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Bloomberg Reports Mexico Infrastructure Spending to Hit $70 Billion

07 November, 2012

Annual infrastructure spending in Mexico will rise by at least 56 percent in the coming years, according to a report by Bloomberg Businessweek. The numbers are expected to exceed $70 billion, as the Mexican federal government continues to pour additional funding into improving the country’s roads, ports, water supply and energy production capabilities.

“Economic growth and financial stability could help Mexico boost infrastructure investment by as much as two percentage points of gross domestic product from the current level of $45 billion to $50 billion a year,” stated Alonso Quintana, CEO of Empresas ICA,Mexico’s largest construction company. “We’ve been in the range of about 4.5 to 5 percent of GDP these past years, it’s been quite good actually, but I think we can go to $70 billion a year of investment in infrastructure.”

ICA has experienced a 43 percent gain in its stock price this year, mainly due to expectations of an additional increase in the nation’s infrastructure projects by incoming President Enrique Pena Nieto, who will take office Dec 1. The country’s rapid infrastructure improvements have already been excellent for Mexico real estate throughout the country, especially in popular resort areas like Cancun and Tulum, which are located in the Riviera Maya. And with the additional improvements that are planned for the coming years, it is only a matter of time before real estate throughout the country experiences yet another significant increase in value.

Empresas ICA is based in Mexico City and has recently been exploring a series of strategic alternatives for its homebuilding unit, which could involve the sale of a majority stake in this part of the company. Currently, ICA is focused on providing a substantial return on investment for shareholders and is on schedule to complete a dam project in the western part of Mexico for the state-owned Federal Electricity Commission utility.

Topics: Investment Bloomberg Infrastructure