By Harriet Murray ● Cochran Real Estate ● June 2014
It has been five years since I have made a presentation on Mexico to my FIABCI members. The group is a business network of real estate professionals from around the world. This year we met in Luxembourg for 6 full days of seminars, lectures, field trips, and networking.
Every conference allows some time for participants to make short presentations on the properties they have for sale. About 40 people on average attend each session.
My reluctance to promote real estate in my Mexico market to brokers from the US, Canada, Europe, South American and Asia, has been the awareness of the image of Mexico since 2009 when the US housing bubble burst and Mexico became a victim of the fallout. But, now in 2014 the news and comments around the world have been more positive. Reforms President Nieto and the congress have instituted have been positive and many financial blogs, newspapers, associations are promoting Mexico to take the place of Brazil for foreign direct investment.
I wanted to address the intangibles, the unspoken beliefs each of them may have about investing in Mexico. The broker may be polite and listen, but they may not consider referring any client who expresses an interest in asks about Mexico.
So this time I presented verifiable facts and statistics about the country to help dissipate the negativity I suspected was in their minds.
Here are some….
- Mexico has the 14h largest economy in the World, and is expected to become the 10th largest in 2020 (only 6 years).
- Manufacturing costs are less than either China or India, and -25% less than the USA. Mexico is the 15th largest exporter in the world and 80% of this is manufacturing.
- Mexico has reserves in US dollars of 163 Billion, three times our debt.
- We are the second largest economy economy in Latin America.
Our average age is 26 years old and we are graduating 115,000 engineers per year, more than the USA.
Foreign Direct Investment is impressive and has increased with the reforms Mexico has brought in banking, energy, taxes. Some impressive examples of FDI include Anhauser Busch of Belgium buying Mexican Modelo Brewing. Pepsi Cola is our largest foreign beverage conglomerate (which includes selling drinking water.) Cisco Systems, Inc. an American multinational corporation which designs, manufactures, and sells networking equipment has committed enormous funds for manufacturing and technical support in Mexico. Nestle of Switzerland is building baby food and pet food plants to supply Mexico and export.
Mexico has opened investment in oil production service and is working with a Lukoil , the 6tth largest non-stated owned publicly traded company worldwide for production of hydrocarbons.
Mexico has not stayed complacent with trade only between Canada and the USA. It has formed partnerships with 44 countries worldwide, thereby participating in a trade value of 62.64% of the annual Gross Domestic Product (larger than the trade agreements between the BRIC (Brazil, Russia, China and Brazil).
On a national level, Mexico is reporting a 20% increase in imports of luxury goods, including foreign made cars, and is receiving tourism revenues as its 5th largest source of income.
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review.