Jaime Jiménez
Director General
TRANE México

Broker Sees Untapped Potential in International Segment

Wed, 11/01/2017 - 14:28

Construction companies and developers are under more pressure to create projects that can obtain gold, silver or platinum LEED certification to attract international tenants. “Foreign investors are increasingly demanding strict ecological standards to lease and occupy buildings,” says Jaime Jiménez, Director General of heating, ventilation and air conditioning (HVAC) company TRANE.

Although Mexico is the country with the greatest level of expected green commercial activity, only 35 percent of Mexican building project activity was green in 2015, according to Dodge Data & Analytics’ World Green Building Trends 2016. The study additionally found that Mexico has one of the lowest expectations for new green institutional projects. Green retrofitting older residential buildings and the construction of ecological commercial buildings are noteworthy areas of opportunity in Mexico considering the gap between supply and demand.

The rise of sustainability certification is equally promoting a drive for technology that can harness green commercial activity. As a company that offers air conditioning solutions that optimize energy consumption, TRANE is familiar with this demand from customers. Its products can reduce energy costs by 50 percent through an automated control system that delivers an exact amount of cooling or heating as needed.

In addition to energy efficiency, TRANE offers a better – and longer – quality of life. Around 16,798 deaths among Mexicans was attributed to ambient air pollution in 2012, the latest available data according to WHO’s 2016 Ambient Air Pollution report. Pollution was the identified root cause of strokes, lung cancer, acute lower respiratory infections, chronic obstructive pulmonary disease and ischemic heart diseases.

As a result, air purification has become an opportunity area in the real estate industry. “Our purification systems were created to meet increasing demands for clean indoor air, within living, working and commercial spaces, especially given the rising levels of urbanization,” says Jiménez. The benefits of clean air are priceless, according to OECD’s 2016 report on The Economic Consequences of Outdoor Air Pollution and World Bank’s 2016 The Cost of Air Pollution. They include the reduction of health expenditures and welfare costs and the promotion of labor productivity. Clean air also ultimately reduces the chance of premature death and highly enhances quality of life.

Given the levels of air pollution in major Mexican cities like Monterrey and Mexico City, it is little surprise that TRANE has seen such success in the country. For instance, Mexico City, the largest city in North America, is known to have among the worst air quality in the Western Hemisphere with levels that are three to four times higher than New York, Los Angeles or Buenos Aires, according to Lucas Davis, Faculty Director of the Energy Institute at Haas School of Business, Berkeley University, whose research focuses on the economic and business impacts of environmental policy. “Mexico became our most important market in Latin America after the political and economic crisis in Brazil, particularly in the residential segment,” says Jiménez. This, added to increasing urbanization, creates the perfect environment for TRANE’s services.

According to CONAVI data, 1,088,815 new mortgage applications are expected to be made in 2017, the vast majority of which is concentrated in Mexico City and the State of Mexico (80,835 applications) Nuevo Leon (75,434) and Jalisco (58,246), totaling almost 20 percent of all demand.

Nuevo Leon especially has a great deal of potential for TRANE. The World Health Organization (WHO) labeled Monterrey the most contaminated city in the country based on statistics from 2011. “Monterrey is the largest market for residential air conditioning as its population has high purchasing power, it is one of the most populated areas and it suffers from high temperatures,” says Jiménez.

Southern Mexico is also attractive because of the concentration of hotels and resorts under construction. “Tourism-oriented real estate is one of the few industries to benefit from the depreciation of the Mexican peso,” he says. “This country has become a more inexpensive destination for foreign visitors, even those it lost when security issues were on the rise.”