Reclaiming Downtown Monterrey to Deliver Quality of LifeThu, 11/01/2018 - 09:48
Q: What opportunities did Proyectos 9 identify that prompted the company to develop downtown Monterrey?
A: The accelerated economic growth of the region prompted the construction of real estate in Monterrey’s periphery because it was easy to build in that area. This caused a swift but disorderly growth on the outskirts, which eventually caused environmental and traffic chaos. Proyectos 9 realized there were no new developments in the center of Monterrey because most companies were attracted to the inexpensive land on the outskirts of the city.
Q: What are the main obstacles that you have faced to develop real estate in this area of Monterrey?
A: There have been several challenges, land ownership being one of the most significant. Many properties in downtown Monterrey have been in families for generations and consequently there are legal ownership problems as family members contend for them when an owner dies without a will. At the same time, there were no local government incentives for real estate developers, such as zoning and land use permits.
The fact that there were many abandoned buildings in the center of Monterrey caused several issues when crime rates went up in 2009. These buildings were often used by criminal organizations, so economic activity dropped abruptly at night in downtown Monterrey. Thanks to projects such as Pabellón M, the city center is starting to recover and attract more construction projects. There are around 30 significant projects in the area that will completely transform downtown Monterrey in the next seven years.
Q: How is the local government working with Proyectos 9 to support the rejuvenation of the Monterrey city center?
A: There has been a great collaboration between us and the authorities. This includes basic concepts such as efficiency in delivering permits as well as more complex steps such as studies of the area’s infrastructure and urban transportation offering. This collaboration has translated to more sophisticated guideline models, for instance. We take part in roundtables with the government in which we analyze urban master plans from decades ago in order to design new master plans that consider the new needs that an area may have. New flexibility guidelines and tax incentives have also been created. For example, the area surrounding subway stations are now unlimited mixed-use areas so that skyscrapers can be built and the Monterrey city government has implemented mechanisms to remit and reimburse some taxes so that this capital is invested in street furniture, parks and other infrastructure.
Q: What is Proyectos 9’s strategy to finance its developments?
A: Proyectos 9 has several investment models. We have a strategic alliance with a private investment fund that takes part in all our real estate developments. That enables us to purchase land and fund construction operations. Once our projects have achieved a level of maturation, Proyectos 9 has solid leverage with Fibras that purchase finished projects that are already stabilized and generating revenues. We do not need to raise CKDs or publicly list in the stock exchange since we are supported by private investment funds and we can effectively balance the capital risks of our projects.
Q: What new real estate developments are part of Proyectos 9’s pipeline?
A: Our vision is to develop 600,000m2 of construction in the center of Monterrey up to 2H22. This offering will include around 100,000m2 oriented to offices, 50,000m2 for commercial use, 500 residential units, 450 hotel rooms, a couple of educational establishments and a hospital. We have developed a land bank to purchase spaces in the areas surrounding the Constitución 999, Torre 411, Centro Cuauhtémoc, Centro Campo and LoLa to develop Distrito Moca. We have a very specific mobility and tree planting plan for this corridor. It will offer both new and secure mobility opportunities for people that come to the area to work and will offer several amenities for people who live there.