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Mexico’s Growing REIT Market Boosts Real Estate Investment Nationwide

13 November, 2016

The Wall Street Journal reported Nov. 1 that real estate investment trusts (REITs) (known as FIBRAs in Mexico),have been gaining traction recently and are becoming a “major channel of public capital into the country’s property sector.” Since launching for the first time five years ago, Mexican REITs have improved their levels of transparency and overall management structures, and analysts are already predicting that the Mexico real estate sector will benefit from a victory by Hillary Clinton over Donald Trump in the 2016 U.S. Presidential race.

“Mexican REIT share prices rose after each of the three presidential debates,which Mrs. Clinton is widely believed to have won,according to an event study by the Advisory Group at real estate research firm Green Street Advisors,” wrote the Wall Street Journal. “FIBRAs offer investors an easy way to own Mexico real estate and pick up an attractive dividend at the same time.”

The reason for this is built in, because similar in structure to REITs in the U.S., FIBRAs get to avoid paying corporate taxes as long as they distribute at least 95 percent of their income to shareholders as dividends. Today, there are 10 equity FIBRAs in Mexico that have a total market cap of $13.3 billion and most of them went public during 2013 and 2014. This number is an impressive increase from the one FIBRA that entered the market in 2011 with a $300 million market cap. 

“An index of eight Mexican FIBRAs showed total returns averaged 71 percent in 2012,10.4 percent in 2013 and 20.8 percent in 2014,according to S&P Global Market Intelligence,” wrote the Wall Street Journal. “As multinational automakers, aerospace companies and other industries set up shop in Mexico, demand increased for office,industrial manufacturing and distribution space, as well as business traveler hotels in Mexico.”

Real Estate Home Prices Stable in Mexico

Fitch also reported positive news about Mexico’s real estate investment market, which is really booming in places like Playa del Carmen, Puerto Aventuras, Cancun and Tulum, where luxury resort-style living and amazing vacation home rentals are driving the market. 

“In Mexico, supply-demand fundamentals and continued macroeconomic stability will support stable residential home prices,” Fitch wrote. “Low interest rates should continue to support mortgage affordability and demand for housing.”

Want to know more about real estate investment in Mexico?  

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Topics: Real Estate Mexico