In Mexico, there is a historic increase in Foreign Direct Investment (FDI) thanks to the confidence that foreign investors have in the solidity of the Mexican market. Today on the CREA blog we will tell you about the progress in FDI and how this increase will benefit the real estate market in 2024.
Data on Foreign Direct Investment in the Mexican real estate sector
According to data from the Ministry of Economy, the total Foreign Direct Investment (FDI) for the real estate and rental sector was 2,700.4 million dollars in the period from 2018 to 2023. This amount represents 1.3% of the total FDI of the economic activities in the same period.
2019 was the year that had the highest FDI in this sector, with 924.4 million dollars, which represents 34.2% compared to the total of the years from 2018 to 2023.
At the end of 2023, FDI was 36,058 million dollars, an increase of 27% compared to 2022, in which 28,414 million dollars were reported, which represents a historical maximum in the series. This increase is due to economic stability, competitive advantages for investors and the business environment in Mexico, which confirms confidence in the reinvestment of profits.
The main federal entities with FDI in the real estate and rental sector between 2018 and 2023 are:
- Mexico City 67.6%
- Quintana Roo 7.3%
- State of Mexico 5%
- Baja California Sur 4.7%
- Nuevo León 3.2%
The countries that have contributed the most to FDI from January 1999 to March 2024 are: the United States (5,793 million dollars), Spain (1,538 million dollars) and Canada (965 million dollars).
FDI in the real estate sector in 2024
During the first quarter of 2024, around 7,668 economic units of real estate agencies and real estate brokers were registered. FDI in this sector was 69.7 million dollars, of which 56.4% was from intercompany accounts, that is, debt transactions between Mexican companies with FDI in their share capital and other related companies residing in foreign countries.
13.3% of FDI in 2024 was from reinvestment of profits, which, although not distributed as dividends, does represent an increase in the capital resources of the foreign investor.
What awaits the Mexican real estate market in 2024?
The remainder of 2024 presents interesting challenges and opportunities for investors. In the first instance, a panorama of sustained growth is expected thanks to the support of economic projections and investment trends focused on nearshoring, tourism and infrastructure.
Investment growth due to nearshoring
One of the trends that promises a positive scenario is nearshoring investments. According to the Mexican Association of Real Estate Fibers (AMEFIBRA), the 500 companies that arrived in the country due to the nearshoring phenomenon have increased the demand for industrial spaces, which in turn could have an effect on the increase in residential developments.
Increase in international tourism
During the first quarter of 2024, income of 9,806.8 million dollars from international tourism was reported, which represents an increase of 9.7% compared to the same period in 2023. For its part, data from the INEGI International Traveler Survey indicate that, in the same period, period, a total of 11.2 million foreign visitors arrived in Mexico, which represents an increase of 6.9% compared to 2023.
This increase in tourism provides opportunities for the development of properties focused on the hotel, commercial and entertainment sectors.
Sustainability and green constructions
Sustainability has become a relevant factor in the real estate market, not only due to a growing environmental awareness that demands sustainable and ecological constructions, but also in so-called green bond financing.
How does this scenario benefit investors?
The Mexican real estate market is being driven by trends such as nearshoring and the confidence inspired by the strength of the economy. Additionally, the growing demand for industrial real estate opens up new opportunities for investors and developers to take advantage of the trends.
To make the most of these opportunities, having feasibility studies, solid financial models and the advice of real estate consultants is key to evaluating the viability of projects, anticipating market demand, competition, possible risks, regulations, among others. related factors.
This is the time to invest in the Mexican real estate market
The Mexican real estate market presents a panorama full of opportunities for investors looking for profitable projects. If you are one of them, you have come to the right place: at CREA Soluciones we are real estate consulting, we increase our clients’ profits with services such as feasibility study in real estate, mixed-use development, commercial appraisal services, real estate market study, among others.
Browse our website, discover the services we offer to increase the profitability of your project. For more information, write to us through the contact form, to the email info@creasoluciones.com.mx or call us at 5552778044 where our specialists will be happy to assist you.
