the next few years?
A: The main urban hubs are becoming oversaturated. Developers and investors are logically turning to midsized cities for growth. For instance, Mexico City is experiencing a slight oversupply of office spaces with 20 percent vacancy rates; if developers continue developing spaces with no added value they will have a slow and low return on their investments. The current trend is going from developing corporate spaces to more integrated mixed-use buildings in midsize cities.
Q: What opportunities has Colliers International seen in the rental housing segment?
A: Colliers International could become more involved in the rental housing market through mixed-use projects. There could be a decrease in purchases of individual assets that will later be placed on the rental market but we are also seeing a comeback of institutional investors into that segment.
Rental disappeared some years ago because of regulations that were passed, protecting tenants. This made investments less profitable since, from instance rent prices were limited and could not be raised more than 85 percent of the increase in the minimum wage. These regulations have been modified, making it a good option for investors once again. We see that developers are now acquiring entire portfolios, giving life to economies of scale and with much greater viability.
This also follows many socio-economic trends within the Mexican market. Millennials are far more interested in renting than buying and are looking for homes that match their particular needs. These new developments have all the amenities included, providing greater comfort for younger generations.
This is an exclusive preview of the 2019 edition of Mexico Infrastructure & Sustainability Review. If you want to get all the information, plus other relevant insights regarding this industry, pre-order your copy of Mexico Infrastructure & Sustainability Review or download our digital edition.