Real Estate Regulation: Catalyst or Risk Factor for Investment

The increased demand for industrial parks in Mexico, driven by nearshoring, requires significant new investment in construction. However, the pace of this investment is influenced by regulatory hurdles. For developers and investors, a predictable and efficient regulatory framework is a key factor in their decision-making process. 

Experts stress the importance of avoiding over-regulation of the real estate industry to avoid delays in project construction. "Over-regulation in the real estate market is a direct barrier to investment. When we approached Asian companies, one of their primary requirements was a four-month timeline to secure permits and start building their industrial facilities,” said Karim Oviedo, President, Mexican Association of Real Estate Professionals (AMPI). 

A primary concern for industrial park developers is the process for securing permits and access to critical utilities, namely energy and water. Developers report that obtaining the necessary approvals for a high-voltage electricity connection from various agencies can be a process with variable timelines. Similarly, a 2024 survey of Mexican Association of Private Industrial Parks (AMPIP) members by BBVA identified inefficiency in the authorization of energy generation and cogeneration as a significant hurdle. Securing water rights proves challenging, as well, particularly in the country's arid industrial regions. This uncertainty can create financial risk for projects and affect the availability of industrial space for potential tenants.

To improve regulatory certainty, private sector groups have proposed several actions focused on creating a more transparent and efficient administrative framework. A frequently cited proposal is the need to streamline the permitting process. The establishment of a federal single-counter for large-scale industrial projects is one of the suggestions, which could reduce timelines by coordinating the requirements of different levels of government. The most recent address given by authorities was Mexico City’s single counter for real estate projects. However, this initiative is more focused on housing and retail assets, as reported by MBN.  

Communication to Determine Sector Needs

Ongoing communication between the government and the private sector is another proposed method for aligning regulations with market requirements. This involves creating formal channels for public-private dialogue, where government agencies can meet with industry associations like AMPIP. Through such channels, developers could provide data on industrial demand and offer feedback on the impact of existing regulations. This collaborative approach would allow the government to formulate policies and infrastructure plans that are more closely aligned with the needs of the market. "To capitalize on nearshoring, we must urgently strengthen our energy, water, and logistics infrastructure. The private sector can no longer be just a spectator: it is a fundamental actor,” said Luis Méndez Jaled, President, Mexican Chamber of the Construction Industry (CMIC).


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