|
 2008 - MY PERSPECTIVE
by Bruce Greenberg
I have been providing real estate
valuations and consulting services in Mexico for the past twelve years
and have observed blips in the United States economy including the
dot.com and previous Wall Street “Slowdown” that did not affect the
real estate cycle in the resort communities of Mexico. As we enter the
recession in the United States, I believe this economic re-adjustment
cycle will have effects on Mexico and real estate globally.
I recently attended a 2008 Economic
Forecast in Mexico City where both “National” public & private sector
professionals with strong pulses on the economic status of Mexico,
cited:
• Mexico is better prepared within its finance infrastructure system
than ever before for a United States economic slowdown and is now
“globally” oriented;
• That Mexico's GNP growth rate will be slower (2.8% vs. 3.8%) for the
forthcoming year yet this is still a respectable amount.
I agree with the consensus, yet I am
concerned that many of the resort markets in Mexico will be
experiencing an oversupply of “new” condo units. The economic slowdown
in the United States will have a direct effect on this “submarket.”
Traditionally, in a recession “the rich get richer and the poor have
babies!” So I believe, the less affluent U.S. buyer will be less
active. If developers have foresight and reduce prices then Canadians,
Europeans and Nationals during this cycle can take advantage and fill
the U.S. buyer void.
Conversely, I do not believe the
wealthier U.S. buyer will disappear. In fact the affluent will take
advantage of developers “fear factor.” Historically, the wealthy get
wealthier in an economic downturn — money talks! So the upper-end
market should generally remain stable. More importantly than ever,
developers need market/feasibility/absorption/competition/pricing
studies!! Information is key in this economic cycle!! Developers and
lenders cannot look through the rear view mirror they must look
forward.
Presidente Calderon and his Cabinet
understand both the need to grow and improve on infrastructure and
tourism. They get it! The administration is working vigorously to
bring more U.S./Canadian/European/Asians to Mexico. Mexico tourism
will exceed 30 million visitors this year — a projected growth rate of
about 7.5% is forecasted. Mexico ranks #2 in the world in timeshare
sales. Through “whole” ownership by U.S. buyers will decrease, this is
the time for the construction of new hospitality facilities —
hotel/timeshare and even fractional complexes will fill the void for
condos.
Mexico “welcomes” US citizens and are
friendly warm hosts. This welcome and attitude is not always true in
other resorts locales globally! Mexico is close and affordable so
during this U.S. recession, I believe that the hospitality sector will
grow.
This also benefits Mexico in the long run with increased sustainable
employment. The construction of new hospitality/timeshare/fractional
facilities will “house” the next wave of buyers as the recession winds
down. Re-stated your next buyer is already a stakeholder in your
timeshare and/or fractional complex.
To help foment the economic growth of
Mexico Presidente Calderon has initiated a government/private sector
program to spend $46.4 U.S. dollars annually for the next 4 years on:
• Expanding existing airports;
• 3 “new” airports are being built;
• Seaports are being modernized;
• 3 “new” seaports are being built;
• The federal highway system is experiencing tremendous growth — 100
new major roadways are planned
and/or under construction;
• Fonatur has increased its budget threefold.
Many private sector groups will benefit
from this growth. Crisis always provides opportunities — so this
economic slowdown will be taken straight on by the stakeholders of
Mexico with strong public/private partnerships. This synergy will
benefit those who join in both the short and long term basis.
Bruce D. Greenberg, MAI, SRA, ASA is the
principal consultant/appraiser for Bruce D. Greenberg, Incorporated in
Tucson, Arizona and Valuacioñes Montaña Verde, S.A. de C.V. Mr.
Greenberg serves as a Bi-National Director of the United States-Mexico
Chamber of Commerce and on the Executive Committee for both California
and Arizona Chapters. Mr. Greenberg is an active participant in the
ULI ñ Mexico district. Mr. Greenberg was selected in 1999, by former
Arizona Governor Jane D. Hull, as a member of her task force
addressing consumer guidelines in the acquisition of real estate in
Sonora. Governor Janet Napolitano in 2003 asked Mr. Greenberg to serve
on the Real Estate Ad-hoc Committee under the auspices of the
Arizona-Mexico Commission. He has been a member of the Financial,
Business and Legal Services Committee of the Arizona-Mexico Commission
and a member of the National Law Center of Inter-American Free Trade
for the past 10 years. He is an active member of the Asociacion
Mexicana de Profesionales Inmobiliarios, A.C. (AMPI) of Los Cabos,
Puerto Vallarta/Nayarit and Puerto Peñasco sections and is also a
member of the Multi List organizations of Los Cabos, Puerto Vallarta
and Puerto Peñasco. Mr. Greenberg can be reached at (520) 750-8200,
fax (520) 750-8298, e-mail
bgreenberg@brucedgreenberginc.com or visit the web page at
www.mexicovaluations.com. |
