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THE PERFECT STORM
by Bruce D. Greenberg, MAI, SRA, ASA

	Bruce Greenberg

Real Estate cycles in Mexico have a direct relationship to what happens internationally and more specific in North America.

As I have written before Western Mexico (from Iztapa/Zihuatanejo to Tijuana- the Sea of Cortez/Pacific Ocean region) is most directed affected by the socio, economic, and political effects of Western United States and Canada. While the drive in corridors of Tijuana/Ensenada, San Felipe/El Gulfo; Puerto Penasco/San Carlos are directly affected by Southern California, Arizona, New Mexico and Western Texas.

Since 9/11 Mexico has been a “Field of Dream” for real estate developers, buyers and sellers. Real Estate is all about cycles (upward, downward,and/or stable).

In the United States and in particularly Western U.S., we are presently concerned about;
• Slumping housing prices;
• Overbuilt housing supply (vast volume of new and resale market homes sale);
• Upcoming national Presidential election;
• Increased bankruptcies;
• Sub prime mortgage dilemmas and in Mexico;
• Oversupply of new housing stock;
• Oversupply of existing resale housing stock and;
• “Smarter” international buyers

So, what is a developer to do to increase sales volume:

Work with the federal, state, and municipal governments to improve constructing infrastructure of utilities, roadways/highways, airports, and the like. All vehicular border crossings back to the United States must become more efficient. This is a must to increase the volume of consumers in and out of Mexico!

Since, 9/11 vast real estate developments have occurred in Mexico. The Mexican government under Presidente Fox and Calderon have assisted the real estate sector/industry by modernize and improving airports, and improving the 4-lane federal highway systems leading south from the U.S

Over the same time period business/real estate, sectors the United States entered Mexico to increase safe practices for the consumer from buyer including;

• Title insurance/escrow services;
• Financial/mortgages;
• Property Insurance services;
• Valuation/consulting services and;
• Legal services

These bi-national/bilateral services have been put in place and slowly but surely accepted by the Mexican real estate development community to accelerate sales.

Back to real estate cycles, we are currently in a downward cycle- so what in Mexico can developers do to assist in “re-accelerating” sales volume; Value is comprised of factor elements!

1. Socio;
2. Economic;
3. Political (legal) and;
4. Physical

Socio- developers need to be proactive in their respective communities; be visibly charitable and give to their “favorite” non-profit cause;

Economic - developers need to survive the domain cycle by driving sales by absorption not price! Project bank financing and or strong investment parties are necessary to give strength and stainability to developments.

Legally - developers need to insert American style real estate safe postures.

Physically- Americans want the feed of Mexico (exterior); blue and green (vast landscaping and water features, but demand US finishes inside their home. There are 75 million baby boomers in the US; 30 millions Americans will visit Mexico in the next 12 months! Mexico leads the world in timeshare sales (convert timeshares buyers into full time real estate). So CAPTURE is the road to success.

This cycle is a cycle Mexico real estate will continue to blossom so take this adjustment period as a time to re-evaluate your investments- No there will be no perfect storm- only heavy rain clouds- then clear skies will appear again. Make sure your project will be at the end of the rainbow after the monsoon ends!
For more articles and information on real estate in Mexico
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