At Riviera Partners, we are seeing an increase in activity from Mexican buyers – both individuals as well as developers – coming back into the market. They are actively looking to take positions in well-priced real estate, as they sense that this is the bottom of price adjustments in this region. With the Mexico economy strong, we believe Mexican buyers will lead the return to investment in the area, paving the way for their Canadian and U.S. counterparts.
Part of their leading the return to purchases is due to the relative strength of the Mexican economy. Their economy has show consistent signs of positive recovery and an increase in activity in both manufacturing orders and exports, two key contributors to Mexico’s GDP. The Mexican central bank has forecast for the end of the second semester an average growth of between 4.0 to 5.0%, as well as the creation of between 525,000 to 625,000 new private sector jobs by year-end. Notwithstanding some concerns and risks for the economic grow, the consensus of analysts are calling the end of this recession in Mexico. The Mexican Bolsa (stock market index) continues to move in positive territory, having registered consistent gains since September 2009.
Mexico did not experience the same financial meltdown as the U.S., but merely reacted to the problems of its northern neighbor. Mexico’s banks and insurance companies emerged largely unscathed from the global crisis thanks to proactive supervision by regulators and the strict regulations put in place following a severe domestic financial crisis in 1995 that saw many of the country’s banks fail or go into government receivership. To ensure its institutions’ continued strength, the Mexico government recently instituted the Financial Stability Council. It held its first meeting in early August, just two weeks after President Felipe Calderon issued the decree establishing the body, whose main task is to watch for systemic risks in the country’s already heavily regulated financial system.
Today, all major Mexican banks are well capitalized and profitable, although somewhat reluctant to lend even as the economy is forecast to grow between 4% and 5% this year. Bank profits rose 15% year-on-year to 37.28 billion pesos ($2.93 million) in the first half of 2010, after growing 11% to MXN62.06 billion last year.
Mexico boasts the 12th largest economy in the world and, according to the World Bank, and it has the highest Gross National Income per capita in Latin America. Goldman Sachs’ recent study of emerging economies predicted that by 2050 Mexico will hold one of the largest economies in the world, alongside China, United States, India, Japan and Brazil.
In a word, the Mexico market is resilient, with the Mexico economy strong. Although the northern news media is focusing their cameras on violence resulting from the Mexican government’s aggressive war against drug traffickers, there is another story to be told in Mexico. It’s a shame positive news isn’t nearly as attention-getting as sensational news. Which, according to Mexican buyers – is just fine for them. It gives them more time to take advantage of current opportunities before their northern neighbors realize the opportunities present here, and return to the game.
Tags: MarketUpdate, Mexico Real Estate, Punta Mita, Punta Mita Real Estate, Real Estate, Real Estate for Sale