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Tuesday, September 19, 2023, By Jessica Hernández, Real estate advisor and marketing analyst in SILMÉXICO

 

In previous sections we have already talked about the importance of the real estate sector, and that it is one of the safest forms of investment. This is a generator of wealth and direct and indirect jobs. Regarding the labor market, in 2021, activities related to housing generated 2 million 366,767 jobs, that is, 5.8% of the country’s total jobs.

It is directly related to the banking and construction sectors, which is why they also grow along with real estate.

The dynamism of the real estate industry in the market directly impacts the economy not only of a country but also of the global economy. For example, studies by the International Monetary Fund reveal that, of the almost 50 systemic banking crises recorded in recent decades, more than two-thirds were preceded by falls and increases in housing prices.

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Now let’s look at Mexico, as an emerging country, the real estate sector plays an essential role in its economic development. Mexico’s real estate market reached a value of USD 32.70 billion in 2022. The market is estimated to grow at a compound annual growth rate (CAGR) of 4.80% during 2023-2028 (EMR, 2023).

Mexico’s real estate market is experiencing a boom due to the growth of domestic and commercial projects by the middle class, who prefer to buy rather than pay rent. Similarly, Mexico’s Riviera Maya coast is experiencing sharp increases in demand from homebuyers due to its excellent beachfront location. The same situation occurred in the state of Oaxaca, which resulted in a post-pandemic tourism boom even greater than that which had occurred in previous years, places such as the City of Oaxaca, and the coast, Puerto Escondido and Huatulco, are the main targets of national and foreign investors, as well as retirees and digital nomads who choose this state as their new home.

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Like all economic sectors, real estate is also plagued by the consequences of the post-pandemic, crisis promoted by other factors, inflation, etc. However, this does not remove it from being one of the most solid investment industries, why? The answer is simple, there will always be a demand for housing, Mexico has positioned itself as one of the Latin American countries with the most potential for economic development due to factors such as an attractive business climate, and legal security, it has one of the largest networks of free trade in the world, and has a presence of highly developed industrial groups, this in turn contributes to population growth. Until 2023 Mexico has placed itself in tenth place of the most populated countries in the world with a total of 128,455 563 million inhabitants, therefore, real estate development is a basic demand that will always need to be covered. This trend of course must adapt to the requirements of the consumer and the situation of the country and the world, specifically in matters of sustainability, a crucial point in the development of new real estate projects.

 

That is why real estate contributes significantly to the country’s economy, as it adds social value with the generation of jobs for the local population, provides public and green spaces for varied uses, and promotes community integration, it has a chain effect, which causes growth in other sectors, such as tourism, which is also an important source of income, thus making the real estate sector one of the great pillars of the Mexican economy.

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