Experts Warn of Uncertainty in Mexico City’s Housing Sector
As a series of reforms impact the Mexico City real estate sector, from constitutional changes to new fiscal regulations, experts express concern over the housing sector’s future.
Juvenal Lobato Díaz, a constitutional and fiscal law specialist, highlights that changes to the constitution regarding private property, modifications to the fiscal code for luxury properties, restrictions on short-term rentals like Airbnb, and expropriations raise doubts about the direction of the real estate sector.
Balancing Private Property and Right to Housing
Lobato Díaz explains that while both private property rights and the right to housing are recognized in the Constitution, the latter is programmatic, meaning its fulfillment should occur through balanced public policies.
“The concern is how these changes will be implemented, as it seems that under the guise of the right to housing, private property rights are being disregarded,” he emphasizes.
Burocracy and Corruption in the Housing Crisis
Ignacio Morales Lechuga, a public notary, attributes the housing crisis in various cities to insufficient supply, exacerbated by restrictive state intervention.
Morales Lechuga recalls that during Marcelo Ebrard’s administration, obtaining a construction license for housing projects in Mexico City took between four to six months. However, under the current administration, building a property can now take two to four years, creating an environment prone to “significant corruption in construction,” according to Morales Lechuga.
“Census data reflects the sector’s decline: only 6,600 new catastral accounts were registered in 2023, a low number for a city with over nine million residents and the demographic pressure of the metropolitan area,” he points out.
Furthermore, Morales Lechuga notes that the restrictive regulatory climate has caused many developers to relocate their projects to other cities or even abroad, resulting in an investment flight from Mexico City.
Risks Associated with Expropriations
Lobato Díaz explains that expropriations initiated by Clara Brugada’s administration to recover deteriorated housing create more uncertainty than clarity.
“Although carried out through an expropriation decree, the request targets those in possession or occupancy rather than owners. These details should not be overlooked to understand how property owners can protect themselves,” he warns.
Both experts agree that addressing the housing crisis in Mexico City requires clear rules and legal certainty, essential elements to encourage private investment and ensure sustainable urban development.
Key Questions and Answers
- What is causing uncertainty in Mexico City’s housing sector? A series of reforms, including constitutional changes, fiscal regulation modifications, restrictions on short-term rentals like Airbnb, and expropriations, have raised concerns about the future of the housing sector.
- How do restrictive state interventions affect the housing crisis? Restrictive state intervention exacerbates the housing crisis by prolonging construction processes and fostering corruption in the construction sector.
- What are the risks associated with recent expropriations in Mexico City? Recent expropriations targeting deteriorated housing have created uncertainty, as they focus on those in possession or occupancy rather than property owners.
- What solutions do experts propose for the housing crisis in Mexico City? Experts suggest implementing clear rules and legal certainty to encourage private investment and ensure sustainable urban development.
