"Mexico Real Estate Report Q4 2013" Published

We forecasting Mexico's commercial real estate industry to have a consistent, yet unremarkable performance over 2013, with rental rates across all sub-sectors expected to remain flat as the standoff between the market's long-term potential and macroeconomic headwinds continues. The country has one of the most stable growth outlooks in the region, and an operating environment which is seeing tangible improvements and rising longer-term prospects. Nevertheless, the poor financial condition of many of the country's residential developers is a threat.

With a focus on the country's principal cities of Mexico City, Tijuana, Guadalajara and Monterrey, the report covers rental market performance in terms of rates and yields over the past 18 months and examines the commercial office, retail, industrial and construction sectors throughout the country.

Full Report Details at
- http://www.fastmr.com/prod/712803_mexico_real_estate_report_q4_2013.aspx?afid=302

Our in-country interviews and data confirm the market sentiment that commercial rental growth in Mexico had been fairly stable over recent years, particularly in the office and industrial sub-sectors. Minimal growth in rents is expected in 2013, amid a continued slowdown in the US that has increased caution among international investors. Nevertheless, we maintain an overall positive long-term view about the potential of the commercial real estate sector in Mexico.

Key Points

* Mexico's construction sector is in a period of readjustment as it feels the delayed impact of the change in government. Data for Q113 has been weak.
* In our previous update we adjusted down our real GDP growth forecast for 2013, from 3.6% to a belowconsensus 3.0%, and the release of Q113 GDP by expenditure confirms this more pessimistic outlook. The risks to our view are weighted firmly to the downside, with potential for an uptick in imported inflation to hamper private consumption and indications that an uncertain global economic environment may weigh on investment to a greater extent than we currently envision.
* While manufacturing will most likely continue acting as the main driver of growth over the coming decade, we believe Mexico is set to begin transitioning toward a more services-oriented economy, with a stronger private consumer boosting the country's economic outlook and retail segment.

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