Local Partners for a Succesful ExpansionThu, 11/01/2018 - 10:13
Expanding to new markets is an arduous task for any company but even for the most experienced developers, constructing in a new place can be an intricate process. Antonio Elosúa, President of the Board of Monterrey-based developer U-Calli, says it is important to apply lessons learned when taking the leap.
“U-Calli has experimented with working outside of Monterrey many times,” he says. “Our first venture was constructing a housing development in Leon, Guanajuato, which allowed us to learn our first lesson when expanding. This was around the time of the subprime mortgage crisis in the US and the company experienced great losses.” U-Calli decided to focus on the market it knew best: Monterrey.
But Elosúa says that a few years later, the time came to take the leap again, this time taking time to find the right partner. U-Calli was invited to venture into the Queretaro housing market through an alliance with VIVESA, called VIALLI. This alliance developed various bulk lots destined for homes. “Boosted by a strong industrial sector, Queretaro is a fast-moving market for real estate development,” says Elosúa. “Each of our developments there sells 10 houses per month, so with eight subdivisions we sell almost 80 houses per month.”
After gaining traction and confidence in the Queretaro market, U-Calli was then invited by Inmobilia to develop a mega project in the still-underdeveloped city of Merida. “Country Towers was our first project in Merida. The two towers were the tallest residential towers from Puebla to Panama. Each tower had 33 floors, breaking the horizontal city’s paradigms,” Elosúa explains. Country Tower units were priced at over MX$6 million each, aiming to cover the needs of Merida’s upper economic level. Elosúa says that the project was not as successful as expected and even though Merida is considered among the best places to live in Mexico, there was not enough market for the products they were offering. “If we decide to construct another project in Merida, we would definitely aim to target the middle-income market,” he adds.
The company’s latest venture was alongside Miami real estate mogul Jorge Pérez, of Related Group, and Inmobilia. Together, Inmobilia and U-Calli acquired a Spanish developer that had gone bankrupt in Puerto Cancun to create a new type of high-end residential project. After Inmobilia and U-Calli had turned the company around, they invited Pérez to join the venture. The SLS Tower in Cancun has 120 apartments with hotel services, and 110 were sold before the construction was even started. Elosúa says the product sold quickly and was a hit among both national and international buyers.
U-Calli has investments in Merida, Cancun, Queretaro, San Miguel de Allende, Saltillo, and of course Monterrey. Although the company continues to look for new opportunities throughout the Mexican territory, Monterrey still plays a vital role in its portfolio. Like Guadalajara and Mexico City, Monterrey has experienced an accelerated and uneven growth that has led to various mobility and security issues. “Monterrey has grown horizontally and it has not done so in an orderly fashion with a joint vision among municipalities. There is no master plan that integrates all the necessary infrastructure,” says Elosúa.
Recently the downtown Monterrey area has caught the eye of investors and developers alike that want to regenerate the urban landscape and build upward. Elosúa is a supporter of this plan. “I have always thought that we need to recycle cities and start by regenerating the city centers that are inhabited. The infrastructure and homes located in the downtown area could be optimized and given a different air,” he says, while also warning that developers must learn from past mistakes and carry out the adequate planning beforehand. “Before developing in this area, we must first make sure the right infrastructure exists or if we need to construct and rehabilitate its basic infrastructure.”
The Mexican real estate sector is a labyrinth to navigate as it involves many variables but as an architect, Elosúa says the ultimate goal of real estate and architecture is to serve a greater purpose. “Architecture’s function is to serve mankind; if it fails to do so then it is a sculpture.”