Mexico boasts a multi-trillion dollar economy which inched upwards by over 2% in 2018. As the area continues to come into itself as a global powerhouse, many United States real estate professionals are wondering if the country's capital, Mexico City, represents an investment opportunity.
The answer to the question, in our opinion, is yes!
Mexico City is showing many tells from both a real-estate and governance perspective which hint that its relatively middling growth is likely to turn into something substantial over the next decade. If you're on the fence as to whether or not buy up Mexico City real estate, here are 7 reasons why you should consider making the leap!
1. Currency Advantages
The US dollar goes much further in Mexico than it does domestically. That's not just true because things cost less in Mexico. That's true because, from a currency exchange perspective, the peso has always been lackluster.
As of writing this, 1 US dollar is the equivalent to almost 20 Mexican pesos. While the country tries to adjust for this by making its goods and services cost high volumes of pesos, the US dollar still buys you a lot more down south than it'll buy you back at home. The same is true for investors leveraging CAD, Euros and other strong currencies.
2. Rates of Housing Inflation
House prices in Mexico City and around the country are experiencing historical year-over-year gains in-part because of the influx of immigrants from its South American neighbors. To reflect that assertion in numbers, in 2009, housing prices went up by 4.75%. In 2016, housing prices jumped by 7.49%.
That trend shows no signs of slowing given that political unrest in South America will likely drive more people into Mexico over the next decade. Getting in on the Mexican real estate market today can put you in an outstanding position to benefit from Mexico's population boom, consequential housing shortages and staggering real estate price hikes.
3. Increased Stability
One of the largest barriers to foreign investments in Mexico City are worries over instability. After all, being Mexico's central hub means that unrest, violence and other worrisome activities can crop up in the area.
Wanting to make the country's capital an example for the rest of the country, city officials have begun cracking down on a number of adverse behaviors like public drunkenness by doubling down on its police support. These efforts have already had documented effects on increasing the safety and desirability of Mexico City.
While Mexico City has a long way to go in its pursuit of becoming a world-class destination, recent efforts tell us that over the next few years, we're going to see positive change. That positive change will result in housing demand continuing to rise.
4. Bi-Lingual Communities
As an investor that doesn't speak Spanish, it can be hard to navigate South/Central American real estate markets. Fortunately, Mexico City boasts a key advantage over other popular investment opportunities in that large swaths of the area speak perfect English.
This reality not only makes investing a more seamless process but it also makes Mexico city more attractive to expats that may end up being your future tenants. Multi-language territories tend to attract more business investments as well which leads to faster economic growth and (you guessed it) inflation of housing costs.
5. An Excellent Entry-Point for Low-Cash Investors
Mexico isn't the only real estate market that's experiencing growth. Look no further than your neighborhood to see how expensive things have gotten just outside of your window.
Today, the average house price in the United States is over $200,000. In larger cities, that number can easily go up to over half a million.
Mexico's average house price is $54,000. You can see how cash-poor investors can buy or sell real estate in just about any Mexican city more easily than they can locally.
6. Ease of Access
Investing in Mexico City real estate is a lot more attractive to investors than investing in other foreign markets simply from an access standpoint. Direct international flights from most major US cities to Mexico City are available daily. In addition to that, driving across the border is a possibility if taking a flight is out of the question.
With a US passport, entering Mexico is as simple as waltzing through customs. Compare that to other countries where you need to apply for visas and you come to see why so many investors choose to place portions of their portfolios down south as opposed to in other parts of the world.
7. Increasing Rates of Nationalism
There is tension between the United States and Mexico right now over immigration issues. While those tensions have led to a variety of outcomes and continue to evolve, an outcome that doesn't get overage in the news is a rise in Mexican nationalism.
Now more than ever, Mexicans are asserting pride in their culture, country, and communities. This pride is leading younger generations of Mexicans to stay in Mexico and invest themselves in bettering their nation.
As more young people choose to live domestically, more will get educations, good jobs and pour tax dollars into major hubs like Mexico City. That increased investment will create more competition for quality housing which will continue to inflate the Mexico City real estate market.
Our Final Thoughts on Mexico City Real Estate
Whether you're a seasoned investor or one that's looking to do their first international deal, Mexico City real estate presents an incredible opportunity. It has a low barrier of entry and high return potentials over the next decade.
As with all investments, do your diligence. Ensure that buying real estate in Mexico City is right for you by talking to your financial advisor and/or other trusted team members.
For additional residential and commercial real estate tips, tricks and advice, browse more of the helpful content on our blog!