Broker Sees Untapped Potential in International SegmentWed, 11/01/2017 - 14:31
By keeping their eyes pinned to the domestic market, Mexico’s developers sometimes miss the opportunity to cater to another lucrative segment: the international set, says Carmina Zamorano, Director General of Carnan Properties. “Mexican developers often lose sight of just how attractive the Mexican market is for international investors,” she says. “The market must continue creating living experiences and not just homes to attract international players.” But over the last two years, Mexico’s residential sector has raised the bar in terms of the quality of its projects, which have begun to catch the eye of international investors looking to buy assets in the country.
According to International Living, a print and digital publication on retirement destinations, Mexico has occupied third place for the second consecutive year as the most attractive country for American retirees. The National Population Council (CONAPO) estimates there are more than 1 million US citizens living in Mexico and each year, more are looking to retire in Mexico’s cities and beach destinations.
Carnan Properties, a leading international home brokerage, has learned to take advantage of the interest from foreign investors and the advantages that volatile currency exchange rates offer. One of the company’s most successful projects in Mexico is the El Milagro housing development, located in San Miguel de Allende. The well- known tourist destination is home to more than 30,000 US residents and the peso’s weakness against the dollar has increased the attractiveness of investing in real estate there. “Investors who purchased these homes two years ago already have a profit of more than 30 percent because of the increase in the dollar to MX$18 from MX$15 in mid-2015,” says Zamorano. The strong dollar allowed foreign investors to purchase homes in El Milagro at prices between US$80,000 and US$260,000, something unheard of in the US.
This trend is unfolding across the country, and the high demand is incentivizing some developers to build higher quality, more innovative designs. Still, most have decided to stay at home rather than take their ideas to what could be another lucrative venture: building abroad. Zamorano believes there should be more Mexican developers catering to the international field but she says those are few and far between. “Mexican developers have to be willing to take the risk and take advantage of new opportunities abroad,” she says. “The problem is that there is a secure market in Mexico and they are not interested in looking to new destinations since they enjoy enough demand at home.”
Carnan Properties wants to encourage Mexican developers to venture into the US market and naturally, promote their Mexican developments simultaneously. “The world needs to take a closer look at all the opportunities that Mexico has to offer,” she says. With interests in Mexico, the United Arab Emirates and the US, Carnan Properties is well-positioned to project the market’s behavior in the next few years. “The real estate market in Miami has incredible opportunities but I believe that its growth will slow down in the next year,” says Zamorano. “Properties are grossly overvalued in areas like Phoenix, the Los Angeles metro area and Las Vegas, and we want to wait for these regions to regain some strength.”
On the other hand, Texas is proving to be a bountiful market and Carnan Properties has begun to sell its projects before construction is complete. The company currently has more than 4,800 units to sell in Miami and only 87 in Houston but Zamorano explains that inventory in Houston is sold almost instantly. “Developers that decide to invest in Houston have a great return on their investment,” she says. The company currently has two projects under construction, Arabella and Marlow, which are located in downtown Houston with an estimated completion date of October 2017. One of the characteristics that will make these projects successful is that developers are adapting to new generations and trends that will change the concept of housing completely.
“I believe demand for gated communities will increase in the next few years and demand for high rises will wane,” she says. “Families are looking for more space and a garden where their children can play.” says Zamorano. Developers are bringing housing back into downtown areas and will continue building smaller apartments within walking distance of cultural forums and shopping areas, which are attractive for young professionals and retired citizens. “The Mexican market is filled with opportunities but it is up to the sector to create housing that adds value for investors.”