Why is the market for rental residential projects underdeveloped in Mexico?

This is an emerging market that we’re actively working on developing. Our objectives for 2023 involve consolidating 13 ongoing projects and adding eight more to our portfolio. Among these, we aim to introduce five residential projects for rent and three for sale. Typically, these projects feature larger buildings with multiple units situated in busy urban areas and on main thoroughfares. To mitigate the impact on local communities, we plan to distribute these traditional company structures into 300-unit apartments across various projects. Our focus leans towards smaller, eco-friendly buildings, and our primary concentration at present is in Mexico City.

What level of interest do you observe from international investment funds in the Mexican real estate sector?

Interest from international funds varies based on their prior experiences in Mexico. Funds already active here tend to appreciate the local advantages. However, for those without prior exposure, negative risk perceptions can hinder attention. Mexico, with its youthful population and several underserved markets, including the residential sector, lacks local expertise. Foreign investors with compelling products can excel in the absence of significant competition. Additionally, these funds comprehend that the country’s long-term outlook transcends any single political administration. Businesses think years ahead, and Mexico remains a favorable operating ground. We’ve conducted events drawing funds from the US, Canada, Europe, Singapore, and the Emirates, aiming to raise awareness. A new endeavor, Fibra Sky, a multifamily platform, is in the works as you need the assets in place to raise capital in the stock market. Launching a FIBRA typically spans several years.

What housing market demand trends do you foresee for Mexico City?

In numerical terms, we expect a surge in demand due to the substantial deficit in new unit construction. A governmental pause on issuing permits halted new housing production for a period, providing Skyhaus a favorable position as we continued development. There’s a significant demand for residential projects, both for sale and rent, in the multifamily market. This presents an opportune window for us to gain market share. We plan to maintain our product line with 90-100 sqm apartments in middle-class areas. We’re incorporating co-working spaces into our projects to accommodate meetings outside conventional offices. Our emphasis remains on prime locations, quality design, and construction.

What advice would you offer to firms eyeing entry into this market?

Partnerships are crucial. Foreign firms aiming to invest in Mexico—or any other country—should seek the best local partner. The ideal partner should possess expertise in the market, have a strong grip on administrative procedures for compliance, and maintain effective communication. Sustaining a partnership requires open dialogue rather than disputes.

What are the primary advantages you offer?

Our expertise is a significant advantage. We’re vertically integrated, offering a one-stop solution for all project-related matters. With our in-house sales and construction departments, we ensure efficiency under one roof. Moreover, our capacity for creative problem-solving enables us to devise unconventional solutions to common issues, setting us apart from most companies.