Boston, MA -- (ReleaseWire) -- 05/02/2014 -- We are forecasting Mexico's commercial real estate industry to show a consistent, yet unremarkable performance over 2014, 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.
To the detriment of the near-term growth of Mexico's real estate sector, the macroeconomic 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.
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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.
- In November 2013 it was announced that Macquarie Mexican REIT (MMREIT) had finalised the acquisition of two properties from companies controlled by Fondo Comercial Mexicano in a deal valued at US$153mn. The properties, Coacalco Power Centre and Tecamac Power Centre, are located in the Mexico City Metropolitan Area and have a combined gross leasable area of 134,246 square metres. The properties have an occupancy rate of 98.7%. MMREIT said it expects the portfolio to generate around US $12.8mn in net operating income and US$7.1mn of funds from operations in 2014.
- In October 2013, US real estate firm DCT Industrial Trust announced that it had sold its portfolio of industrial properties in Mexico. The portfolio of all the firm's 15 properties in the country consists of occupied space in five states. They were sold to a trust belonging to MMREIT for US$82.7mn and will allow DCT to focus on the US market. The acquired properties have a gross leasable area of 1.65mn square feet, and are spread across the Monterrey, Guadalajara, Tijuana, San Luis Potosi and Queretaro regions
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