Flavio Tavera
Commercial Director of Desarrollos Inmobiliarios de Occidente (DIOCSA)
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Insight

Compact and Well-Connected Housing for a Booming City

Thu, 11/01/2018 - 11:06

A rapid increase in population over the last decade means Guadalajara’s real estate sector is booming. But while the city is flourishing, it is failing to do so in an orderly way, says Flavio Tavera, Commercial Director of Desarrollos Inmobiliarios de Occidente (DIOCSA). “The city grew extensively to the south and east, with an unequal distribution of social classes,” he says, highlighting that high-income classes remain mainly located in the west.
DIOCSA is a consortium focused on housing construction and sales that is developing across the state of Jalisco, striving to contribute to its urban development through compact and well-connected housing and mixed-use projects. Today, the metropolitan area of Guadalajara is made up of nine municipalities. DIOCSA understands the social distribution and offers developments for different market niches but with a focus on the middle-class residential segment that has a purchasing power of MXN$1.8-3 million. It also builds social housing near massive transport infrastructure at affordable prices, normally between MX$450,000-850,000. “If there is the potential to avoid high transport costs, social housing becomes more appealing to low-income families,” Tavera adds.
Guadalajara’s fast expansion led big consortiums to buy huge land parcels for housing on the outskirts, but these areas were lacking basic services. “This fostered changes in land-use regulations, a decrease in the quality of housing services and increase in commuting times,” Tavera says. “The problem became one of having over-priced and poorly-connected land.” This opened the door for developers like DIOCSA to create smart projects that would successfully densify the city, making prices affordable and developments accessible to the main transport systems.
DIOCSA follows the Sustainable Transport Oriented Developments (DOTS) urban model, which focuses on planning and designing around mass transport systems and building compact, high-density neighborhoods. The model has been recognized as a priority in both the National Program for Urban Development and Housing 2014-2018 and by Mexico City’s Mobility Law. “The idea is to provide housing to low-income families with easy access to mass transportation systems,” says Tavera. “We need to develop living spaces focused on lowering the use of land and commuting costs.”
This agreement between the public and private sectors is especially important when it comes to addressing the needs of low-income market segments, says Tavera. Each municipality has its own development plan, which according to Tavera, should aim to unify and plan an orderly growth of the metropolitan area. “A recent update of some of Jalisco’s municipal plans gave investors more certainty to invest in vertical housing, helping make the city more compact,” he said. “Zapopan is a good example as its market demand called for high-class hotels, housing and offices in one area, requiring developers to build vertically.”
The economic and geographic conditions of Guadalajara also continue to attract investors. “It has been a growth center in the eastern region of the country,” says Tavera. “It can be viewed as a pilot city for commercial purposes. If a project succeeds here, it is likely to do so in other cities.”
But the decline in the younger demographic presents a challenge for Guadalajara’s developers. The forecast finds that the city’s population is getting older, steering the market toward one-story, accessible housing. The demographic trends are also demanding fewer rooms per house. “The average now is 3.7 compared to the previous 4.5 inhabitants per house, as families are becoming smaller and looking for more compact living spaces,” he says.
DIOCSA has experienced the ups and downs of the market, which are largely dictated by demographic changes and public policy. As a result, its next step is to become completely self-sustaining. “We look for the land we buy, carry out the marketing processes and develop it by ourselves, without outsourcing,” Tavera says. Although the company wants to be self-reliant, it does not rule out other developers relying on it. “We build all our projects internally from scratch, but we can also commercialize developments belonging to other constructors.”