This week, Mexico Infrastructure & Sustainability Review interviewed Giovanni D’Agostino, President Mexico and Regional Managing Director Latin America of Newmark Knight Frank (NKF), who shared his perspective on the Trump administration and its expected impacts on Mexico.
Q: What are the main trends driving the occupier market in Mexico?
A: The trend is for co-working. WeWork pioneered the adoption of this scheme globally and today the company is almost a substitute for real estate developers as it rents tailored-made spaces to big corporations. This has developers striving to become more sophisticated and demanding more market studies to really understand what their clients want. Our Global Cities report is an example of the kind of research required to comprehend what new generations need. Co-working has changed the operational methods of many companies and it is the main trend NKF perceives. Even if it is not functional for all the divisions of a company, it can be adapted to certain areas. Also, more users are certifying their spaces with LEED, which implies a reduction of costs and some tax incentives. We are working closely with DOW, which recently merged with DuPont.
Q: How is the uncertainty raised by the renegotiation of NAFTA affecting the real estate industry?
A: The renegotiation of NAFTA may affect the development of industrial parks and warehouses, but I do not believe it will affect real estate services. The industrial regions, including the Bajio may suffer, especially related to the automotive or aerospace industries. As Mexico has robust international trade agreements with multiple partners besides the US, I am convinced that this will help mitigate NAFTA’s possible repercussions. Our commercial diversification helps us remain optimistic about the market.
Q: Has the Trump administration impacted the willingness of international corporations to base operations in Mexico?
A: I think it has had the opposite effect. The political situation in the US has many international investors viewing Latin America as an investment paradise. Mexico is attractive, especially given the instability in other countries in the region. NAFTA’s renegotiation has stalled some investments as investors wait for the outcome of the talks before making any move. But as the political term in the US lasts only four years, I believe that by the time Trump exits office we will realize his impact was not as significant as we thought. Conversely, it is our own internal policy that has the potential to affect us the most in terms of investment. We have been given a higher sovereign credit rating by reference agencies and we are finally starting to see the fruits of the structural reforms. All the factors molding business conditions in Mexico may decelerate our growth rate, but the economy will continue expanding anyway.
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