The Real Estate Sector during 2020
The real estate sector is one of the most affected, it turns out to be a thermometer of the economy due to the various areas that it operates such as the service area, hotels, and so on.
In 2020, we observed a positive difference compared to the 2009 crisis, the real estate sector was the cause to some or a large extent of the crisis. Now, we see the real estate sector as a possible or great solution to the crisis, mainly due to the fact that the reference rate is very low in first world countries such as the US, Japan, among others, the rates are negative or in zero. This implies that there is an appetite to carry out real estate investment schemes with some security.
In Mexico, the reference rate, being at levels of 4 percent (what you receive for your money in the bank), is not comparable to the profitability that a property gives you depending on the type of property or industry, the profitability is different. . However, this makes the investment very attractive.
The 2020 COVID-19 pandemic definitely did cause effects in the real estate sector, but it is necessary to think about how to reconfigure or democratize real estate investment to a greater extent to access a broader market, since definitely whoever has a million pesos or a lower ticket can not access real estate investment. However, through some vehicles such as the rental pool, democratization of investment, they can buy a ticket that gives them returns linked to the profitability of real estate.
The most affected in the Real Estate Sector in 2020
In the real estate sector, it stands out that the tourist and hotel areas were among the most affected, along with retail or commerce. These areas suffered many effects due to the issue of consumption.
Next, we can find the housing area, finally, of the areas of the real estate sector less affected are the matter of offices and industrial, it is expected that the expectation of recovery will be very slow due to the simple fact that there is a decrease in services, unemployment, this will imply that there are fewer offices that will continue to be rented, although it is the sector that had the least impact or of those that had the least impact, along with the industrial sector, its recovery will also be slow.
Unlike the above, in commerce or retail where restaurants reopen their doors are going to recover very quickly. In the commercial aspect, people expect us to return to normality, as far as possible to live life experiences, return to the shopping centers that they reconfigure their service and offer other types of experiences.
In the housing issue there is a very captive market that is the residential market, that is, homes with a value of between one and a half million pesos in the large cities of Mexico such as Tijuana, Querétaro, the Bajío area, Guadalajara or Monterrey. The captive market encourages the search for products (homes) that can reach that market.
Unfortunately in Mexico City there is a brake on authorizations for real estate development, this caused investors in a certain way to turn to see these emerging or growing cities such as Tijuana, which has a very important development, as well as Guadalajara and Monterrey. In the same way, we must look for this type of products and a market that is in these ranges of one and a half million and three million pesos to redensify population areas or population centers by offering a vertical product that allows us to offer an affordable verticalization to the real estate investor .
Perspectives in the Real Estate Sector
We must not forget that the new generations are the productive ones, we stay between the baby boomers and generation X, but they are no longer the productive generation. Currently, they are millennials , generation z, among others.
We have to look for the schemes that allow us to reach that type of market, 65% of the homes for rent are rented by millennials , this gives us a parameter to identify what they are looking for, what they are buying and about all how we can access that market.
The subject of income is very attractive, schemes can be established in which it is possible to attract investment to offer a more affordable investment ticket that allows obtaining returns and that in the same way allows access to this market that has some liquidity and that is located in these price ranges. On the other hand, the mortgage rate is very attractive, currently it is between 7% -8%, this makes the investor or the person who wants to buy a home to access that type of market.
We must observe that we consider that there could be an important recovery in the real estate sector in some areas more slowly than in others, but it is definitely a buyer’s market taking advantage of these opportunities, especially that interest rates are very low, this makes profitability that gives you a property that is much more attractive.