Fernando Amescua
Director of Investor Relations at KIVA Grupo Inmobiliario
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Insight

New Generations Demand New Mixed-Use Spaces

Thu, 11/01/2018 - 10:12

Mexico’s most important real estate markets have been Mexico City and Monterrey for many years but another state is gaining strength. Guadalajara has experienced a real estate boom and institutional investors have rushed in to take advantage of commercial opportunities. But there is also room for smaller investors to take part, says Fernando Amescua, Director of Investor Relations of KIVA Grupo Inmobiliario.
“The entry barrier for investors in a residential space is much lower than that of a commercial space due to lower price tags. Corporate buildings and commercial projects have always been in the hands of larger developers,” says Amescua. “The essence of KIVA is to eliminate that entry barrier so individual investors can participate in commercial and corporate projects that give them access to higher capital gains.”
KIVA specializes in the development of mixed-use projects that contain commercial and corporate components, through smaller-ticket prices for investors. But the key to a project’s success is not in entering a completely new market. Instead, KIVA looks for locations that are surrounded by other offices and commercial spaces to create synergies and in return increase traffic and boost capital gains.
The company is developing projects in Jalisco, Queretaro, Guanajuato and Nayarit, but the Guadalajara market continues to show positive signs of growth. “The office market in Guadalajara has grown steadily over the past few years. Companies were accustomed to having their offices in homes or apartments,” Amescua says. A factor that has influenced this growth is the change in generations of family-owned businesses. “Guadalajara has always had a strong entrepreneurial spirit and that spirit has driven the success of many family-owned companies. These companies are now far more institutionalized, provoking them to move into corporate offices,” says Amescua. When family companies are passed down through generations, they tend to become more institutionalized and look for more collaborative environments and efficient locations to host their offices.
The Guadalajara market still has a great deal of room to grow in comparison to that of Monterrey and Mexico City when it comes to office spaces. Guadalajara is also re-densifying its downtown areas to foster the development of vertical and mixed-use projects just like many other cities across the country. “The urban sprawl of Mexican cities has grown in a disorderly way, without long-term infrastructure planning. Infrastructure development is usually thought out for about five or six years and the lack of long-term planning directly impacts the quality of life of future generations,” says Amescua. An increase in mobility problems and extremely long commutes have pushed governments to reconfigure their zoning plans to bring people back into the cities.
Changing zoning plans to boost vertical and mixed-use development is good for real estate developers and allows them to create new projects in areas that had become too expensive. “People want to have shorter commutes and the current governments have tried to provide certainty to zoning permits to promote the re-densification of some areas. The city of Guadalajara has made these changes to its zoning plans and is pushing vertical development of residential, commercial and office projects,” Amescua says.
With new opportunities on the horizon, KIVA will continue looking for projects that will provide its investors with the highest returns while also having a positive impact on their surroundings. “If our projects are quality projects that offer our investors a hefty capital gain with legal certainty, we will keep developing. We are not interested in being the largest developer; we want to create winning projects,” Amescua says. The company’s newest mixed-use projects include the Avania and Bravante Business Centers in Guadalajara.