The Rakennus Initiative: Transforming Aging Buildings into Affordable Housing
In a housing market where prices continue to rise, the renovation of old buildings in Mexico City (CDMX) could be a viable option to address the growing housing needs.
According to data from the Instituto de Planeación Democrática y Prospectiva (IPDP), as of 2022, there were approximately 2.9 million private dwellings in the capital, with 39.5% having between 25 and 49 years of age, while 25% were over 50 years old.
Rakennus’ Strategy: Turning Old Buildings into Affordable Housing
Tony Gebara Rahal, General Director of the development firm Rakennus, stated, “Acquiring and remodeling old buildings to transform them into affordable and functional housing that is more accessible than 100% new projects is possible.” However, he cautioned that the process faces challenges such as bureaucracy and investment.
Rakennus’ strategy aims to demonstrate that old buildings are not an urban problem but an opportunity for generating affordable, functional, and secure housing in Mexico City.
“There is a strange gap where no one understands the model and no one wants to regulate it because it’s still a small market. Politically, it sounds good to build new housing, but we have approached authorities to promote renovation,” explained Gebara Rahal in an interview.
Current Regulations and Financing
Currently, the intervention of old buildings is carried out based on Article 62 of the CDMX Construction Regulations, which allows for the remodeling of apartments, houses, or buildings.
On average, purchasing and renovating a building for housing in CDMX can cost around 60 million pesos. However, the lack of specific regulations limits access to bridge loans from banks, so Rakennus has resorted to Sofomes and private capital for project financing.
Affordable Pricing
Over 30 years, Rakennus has remodeled 148 buildings aged between 45 and 60 years. Currently, they have 18 active projects in the city, representing over 300 units for sale, and maintain a purchase rate of two to four properties per quarter.
“We ensure that the buildings are structurally sound, with a solid foundation, for which a technical review is conducted,” detailed the executive. The apartments they offer range from 60 to 80 square meters, with an average price of 2.5 million pesos per unit.
According to data from the Sociedad Hipotecaria Federal (SHF), the average housing value in the capital reached 3,871,942 pesos in the first half of 2025.
Expansion Plans
Currently, Rakennus primarily operates in high-demand areas like Miguel Hidalgo, Venustiano Carranza, Alvaro Obregon, and Benito Juarez. However, they plan to expand towards the State of Mexico, Jalisco, and Coahuila.
Key Questions and Answers
- What is the housing crisis in Mexico City? The housing market in Mexico City is facing rising prices, making it difficult for many residents to afford decent housing.
- How does Rakennus aim to address this issue? Rakennus plans to acquire and remodel old buildings, transforming them into affordable housing options.
- What challenges does Rakennus face in this process? The company faces bureaucratic hurdles and high investment costs.
- How does Rakennus finance its projects? Due to limited regulations, Rakennus relies on Sofomes and private capital for financing.
- What is the average price of apartments offered by Rakennus? The apartments range from 60 to 80 square meters, with an average price of approximately 2.5 million pesos per unit.
- What is the current average housing value in Mexico City? As of the first half of 2025, the average housing value in Mexico City is around 3,871,942 pesos.
- In which areas does Rakennus currently operate? Rakennus primarily operates in high-demand areas like Miguel Hidalgo, Venustiano Carranza, Alvaro Obregon, and Benito Juarez.
- Where does Rakennus plan to expand? The company plans to expand towards the State of Mexico, Jalisco, and Coahuila.
