Руководитель проекта «InvestEL» Егор Левченко: рынок недвижимости Мексики - статистика и лучшие регионы для инвестиций
Yegor Levchenko, InvestEL project manager: real estate market in Mexico: statistics and the best regions for investment
InvestEL Project Manager Yegor Levchenko (known in professional circles as a Mexican) gave an interview about investing in real estate in Mexico.
Egor, good afternoon! Tell me, it’s probably not for nothing that you are called a Mexican, and you know better than anyone else about the real estate market in Mexico.
Why is Mexico more attractive than other countries in this regard?
Far Mexico has an attractive real estate market in terms of investment. It is not for nothing that residents of the United States and Canada are actively acquiring apartments and houses in a neighboring country. In Mexico, everything is simply much cheaper, including: food, utility bills, and, in fact, the real estate itself. All this supports the high demand for Mexican real estate even during a pandemic.
Some statistics about the real estate market in Mexico
The residential real estate market has also succumbed to the negative impact of COVID-19. In 2020, the national house price index increased by only 1.79%, while in 2019 - by 4.58%, or in 2018 - by 4.32%. In the last quarter of 2020, the cost of residential properties increased by only 0.43% compared to the previous quarter.
It should be noted that the real estate market in Mexico has a high level of stability. Over the past 10 years, prices on it have not changed much. It is stability that is one of the key factors that attract investors from the USA and Canada to the country. Citizens from these two countries especially often purchase objects in resort areas. In 2019, according to Forbes, more than 1 million Americans lived in Mexico, and more than half of them owned real estate.
Also, demand in the Mexican market is supported by the middle class (14.6 million), which, according to experts, makes up almost 50% of the total number of households. According to forecasts, by 2030 their number will grow by another 3.8 million. The Lamudi survey showed that among Mexicans it is not customary to rent housing (18%), the majority of the country's residents want to own real estate (82%).
The yield of rent in Mexico is moderate - at the level of 4.9-5.4%, and the average cost per square meter in Mexico City is about $3,000 (Globalpropertyguide).
The most affordable housing in the states: Tamaulipas ($36,800) and Durango ($37,200).
Buying property in Mexico: important points
Foreigners can freely purchase property in Mexico. However, there are a number of features in the local market that you should be aware of when planning to become the owner of a house, apartment, land, etc. here.
Ejido land (ejido)
Almost all the stories that relate to the confiscation of land from foreigners relate specifically to the land of ejidos. The latter refers to agricultural land owned by the indigenous population. Most of this land is located on the seashore and is therefore popular with foreign investors.
The purchase of ejido land requires the consent of all members of the community. This is a rather complicated and time-consuming process, which simply cannot be organized without the help of specialists. Yes, and only reputable law firms will undertake such work.
Restrictions for foreigners
Foreigners can purchase any residential property in Mexico. It can be owned either personally or through a trust. However, a number of objects still cannot be acquired into personal property. We are talking about real estate, which is located 50 kilometers from the sea and 100 kilometers from the land border.
Until 1993, foreigners could not buy real estate in such regions at all. However, in order to attract foreign investment, the Mexican government allowed the use of trusts to purchase real estate in special zones. Such trusts are called fideicomiso. They must be renewed every 50 years.
The role of the notary
The notary in Mexico is appointed by the governor of the state. He does not act as an interested person of the seller in the transaction, but represents the buyer. This allows you to save on the services of a second attorney. The latter is used in Mexico for non-routine transactions, such as buying real estate through a corporation.
The notary checks the property in the register, prepares the documents for the transaction, enters the purchase information into the register, enters the title, withholds taxes and fees.
The official language in Mexico is Spanish. It is on it that office work is carried out, laws are issued and, of course, a contract of sale is drawn up. At the request of the client, the second copy of the contract can be drawn up in another language: Russian, English, French, etc.
However, it should be borne in mind that in the event of a conflict between the Spanish version and the other language version of the treaty, the former will take precedence.
Why is it profitable to invest in real estate in Mexico right now?
The purchase of Mexican real estate did not particularly attract investors from Russia, Ukraine, Kazakhstan due to the large distance between the countries. However, the pandemic gave a significant impetus to the development of online services, and now it has become much easier to buy real estate even so far away. Therefore, if there are profitable investment proposals in Mexico, we recommend not discarding them, but carefully studying them.
What is the advantage of real estate in Mexico:
• affordable price - the cost of housing here is lower than in the US or Canada;
• great tourism potential - two sea coasts, mountains, ruins of ancient Mayan cities, jungle, beautiful nature;
• simple purchase procedure;
• a high level of security (however, foreigners are not recommended to appear in certain areas);
• the cost of living is lower than in the US and Canada;
• no inheritance tax;
• the right to a residence permit.
The most attractive regions for investment in Mexican real estate
Among all the regions of Mexico, experts have identified several of the best areas for investment:
In 2020, Forbes named Tulum the best place in Mexico to live and live. This strengthened the reputation of the city, both in Mexico and abroad. Tulum attracts tourists due to its ancient ruins, beaches, and lack of hotels and apartments, which increases the demand for rental housing. In addition to the above, the government plans to build a railway that will connect the city with another part of the country, which will increase the investment attractiveness of the region.
Thanks to the protective measures of health authorities, the growing demand for distance education and work, many people began to leave urban centers for the regions. And it is Morelos that is one of such attractive places to live and work.
A wonderful climate, an abundance of greenery, and high-quality infrastructure attract a large number of freelancers and remote workers here. Due to rising demand, the average cost of housing in Morelos increased by 16.02% from 2019 to 2020.
A major industrial and technological center in the western part of Mexico. The growing demand in the world for innovative solutions has increased the attractiveness of the state among programmers, engineers, and other IT professionals. As a result, real estate price growth here amounted to 12.38%.
During the pandemic, foreign investors, including Ford and Carrier, continued to actively invest in local businesses. According to the Federal Mortgage Society, the median home price in Sonora rose 11.69%. At the same time, the average cost of a house in the region is less than $51,000.
Another attractive state to invest in real estate in 2021. Local enterprises attract large foreign investments in the mining industry, in the renewable energy sector. This increases the number of jobs, which automatically increases the demand for housing.
According to the Federal Mortgage Society, the median home value in Zacatecas rose by 12.49% from 2019 to 2020 to $41,000.