Mexico is recognized as one of the most attractive destinations for foreign investors due to its strategic location, developed infrastructure and specialized workforce, among other factors.
In this year 2024, production trends have experienced significant changes, driven by phenomena such as nearshoring and the implementation of the Agreement between Mexico, the United States and Canada (T-MEC). These factors have further increased the country’s attractiveness for real estate investment, both domestic and foreign.
In a dynamic context, monetary policy actions have been oriented towards promoting stability in the markets and creating an environment conducive to promoting investment and economic competition.
This approach has given positive results, especially in the case of FIBRAs, with a growth in the profitable area of more than 20% during the period 2021-2023. Likewise, the value of investment in real estate assets has experienced an increase of 22%, which is equivalent to 800 billion pesos in more than 2 thousand professionally managed properties throughout the national territory.
As of the first quarter of 2024, the FIBRAS reported an investment of 382.6 million dollars (6,271 million pesos) in the purchase of warehouses and parks, mainly in the north and center of the country, and strong investments are expected for the remainder of the year.
According to Josefina Moisés, General Director of AMEFIBRA, “2024 is expected to be full of opportunities for the real estate sector in Mexico… We will see many developers incorporating sustainable practices and new technologies continuously, in all stages of the process, as well as as if responding agilely to the changes in preferences set by the market.”
Today on the CREA SOLUCIONES blog we will give you the key reasons to invest in the industrial sector.
Strategic location
Location is a hugely important factor in determining property value as it influences security, growth potential, market trends, connectivity and appeal to end customers.
Mexico’s logistics infrastructure is made up of 49 customs offices, 58 terminals and ports in the Pacific Ocean and 59 in the Gulf of Mexico, as well as 15 highway corridors. This brings many logistical benefits that are highly attractive for industrial real estate investment, especially for the manufacturing and distribution sectors.
According to the study “State Competitiveness Index 2022” carried out by the Mexican Institute for Competitiveness (IMCO), the best states to invest, based on factors such as salary level, working conditions, safety, health services and strategic location are :
- Mexico City
- Queretaro
- New Lion
- Coahuila
- Baja California Sur
- Jalisco
Regarding nearshoring, the states in the central and northern regions of Mexico have better conditions to attract investments, this is explained by their deployment of logistics and energy infrastructure, a population with better access to education and health and a better integration of the manufacturing industry with the outside.
Attractive Foreign Direct Investment (FDI) for various sectors
The Statistical Report on the Behavior of Foreign Direct Investment (FDI) in Mexico, carried out with official data from the Federal Government, indicates that at the end of 2023 the investment amounted to 36 thousand 058.0 million dollars (mdd), which represents the highest figure discharge ever recorded.
The main sector that invested in Mexico was the manufacturing industry, for an amount of more than 18,081 million dollars; followed by other industries such as auto parts, metals and food and beverages that have also invested in industrial zones in the country. This increase is largely due to nearshoring.
By economic sector, the manufacturing industry and financial services concentrated 70.09% of the investments and to a lesser extent the transportation sector with 6.33%.
According to the report, at the end of 2023 the states with the highest investment were:
- Mexico City 31.05%
- Sonora 7.5%
- Nuevo León 7.04%
- Jalisco 5.62%
- Chihuahua 5.5%
By country of origin, 37.83% of the investors came from the United States, with 13,640.9 million dollars, 10.47% from Spain with 3,774.1 million dollars; and 9.63% from Canada with 3,472.0 million dollars.
Mexico is the second exporting economy in Latin America
According to the 2023 Statista report, Brazil, Mexico and Argentina are the largest economies in the export sector. In that year, in Brazil the amount of goods and services produced reached an approximate value of 2.08 billion dollars, while Mexico’s GDP was more than 1.66 billion dollars and Argentina’s was 641 billion dollars. Dollars.
On the other hand, Mexico has a network of 14 trade agreements, including the USMCA, which open the doors to more than 50 countries to foreign trade with policies to regulate the labor market, electronic commerce, the integration of SMEs, the environmental protection, price competitiveness and merchandise regulation.
All of this, together, makes Mexico an attractive country for industrial investment, since it gives manufacturing companies certainty of entering a solid market with opportunities to import and export products.
Tax incentives for investors
In addition to the previous point, on the northern and southern border of Mexico there are areas where VAT is reduced from 16% to 8% and ISR from 30% to 20% so that companies have greater profitability in purchasing goods and foreign trade operations.
There are also other tax incentives directly for real estate investors, such as:
- Tax deductions related to the operation, administration and maintenance of properties, such as mortgage interest, property repair, property taxes, among others.
- Deduction of residential or industrial business expenses such as office spaces, advertising, accounting or legal fees, acquisition of equipment, among others that reduce the tax burden and can be included in the tax refund.
- Amortization of investment properties to deduct the value of the property over time.
- Exemption from Capital Gains Tax on Home Sales if the corresponding requirements are met.
Cultural diversity and profitability
Mexico is a country with great cultural diversity. According to the 2020 Population and Housing Census, one million 168 thousand foreigners lived in Mexico. For its part, data from the Government of Mexico reveal that during the first two months of 2024, 4,377,000 international tourists arrived, exceeding tourism during the same period of 2023 by 6.7%. In addition, foreign currency income was 5,914 million dollars, 8.6% more than in the same period of the previous year.
This diversity is key in the field of real estate investment since it increases the probability of having stable returns, reduces the risks associated with investing in a very specific market, and also allows investing in different types of properties and accessing various financing options.
Challenges for Mexico in 2024
For Mexico, receiving the demand for industrial space due to nearshoring presents several challenges, especially in terms of environmental care and sustainability.
- Comprehensive Industrial Policy: Mexico needs an industrial policy that promotes growth in all regions of the country and encourages the integration of value chains at the national level. This implies a significant investment in transportation and logistics infrastructure, as well as guaranteeing an electricity supply preferably from clean sources.
- Research and Development: A strong commitment to research, science, technology and innovation is required to add greater value to national production. In addition, it is essential to advance the digital transformation of business models and processes, as well as government procedures and services to improve their agility and efficiency.
- Environmental Impact: The increase in industrial activity can generate greenhouse gas emissions, deterioration of air quality and increased demand for water in the affected regions. This can contribute to climate change, biodiversity loss and waste generation, so measures are needed to mitigate these impacts and promote sustainable practices.
- Talent Development: The availability of qualified talent is crucial to the success of the industry. The challenge is to train and train enough people in areas such as technology, engineering, innovation, logistics and services. This involves adapting study plans to market needs, as well as investing in infrastructure and academic quality to train the required professionals.
Trust CREA and make your investment grow
What did you think of the outlook for 2024? CREA SOLUCIONES is a company dedicated to real estate consulting, since 2004 we support and promote the planning of better cities through an exhaustive market and financial analysis for real estate developers in commercial, industrial, residential, hospitality, health, educational, among others.
We are pleased to announce that on May 6 our Report on Industrial Parks at the National and State Level as of the 1st quarter of 2024 will be available.
Request more information about our services such as real estate repositioning, real estate market study and mixed use project through the contact form, to the email info@creasoluciones.com.mx, to our WhatsApp, or call us at 5552778044. A specialist will be happy to assist you.
