Real estate investment and leasing has been booming in Mexico for decades, and the Mexican economy is now in a strong position to meet the challenges of the global recession.
But a new study from HSBC finds that real estate investment could be overvalued in the country.
According to HSBC, Mexico has seen a 10.4% increase in the amount of property sales and sales commissions over the past decade, and a 6.5% increase over the last decade.
Real estate in Mexico is highly concentrated, and only a small percentage of people own any real estate.
In 2013, about 5% of the country’s population owned some type of real estate assets, but this figure is expected to grow to 9% in 2027, HSBC reported.
The study also found that Mexico’s overall property prices have risen by more than 20% in the past two years, with the average price per square meter rising by 24.8%.
HSBC’s research shows that, even as real estate is becoming more affordable and more accessible, Mexicans are still not willing to pay as much as they would in other markets for property in Mexico.
“Mexico is the world’s largest consumer of real property in terms of purchasing power, but it is also the only one of the BRICs (Brazil, Russia, India, China) where the proportion of the population owning real estate has increased,” HSBC’s director for global markets, David A. Mazzuca, said in a statement.
“The trend of increased real estate prices and real estate rents is not confined to Mexico.
Other emerging markets, such as Argentina and Brazil, also have a very strong property sector.”