UNITED STATES - LaSalle Investment Management believes Mexico as a country has strong real estate fundamentals for future investment possibilities as middle-class demand is creating new commercial projects.
Officials say it makes sense to build new retail, office buildings and industrial properties to meet that demand, as the Mexican economy is projected to continue to show improvement over the next four years and GDP is anticipated to grow at an annual rate of 3.1% between 2008 to 2012.
Eduardo Guemez, chief executive officer of LaSalle Investment Management in Mexico, confirms there is still strong activity in the residential market too, as he told IPE Real Estate: "One of the implications of a stable economy has been the increasing availability of consumer and mortgage financing in Mexico. Credit conditions, primarily interest rates and maturity terms, have improved a lot in the last seven years. This has translated into annual mortgage growth of around 15% since 2000."
As a result of improving economic conditions, return potential on investments is currently higher than available in the United States.
LaSalle projects the yield difference between assets in Mexico and the US is in the region of 250 basis points - approximately 100 basis points above country risk.
It seems there may be some area for concern, howver, about investing in Mexican industrial properties, because a major economic link between Mexico and the US means many of the tenants lease property space in both countries and there could be a reduction in the demand for new industrial space while the US economy slows.
LaSalle's main investment vehicles in Mexico is the LaSalle Mexico fund I - a $500m (€323.3m) commingled fund set up to invest in high-quality development projects across all property types in Mexico.