Background on the Real Estate Development Sector and Key Players
The real estate development sector in Mexico is facing uncertainty due to the ongoing trade tensions with the United States. The Asociación de Desarrolladores Inmobiliarios (ADI) and the Cámara Mexicana de la Industria de la Construcción (CMIC) are closely monitoring the situation, as any changes in trade policies could significantly impact their projects.
Impact of Proposed Steel Tariffs
María José Fernández, the general director of ADI, has stated that a 50% tariff on steel, recently approved by U.S. President Donald Trump, would directly affect the costs of real estate projects.
“We anticipate a 10% increase in the cost of real estate projects, similar to what CMIC has forecasted,” Fernández said during The Real Estate Show 2025. “Items already covered under the USMCA will not be subject to this tariff, so we need to identify which construction inputs will be most affected. We’re expecting a 10% rise in construction costs.”
Cautious Investment Plans Amidst Trade Uncertainty
The trade tensions have caused hesitation among real estate developers, who are now proceeding with investment plans cautiously.
“Developers are being careful about tariffs and their relationship with the U.S., as many large projects require stable conditions,” Fernández added.
Current Projects and Future Developments
ADI members currently have projects underway and industrial planning in the northeast, central, and Bajio regions of Mexico. They are also developing tourism projects in the Riviera Maya, Riviera Nayarit, and Los Cabos. Additionally, the construction of retail centers that were delayed due to the pandemic is expected to resume.
Optimism Amidst Trade Negotiations
Despite the uncertainty, ADI remains optimistic about Mexico’s government negotiations with the U.S. Fernández mentioned that President Claudia Sheinbaum and Economy Secretary Marcelo Ebrard are actively seeking aggressive negotiations to avoid tariff impacts on project initiation and pricing.
Besides tariff costs, Fernández emphasized the importance of legal certainty and efficient permit and license processing for real estate investment growth.
Key Questions and Answers
- What is the main concern for real estate developers in Mexico? Trade tensions with the United States, particularly the proposed steel tariffs, have caused uncertainty and potential cost increases for real estate projects.
- What percentage increase in project costs is anticipated? ADI and CMIC predict a 10% rise in real estate project costs due to the proposed steel tariffs.
- How are developers responding to the trade tensions? Developers are being cautious with their investment plans, ensuring stable conditions for large projects.
- What types of projects are currently underway in Mexico? ADI members have ongoing projects and industrial planning in the northeast, central, and Bajio regions. They are also developing tourism projects in Riviera Maya, Riviera Nayarit, and Los Cabos.
- What is the outlook for retail center construction? Construction of retail centers that were delayed due to the pandemic is expected to resume.
- What factors are crucial for real estate investment growth? Legal certainty and efficient permit and license processing are essential for real estate investment growth.
