Supporting Infrastructure to Improve Project ViabilityWed, 11/01/2017 - 13:10
While many residential developers have their eyes fixed on the large urban centers like Mexico City, Guadalajara and Monterrey, Inmobilia prefers to focus on the lesser- served growing cities like Veracruz, Villahermosa, Merida, Campeche, Cancun and Tulum. “Our company is primarily focused on medium-sized cities with a population over 1 million,” says Roberto Kelleher, the company’s CEO. “We prefer these areas over Guadalajara, which has a great deal of competition.”
The company has a large pipeline of projects for the coming 15 years. It is developing a 100ha project in Tulum, the design for which will be completely eco-sustainable. The development includes a hotel, housing and a shopping center. In Cancun, Inmobilia has a large luxury residential complex called Novo Cancun, where it has already completed the sale of SLS Cancun, a hotel and residential tower. It is about to start its second development of this kind in Cancun, while in Merida, its mixed-use development Via Montejo is planned to include 1,100 apartments.
Inmobilia strives to understand the population of the cities it develops projects in. In Tulum, 65 percent of its clients are foreign and the rest are national. Of the foreigners, 80 percent are Europeans. Playa del Carmen and Tulum tend to attract more Europeans while Cancun is composed 60 percent of nationals and 40 percent foreigners, mostly from Canada and the US. On the other hand, half of Merida’s market comes from other parts of the country, such as Monterrey and Mexico City. This flow of internal migration to Merida is made of people in search of a better quality of life, and this is a need Inmobilia is eager to meet.
Although developing in these smaller cities means Inmobilia comes across fewer problems related to land availability, there are other considerations. “There is a scarcity of land in larger cities but an abundance in smaller towns, and most often the terrain requires a heavy investment in infrastructure,” he says. For instance, although Inmobilia’s 400ha Yucatan Country Club project was categorized as the best residential project in Latin America, as a result of its complexity and size, the process was similar to building a small city. “We needed to consider investment in lighting, water-treatment plants and access,” he says.
This infrastructure gap normally requires a great deal of communication and cooperation with government authorities. “We usually negotiate with governmental authorities at the municipal, state and federal level to co-invest with us in infrastructure that can help both the city and our projects.” In the past, he says Inmobilia has donated land to the government to improve both the viability of its projects and access routes. “Projects need to be in an optimal location and we invest a great deal in road infrastructure,” he says.
Inmobilia not only cooperates with the public sector but also works a great deal with complementary companies in the private sector. “Partners are important because they complement our skills and abilities to make sure our projects are the best in the market,” he says. “As developers, we specialize in vertical residences, luxury housing and creating communities. We fill in the gaps with strategic alliances.” For example, when developing Via Montejo, Inmobilia felt Thor Urbana was the best choice with which to create not just a fashion mall but a lifestyle center. It also has an international partnership with Related Group in Miami, the biggest luxury housing group in the US and is using this expertise to create projects in Cancun, a city that is similar to Miami.
Inmobilia executes a thorough socioeconomic study of the clients to understand them and their financial needs. Only then does it create a credit plan through its alliance with Banorte. “The plan provides clients with a fixed-payment scheme, for instance MX$30,000 on a monthly basis for 30 years,” Kelleher explains. This payment scheme can work well for millennials, and he says the younger generation is one demographic the company is following closely. “Most millennials are not interested in buying houses. They are getting married later and thinking less about families,” he says. “This means that people up to 35 years old prefer to live in apartments that are 45m2. We are developing innovative projects using these trends as a springboard.”