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A more competitive Mexico

A more competitive Mexico
Mexico must count on 6 thousand buildings for offices, 62 thousand stores in shopping centers and industries and 170 industrial parks to develop the real estate plan for the year 2030; that was mentioned by the President Felipe Calderon during his speech at the Expo Real Estate Development.

Once again, real estate development is an important element for our country’s growth, anchored through a sustainable responsibility acquired by the real estate sector players. Competitiveness must be something real in our country, because we have borne witnesses to global advances concerning real estate, and Mexico cannot be excluded thanks to its current situation: it has the most interesting economically active population of the world, which without a doubt will benefit the country’s real estate growth in the commercial and industrial sectors.

According to the census’ results published by the INEGI, Mexico’s competitive advantage is its young population. This situation will encourage the investment in our country. Enhancing good practices in our sector remains as our labor today to keep giving positive news, and this way, we could eliminate the negative image our country has worldwide due to insecurity. By applying these actions, the housing abandonment in the northern country will be eradicated, mainly in the borders. We must also work on promoting urban infrastructure development to satisfy the community needs.

Following a competitive development line, this kind of short term actions will offer sustainable solutions in a long term.

Now, I would like to say at Inmobiliare Magazine we work hardly to be innovators in editorial proposals and, for the consecutive fourth year, we have re-launched our B2B Real Estate Planner with a new design, new tools of contact print, and also new digital applications, something you have never seen before.

We take pride in our innovations to interact with the marketplace and invite our readers to participate in our new format.

The Infonavit heads towards the green

Infonavit’s goals are granting credit for green housing: as well as remodeling and expansion. The changes to the so called Green Mortgage include the fact that all new real estates must be environmental friendly, and although this credit was born 3 years ago, developers and constructors are just starting to comply with this requirement.

As of 2011, credits granted by the Infonavit for new and used houses, remodeling, expansion, and construction in the beneficiary’s own land must be used for houses projects with eco technologies, this to grant the Green Mortgage to all the borrowers. As Victor Manuel Borras, Director of the Infonavit, says, this is the goal of the Institute because that is what the market is demanding.

More than 40% of the credits that the Infonavit will grant this year will be for this concept that was born 3 years ago, but just recently adopted by constructors. The bottom line is that all new homes must be environmental friendly.

During 2010 the Infonavit granted 23% of its credits for the purchase of these units.

It is expected that Conagua, the Energy Ministry and the CFE become part of this initiative that the Infonavit started 3 years ago.

Among developers we must have players such as Ara, Sare and Geo.

Benefits of the Green Mortgage

In order to show the benefits obtained with these eco technologies, the Infonavit hired a specialized company to perform the corresponding studies and proved average savings of $229, more than the estimated $215. The benefits are:

• The consumption of power, gas and water is reduced, so the borrower has a better payment capacity.

• The environment quality is improved since the CO2 contamination is reduced.

• We guarantee the natural resources for future generations.

• Fostering a culture for saving and respecting the environment.

• Better life quality.

Where is the Green Mortgage heading to?

Up to now this credit has focused in the purchased of new houses, built by developers and constructors and bought with a direct crédito from the Institute with or without federal subsidies from the “This is your home” program.

However, the introduction of eco Technologies to these houses will be mandatory when they are financed with credits granted by the institute with mortgage guarantee.

The previous Green Mortgage had an eco technologies package by bioclimatic area. For this new scheme the developers and borrowers can choose the eco technologies that better adapt to their saving needs. (See the incorporated eco technologies chart).

Víctor Manuel Borras, Infonavit’s General Director, explains that with this Green Mortgage we help avoiding the emissions of 161,250 tons of green house effect gases and we will save up to 75% in gas consumption. Now, in order to face the commitment with the Climate Change, we have to select a Zero Energy house because aside from benefiting the environment, they contribute with the social and economic wellbeing of the region where the house is bought. Zero Energy means that there will be a zero net balance between the power consumption of the house and the power generated by it during a year. In order to do this, the house must have a bioclimatic design, meaning, it has to be protected in heat gain areas (high performance enclosures); and must have advanced telemetry systems and photovoltaic high power generation systems through solar cells.

Some companies of the sector, such as Ara, Sadasi, Urbi and Vinte, among others, have established pilot programs (Net Zero Energy Houses) in Playa del Carmen, Cancún, Acapulco, Coatzacoalcos and Mexicali, and their results will be soon incorporated to the construction of new developments. Geo, specifically, has delivered 20,000 houses with green mortgage since 2007 and for 2011 they plan to deliver 40,000 houses with eco technologies and green credit.

The northern states are the leaders in the granting of Green Mortgages from the Infonavit.

Nuevo León, Tamaulipas, Chihuahua, Baja California and Coahuila have 43% of the green financing granted by the Institute. Since 2007, more than 1,400 developers have participated in the program, equipping homes with eco technologies. In 2010 Geo, Homex, Urbi and Grupo Ruba have built more green houses than other developers.

Incorporated eco technologies

In the power area:

• Energy saving light bulbs (compact fluorescent lamps).

• Electric current static stabilizer.

• High efficiency or low consumption 1 or 1.5 ton air conditioning.

• High efficiency refrigerator (the Infonavit does not finance the purchase).

• Roof thermal isolation

• Wall thermal isolation.

• Roof thermal isolation and reflective covers as roof finishing.

• Thermal isolation in wall and reflective cover as wall finishing.

• Reflective cover as roof finishing.

• Reflective cover as wall finishing.

In the gas area:

• Water sun heater with secondary fast recovery tankless heater.

• Water sun heater with pipes and with secondary fast recovery tankless heater.

• Water tankless heater (fast recovery or instantaneous).

In the water area:

• 6 liter toilet.

• Ecological 5 liter toilet.

• Ecological shower with integrated water saving device.

• Faucets valves) with water saving device in washstands.

• Faucets (valves) with water saving device in the kitchen.

• Regulating valve for water flow in pipelines.

In the health area

• Water purifying filters with two spare parts included.

• Drinking water supply.

Source: INFONAVIT

Seguir leyendo The Infonavit heads towards the green

Sustainable development in Chihuahua

Sustainable development in Chihuahua
If we hear Chihuahua, we immediately think about maquiladora and manufacturer industry, because it is highly linked to the State. In fact, for this industry the State counts on roughly 425 installed plants in almost 25 industrial parks; this quantity represents the 12.47% of the maquiladora plants in Mexico. The manufacturer industry has got nine thousand 917 economic units. In spite of this development, sustainability is a topic present in the agenda of the State and then, government and private initiative are taking part in it. Integrated Sustainable Urban Developments –DUIS in Spanish- are including in these initiatives.

Integrated Sustainable Urban Developments –DUIS are essential for Chihuahua. The government, in fact, wants to help the initiatives pointing to them. “It is a way to correct mistakes made in the past concerning the housing model and cities development”, says Alberto Chretin- Secretary of Economy, Chihuahua. For real estate developers in Mexico, it represents a big responsibility because the actions and good practices results impact the people’s quality of life; therefore, incorporating environmental measures in the new developments and constructions remains a priority. “I am convenced that lots of the problems we have nowadays are a consequence of mistakes committed by government and businessmen, and I consider UDIS an excellent opportunity.”

Rafael Servando, Secretary of Urban Development and Ecology, talked about the importance of creating activities for coexistence and community life. “I agree the development model followed during the last years has been wrong. We have some areas in urban misfortune, so I think we must thoroughly verify the model, however, we have DUIS models in cities like San Agustin, San Jeronimo and San Jose del Sol that will give another aspect to it. In fact, the State Governor has let me know we can change the reserve in Juarez, San Isidro, into a DUIS.”

To finish, Rafael Servando said in the Secretariat they are willing to work jointly to the private initiative to support the DUIS projects in the State.

The private initiative takes part in the DUIS According to Enrique Terrazas, the most important is efficiency in the projects development. It is surprising, for instance, that some programs like the Mobility one (Movilidad), announced by the Urban Development Secretariat since several years ago, have not been executed. “Without a doubt, the biggest problem we currently have in Chihuahua is security. It is really complicated to invite investors to the State when media talk about that every day all day long; in addition, procedures for housing development are really complicated, either land use, construction permits, infrastructure or any other, time goes on for authorizations. I insist, the Mobility Plan is not clear yet”, comments the businessman.

The Secretary of Urban Development and Ecology, Rafael Servando Portillo, commented about that: “The Sustainable Urban Mobility Plan in Chihuahua is a fact; there will be seven stretches with tripartite investment. The Governor, Cesar Duarte, has got the resources released by 227.9 million pesos by FONADIN; on its hand, the municipality will grant another amount, and so will do the state government; and the dealers will grant the material. The work will start the first two weeks in March.”

Ricardo Yáñez, Chihuahua Housing Institute Director, added: “During several years we have been focused on the demand relating to the number of houses. During all that time there was not much attention to the quality of life.

Due to a Chihuahua’s promotion campaign, the work centers were concentrated in industrial parks. Ciudad Juarez became then, a municipality generating wealth, but most of the people were factory workers, and there was not a limit to build, causing at the same time overcrowding, promiscuity and violence. Now, we are living an abandoned homes crisis. Therefore, adopting the UDIS concept taking into account the population of Chihuahua and Ciudad Juarez, and also the abandoned buildings versus the authorized ones is necessary to acquire a responsibility and vision criterion, pointing to value how convenient is to build houses in big quantities, or even adopt DUIS development by renovating the houses already built. We have to buy those buildings, pull them down, place infrastructure and then, build new cities. Offering quality of life is necessary today.”

DUIS concept is positive if we take into account that the main goal is generating sustainability in development areas, says Jose Antonio Ruiz Galindo of IGS. “It can be applied everywhere, and a norm has to exist there. DUIS must be able to build workforces, educational and recreation centers, and it is also important to emphasize that the UDIS process has become totally bureaucratic, so it is required to speed up the qualification and procedures of this kind of developments.”

On the other hand, according to the executive of IGS, sustainable infrastructure has also a cost, which has to be balanced, because houses prices cannot be impacted; so federal and state governments have to be coordinated with the private enterprise. The challenge will be how to make it happen. Everyone must participate in this initiative, by opinion of the Urban Land Institute, which was represented in the table by Blanca Rodriguez.

“For the ULI, an integral vision of development is preponderant to achieve all the conditions, and regenerate some of these towns to make them viable in long term.”

“As capital fund or bank, we are concernid about the big neglect the north of the country knows, talking about housing projects. Although we are not able to affirm this neglect is due to insecurity or to some aspects related to the projects; however, institutions have to lend resources to the States, because it is restraining us”, Jorge Ávalos of INVEX said.

“9 thousand soldiers and 5 thousand policemen are not the solution”

The Director of the Housing Institute of Chihuahua, Ricardo Yáñez, exposed some argumentsstrong, by the way- to explain such violence in Juarez and Chihuahua.

“Not to build more houses is a terrible problem, since we could offer a work to lots of people with an elementary school certificate, equivalent to the 47% economically active population, the same percentage of population is unemployed in Chihuahua today, and those people have been engaged by 78 pesos a day in some industries like the aerospace one.”

“Although we had an over-employment in the period 1998-2001, people from several states came here to work; and once employments had finished, they came back to their hometowns, leaving their houses empty. In the north and Chihuahua, the maquila project, started 40 years ago, left the families without an education base or a Mexican culture: the mother, the person who establishes order in the family”, says Yáñez. “Giving a work to women seemed to be good, but we never thought about society’s sustainability; we forgot the child would be alone. Today, the State has the highest numbers relating to diabetes, obesity and hypertension, as a consequence of this slip. From every ten married couples in Chihuahua, five are divorced and live in 33 or 35 square meter-houses, in overcrowding families formed by children of different fathers. Nowadays, the 30% of the pregnancies in the State occurred at 13 or 17 years old. We can also mention that the urban development of Ciudad Juarezwhere more of the working people live- is 53 kmfar from Sacramento, one of the employment areas, because of that urban sustainability does not appear. The journeys to the workplaces take four hours; the children, who are alone, cannot go to school because there is not infrastructure or an efficient transport system, so we can see the consequences now. We have 95 children belonging to a gang. The challenge, more than thinking about what to do, is correcting these problems. We may build, in those houses so small, a second bedroom to correct the overcrowding. There are 250 thousand houses, but only a 5% has been enlarged”, says Ricardo Yáñez.

To finish his speech the Director of the Housing Institute assured if the main problems are well dealt, the violence could be reverted in 10 years, “this problem is not only present in Chihuahua, but in different states of the Mexican Republic. However and in spite of the violence, there are still investments in the state.”

Enrique Terrazas, a developer businessman in Chihuahua, says that the diagnosis has been large, but with a few projects developed. “In Ciudad Juarez we have started to build private roads, and we have tried to bring people back to the life in community; it is true, to achieve our goal we have to help the population of these complexes, granting them resources like recreation centers, parks and daycare for the children of those single women, among other things.”

According to Eduardo Yáñez, the city needs planning. As Director of the Housing Institute of the State and as a knower of the situation, he adds: “The developments keep growing. We are still building “little houses”. We continue with the massive construction, leaving quality aside. The boom of this kind of houses occurred 13 years ago, the age of the hired killers in the area; those abandoned children with no attention, who were provided of only four walls, because we thought it was the only solution.

The governments have to be more creative, they need to get more resources through unclaimed funds for infrastructure construction, and then, grant lots with basic services to those people to build a decent home, among other sustainable actions.”

During her turn, Claudia Pérezsalas’ affirmed: “In this problem there is co-responsibility between government and private investment, specifically of developers, because they should not build 25 square meter-houses, because it is simply inhuman; the authorities must regulate and they do not have to permit again to build this kind of houses.”

“We need to increase population once again in Juarez and get back the urban sprawl to grow vertically. We must analyze data like Houston’s – a city with a very horizontal growth-, where the registered oil use is 58 thousand liters a year per capita; but on the contrary, Vienna – a compact city- uses 7 thousand liters. Just imagine the cost of pollution: we do not have to continue thinking the city can only grow that way.

An average family in Chihuahua earns, between father and mother, five minimum wages, and they spend 1.8 wages on public transport. So, the question here is: Counting on 3.2 minimum wages we want that family to send the children to school, to eat well, and also to pay their house monthly?”, says Enrique Baeza.

The cost of carrying infrastructure to horizontal cities is really high; all the approved UDIS in the country are out the urban sprawl, adds Jose Antonio Ruiz Galindo, General Director of IGS.

Education is first and then, infrastructure Jorge Girault of AMB: “If we compare ourselves with India, we have a better infrastructure; but in India, they export brand with a high education, something they put in first place, even over infrastructure.” The panelists comment we have to follow the same strategy. Wages rise through education and, as a consequence, the quality of life. “30 years ago, some countries like Malaysia, Finland and Singapore had the 20% of Mexico related to Gross Domestic Product; today all of them are solid economies, because they place education in first place”, points Girault.

“We must unify criterions about sustainability and take into account that every area is unique. In fact, there are three platforms when we talk about sustainability: economic, social and environmental development. As for the social development, and if we add what is happening in Ciudad Juarez and Chihuahua, we need to invite experts on the violence phenomenon in these cities, because it is not convenient to apply standard measures, even if these measures have worked in other places”, adds Roberto Palazuelos of IGS.

Mobility models

At CTS Mexico, they have always been conscious about the importance of integrating mobility and transport topic in sustainability. They support in the making projects to be sustainable, and those ones already developed to become kind with the environment through the sustainability’s principles. “We recently worked on a project in Aguascalientes, the plan was to build 10 thousand houses, so the government had to adjust and made some changes in goals and rules, getting the following ones: reduce the traffic in 34%, increase the public transport 60%, the bicycle use in 50%, walking 40% and increase green areas a 30%, everything by keeping the development’s cost. To achieve that project, a jointly work between government and developer becomes necessary”, says Rolando Nunez.

Jose Herrera of the Environment Institute gave his opinion, too: “It is evident that DUIS generate a benefit for the final user, something that we forgot in last developments, based on the conventional models, but we need more concrete benefits; so, the federal, state and municipal governments must agree with the same idea referring to sustainable development.”

“On the other hand, we need a new housing law in Chihuahua, in accordance with the current needs. It is also important to develop a better infrastructure. In the past there was no planning, we have to place the employment resources close to the people, so they do not have to travel long distances to go working”, comments Enrique Terrazas.

“At Fidelity, we are working on a program in search of collecting contributions or taxes to leave this extra reserve for the joint-owners. In big DUIS cities-20 thousand houses- managing this fund makes sense. All these abandoned assets can be regenerated by planning a way to build vertical developments.

Measures for the future

To finish, some panelists contributed with these ideas and suggestions to implant some measures to help the welfare in the State: “We must analyze the DUIS concept. Yes, we did bad things, but we are conscious we can do different actions to correct what we have today.” Alberto Chretin- Secretary of Economy, Chihuahua “We must increase population in the urban sprawls. In Ciudad Juarez there are 470 thousand houses, which roughly 76 thousand are abandoned. What we are doing nowadays, since the results from a diagnosis of urban sprawls, is to determine where the lacks are. In some places, investment can be in risk; sometimos the houses may be pulled down to build again, but in a vertical way.”

Ricardo Yáñez -Housing Institute, Chihuahua. “We must keep going on with the collaborative work between government and private initiative.

If the first has good initiatives, the second can support them, by applying coordination. The government’s main task is to make developing the initiatives easier, and the private sector’s goal is to press to make it happen and, also to grant the capital helping the economy growth.”

Enrique Terrazas- Developer Businessman “If we can bring some universities like the TEC and Anahuac, if we can have a full time school, if we can offer health breakfasts in the public schools, we could attack the problems of education and health. The program of the Governor César Duarte includes those points, among other topics as mobility, school transport and economic development based on high value added products, for instance the nuts, (the State exports 700 million dollars of this product), apples, cotton, corn (a million 300 tons are being produced), jalapeno chili pepper, etc., products that today have no value added. Integration and execution are important factors, but we will be able to highlight when we execute in a fast way and once. It is a shame to have built 250 thousand houses and, today we have to come back to fix them or even pull them down.”

Eugenio Baeza – Real estate Businessman “A viable way to direct the plans must be present, and they can be achieved by financing. We must redirect the resources going to other sectors of less impact.”

Blanca Rodriguez – Urban Land Institute and Rockwood “Redirect the DUIS.”

José Antonio Ruiz Galindo – Industrial Global Solutions

LEED Certification, More and more important

The information is surprising regarding power consumption by corporate buildings. According to the US World Green Building Council (WGBC), corporate buildings are responsible for 40% of the world’s Greenhouse Gas Effect emissions, one of the key factors today in climate change, and they also produce 50% of the solid waste and consume 40% of the power. The situation is concerning, the environmental policies in various countries seek to revert these numbers and in Mexico the Department of the Environment for Mexico City began operating the Sustainable Building Certification Program two years ago.

The pressure on soil conservation and the increasing demand for water, energy ,and natural resources that Mexico City faces led to the creation of the Sustainable Building Certification Program (PCES) – incorporating strategies and actions proposed by the Mexico City government through the Plan Verde (Green Plan).

In fact, reforestation carried out in 2008 and 2009 resulted in the planting of 1.4 million trees and also the cultivation and maintenance of another 2.1 million reforested trees. In addition, approximately 8,400 m2 of green rooftops have been installed and 900 m2 of rooftops dedicated to hydroponically produced ornamental plants.

There are international experiences that have inspired the PCES in one way or another.

Since 1994, sustainable building certification schemes have been developed and implemented around the world. To mention for example: The Leadership in Energy and Environmental Design (LEED) in the US; the Code for Sustainable Homes in the UK; the EnerGuide for Houses in Canada, and the House Energy Rating/Green Star in Australia.

This being the case, buildings interested in receiving this certification must apply to be accepted into the PCES, meet a series of requisites, and submit to various reviews and analysis.

The certifications are issued according to the degree of compliance with the criteria for sustainability, which include energy, waste management, quality of life, and social responsibility, as well as environmental impact. The degree attained ranges from 21 to 50 points (Compliance), from 50 to 80 points (Efficiency), and from 81 to 100 points (Excellence). Some of the benefits the building obtains with this certification are: increased property value, return on investment, reductions in water and energy consumption, and also recognition as being a member of the group of sustainable buildings.

The Certificate of Efficiency also carries with it a reduction in the payment of city taxes (predial), administrative simplification, and financing at preferred rates, while the Certificate of Excellence, in addition to reductions in city taxes, administrative simplification, and financing at preferred rates, also has financing for energy saving programs.

The overall purpose of this is to encourage new buildings to be designed to use renewable energies, to have mechanisms to treat and save water and power, in addition to using materials that would have the lowest environmental impact possible, as is the case with buildings like Torre Mayor, the HSBC Tower on Avenida Reforma, and the Bancomer buildings (under construction), which already have LEED certification (Leadership in Environmental and Energy Design) given by the World Green Building Council (WGBC).

Sustainable buildings must obtain 25 points in the following areas to receive the certification:

Power

• Energy Saving: 18 points

• Solar Heaters: 7 points

Water

• Rainwater collection: 5 points

• Wastewater treatment: 8 points

• Clean water consumption saving: 12 points (subdivided into:)

• Elimination of leaks: 5 points

• Use of saving devices: 5 points

• Awareness campaigns: 2 points

Quality of Life and Social Responsibility

In housing:

Incorporating nature into rooftops

Incorporating bioclimatic design

Controlling noise levels

Installation of bicycle stands

Generating a culture of involvement

Refraining from using public assets

In Offices:

Two other demands are added:

Providing transportation assistance for employees

Arrival and departure bays for transport

• Environmental impact: 15 points

• Solid Waste Management: 10 points

Environmental chall enges in Mexico City

Soil Conservation

• Stop the urban sprawl from growing Power Consumption / Air Quality

• High dependence on fossil fuels

• 58.9 million tons of CO2eq Greenhouse Effect Gas emissions were generated in 2006 in the Valle de México Metropolitan Area, with Mexico City being responsible 61%

Demand for clean water and over-exploitation of water tables

• Consumption of 35 m3 per second

• More than half is drawn from the water table, however only half of that extracted is replenished annually

• Some areas of the city present sinkages of up to 40 cm each year

• 34% of clean water is lost through leaks and spills

• Water supply is not uniform throughout the city

• 42.6% is pumped from external sources to the Valle de México basin (Cutzamala and Lerma Rivers).

Solid Waste Management

• Approximately 12,500 ton/day

• More than 3,500 garbage collection trucks

• More than 30,000 people involved

Source: Department of the Environment

Seguir leyendo LEED Certification, More and more important

Sustainable, Integrally Planned Center Sinaloa The latest in the Pacific

Based on sustainable development concepts, the National Trust Fund for Tourism Development (FONATUR, by its acronym in Spanish), has started the new Sustainable, Integrally Planned Center (CIPS, by its acronym in Spanish) Sinaloa, which is a project formed by housing sectors connected to golf courses and marinas integrated to hotels.

This new development will be communicated by internal channels connecting the different sectors, creating thus a diversity of aquatic environments.

Located in 5883.451 acres land and 7,46 milles of beach, this new CIPS Sinaloa, in the municipality of Escuninapa, has called the attention of private and institutional investors that see this project as the birth of a mega touristic development oriented towards sustainability. Its infrastructure will have excellent quality and it has 14,000 houses, 15,000 hotel rooms, three golf courses, two marinas, a cycle track, an auditorium, one library and open spaces for physical activities. It promotes a clean development and wellbeing, supported by the concept of compact cities.

First FONATUR’s CIPS Sinaloa

CIPS Sinaloa Master Plan has considered a multidisciplinary planning process that includes environmental, social and economic aspects with a focus on integral sustainability, guaranteeing thus not affecting the current situation of the project’s area ecosystems and providing elements to improve their quality. So, not only the current situation is respected, but actions are proposed to improve the functional quality of ecosystems through a series of Environmental Management Programs (PGMA, by its acronym in Spanish), highlighting restoration activities through the reforestation of the region’s native species, and actions for the preservation of mangroves located in the area next to the National Marshes.

FONATUR considered that in order to improbé the region’s environment they had to perform special studies, among which: LIDAR (Light Detection and Ranking); Marshes System Diagnosis; Socioeconomic Diagnosis of Communities and Productive Activities, and Geohydrologic Studies that described the region’s environmental and socioeconomic functioning and which results were considered in the CIPS master plan design and integrated to the Regional Mode Environmental Impact Statement, which help establishing different measures to be adopted for the stages of the project.

In this regard, FONATUR will continue working with the SEMARNAT to maximize the environmental, social and economic benefits of the CIPS, using natural resources in a sound manner.

The project

This CIPS Sinaloa is interesting due to its sustainability aspect. It has a mix of soil uses in a specific space, which will allow the users having everything on hand without having to use the car in long trips. This connectivity will foster the use of low impact transportation means, such as public transportation, bicycles and walking tours, which will help people becoming one with the space.

The urban design has many intersections, sidewalks and paths, green areas, parking lots behind buildings, malls and different places inviting to social gatherings.

The intention is to include this CIPS in a whole ecosystem, but without affecting it, therefore it will be a place with its own resources generation. For example, regarding the use of water, a model based on a sustainable supply source for the efficient use of water will be used, guaranteeing thus the recycling and reuse at least once.

The use of power will adapt to innovative schemes through low consumption certified equipment, in order to make CIPS a power efficient development, avoiding the use of energy coming from fossil fuels and using solar energy.

It is planned to use the energy resulting from the residues management, as well as the racional use of it, decreasing thus the ecological footprint and the human demand resulting from the construction and operation of the CIPS.

Architecture will be essential in the design of each building. Therefore, the power efficiency will depend on orientation, volumes, shadows, heights, material, winds, isolation and other bioclimatic elements that will increase the level of comfort and life quality of its inhabitants.

Lastly, the CIPS Sinaloa is planned as a touristic destination that will offer a wide variety of products for different sectors of national and international tourism. The idea is serving the more dynamic segments, like nature, culture, adventure, sailing, golf, conventions and health.

FONATUR ACTIONS

• The municipalities of Mazatlán, El Rosario and Escuinapa will benefit from the new CIP, taking advantage of the touristic potential, the cultural and architectural richness and the already installed touristic infrastructure.

• The project, to be developed in 50 years, will have 2,381 hectares, 12 kilometers of beach and will create more than 150,000 jobs, which is translated into a huge touristic potential to create the basic infrastructure to make it one of the best of the world.

IN THE REAL STATE AREA

• FONATUR actions are oriented to develop an important touristic center that can guarantee the investment in profitable businesses through the extension of land reserves for housing and urbanization.

• 14,000 houses, 15,000 hotel rooms, 3 golf courses, two marinas, cycle track, open spaces, library and space for auditorium.

OPPORTUNITY FOR INVESTORS

• It is planned as a touristic destination that will offer a wide variety of products for different sectors of national and international tourism and that will serve the most dynamic sectors, such as nature, culture, adventure, sailing, golf, conventions and health

URBAN EQUIPMENT

• Implementing a non contaminant transportation system that makes moving in 2,000 hectares easier.

• Residual water treatment plants.

• Use of natural resources and implementation of renewable energies as part of the sustainability line.

• It is planned to build many macro lots for hotels, condos, and mix commercial uses, among others during the first stage.

CIPS SINALOA’S PROJECTS

• The different sectors of this complex will be connected through channels, which will create a diversity of aquatic environments with open spaces and landscapes. It will also have a theme park, malls, administration area, pier for cruises, beach clubs, among others.

For more information:

FONATUR

Tecoyotitla No. 100 Col. Florida

México D.F.

Tels: (52-55) 5090-4494 / 01800-800-1020

Toll free USA: 1877-847-8183

www.fonatur.gob.mx

ventas@fonatur.gob.mx

Seguir leyendo Sustainable, Integrally Planned Center Sinaloa The latest in the Pacific

Economic Benefits of the Sustainable Construction

The value of investment property should be analyzed in terms of all costs and revenues generated during the entire life cycle of the building at any time of disposal and not just at the time of the capitalization of investment and profits in line the original financial plan.

In this issue dedicated to Sustainable Development, we will focus our participation to a key aspect of the topic, which often plays an important role in the success or failure of our attempts to design and construct buildings with the smallest possible footprint. We mean the lack of knowledge of the costs and the economic benefits that sustainable construction represents for building projects.

This participation will be dedicated to identifying the cost of raising the environmental efficiency of a building for its certification, and discuss the concepts that are the benefits of sustainability in buildings, focusing on the market for corporate office buildings class A and A +, considering that adhere to global standards, so that comparisons with international data base are valid, because there is little local experience.

We know that Mario Molina Center conducts an investigation of the energy performance of buildings in our country that will allow us to be more efficient in promoting and implementing actions to reduce carbon emissions in the projects we design and irretrievably have a carbon footprint.

To date, only 11 buildings have been LEED certified in Mexico, 5 are mixed-use, industrial facilities-offices, distribution centers-offices or industrial buildings. Fortunately we have the experience of having designed the first office building LEED certified Gold in Latin America, so we have direct information on their costs and energy performance.

While the benefits are numerous –reduction of administration and maintenance costs; increased opportunities for investment; attracting a sophisticated clientele that appreciates the commitment to the environment; higher occupancy rates than those in buildings without sustainable features; best lease rates; better work environment that means savings for low employee turnover, with what this means in terms of hiring and training costs-, we will omit to enforce them because of the difficulty in quantifying them, and the lack of consensus on their assessment.

For those interested in the beneficial impact of these issues, we recommend reading the report to the GSA by the WBDG –published when the former was re-evaluating the possibility of LEED certification mandatory for their new and renovate buildings-, where an account of the benefits of sustainability in construction is made.

Instead we will refer to the motive of real estate development which is the legitimate growth of our patrimony, which in the universe that we have decided to stick in this issue, we can identify in two areas: the office buildings as medium-term investment (or Speculative according to the correct meaning in real estate), where it looks for return on investment and profits in a given period; and those who will become part of the assets of the investor (or Patrimonial) in which the return on investment will consist of the income generated during the life of the building.

In any case, for the purposes of the exercise we propose it is important to accept the notion that the value of investment property should be analyzed in terms of all costs and revenues generated during the entire life cycle of the building. We suggest that this concept should be considered even for Speculative buildings, because the balance between expenditure and receipts should set the property’s value at any time of disposal and not just at the time of the capitalization of investment and profits in line the original financial plan.

While these concepts are commonly used for participants in programs of Public-Private Participation -a modality in which today are held investments in road infrastructure, health, education, and security-, are not yet usual or fully understood, and therefore unacceptable or undervalued in the field of high quality buildings for offices.

Our challenge as leaders in this market is to promote better understanding and dissemination of the subject, in order to adopt and spread its use for the benefit of investors, users and the environment.

This proposal will focus on two concepts: first, to demystify the idea that buildings seeking LEED certification by virtue of its energy efficiency and integration into the environment are much more expensive; second, to identify the economic benefits of savings in the use of energy, analyzing -in the next delivery and via a simple arithmetical exercise- how these benefits outweigh the costs if the appropriate technologies are used. Additionally we should mention that this is more easily achieved when planned as part of the building. When taken once defined the criteria of cost, performance, and construction procedures, all derivatives of any initiative of energy efficiency becomes a concept of additional cost.

For this we must rely on the information gathered by various organizations over the past 10 years that we will supplement with the direct information available to us.

In principle we will review the perception consultants have about the increase of cost in buildings seeking energy efficiency and sustainability.

This perception -identified by a survey conducted by the World Business Council for Sustainable Development in 2007, in 5 developed countries and members of the BRIC- takes the market to consider an increase of 17% on average.

Our own experience is that when discussing with our customers, they recognize they do not have information, which leads to doubt on its implementation. Sometimes they claim not to be interested in sustainability issues as the reference of their advisers is that this is a high cost, which is not recoverable, in addition to not having a positive impact on the profitability of their investments.

The known studies of Davis Langdon on the cost of sustainability -based in a sample of more than 160 buildings of standard energy performance and high efficiency- recorded that there is no cost increases for this reason between the two groups when decisions are made during the initial stages of the projects.

An analysis carried out in Britain found that the cost of bringing a building certification level to “Excellent” in BREAM, the certification system of that country, is 6%.

In the middle of the last decade the General Services Administration (GSA) of the United States commissioned the National Institute of Building Sciences to carry out an analysis of the increased cost of construction of office buildings and cedes of Court Houses both new and tried to remodel for LEED certification, and the results showed that in office buildings the additional cost to base cost would be 2.5% to 4% for those who opt for silver-level certification and up 8% for those who opt for gold certification level, the latter being those who have the best energy performance and therefore those who generate the most savings.

Our experience in VFO, through the certification of the headquarters of HSBC in Mexico based on data released by the institution itself, is that the cost per lead on its building to LEED Gold level was 4.4%, from which 2.6% was due to the implementation of sustainable policies specific to the institution and 1.8% by the adoption of rules belonging to the LEED certification system.

As we talk about the benefits, we will refer to savings derived from energy efficiency, which is worthwhile to emphasize its importance at a time when the whereabouts of General Gaddafi is unknown, and the future price of oil targets to 150 usd by mid-year (which we all hope will not happen).

To identify these savings we will use the figures from the General Services Administration of the United States who found that average savings of LEED certified buildings is 26%, and the building of the Agency for Environmental Protection in California recorded a saving of 38% over the average of the buildings in the area. Our experience in the HSBC building in Mexico City is that energy savings is 33%. Although in this regard abundant data exist, we will not insist on it as it is an easy number to accept, because depending on the level of certification, this is one of the rules adopted for the design and construction of buildings and its operation is verified by the commissioning process.

We conclude that the idea of accepting an additional cost of 17% is wrong, that this increase can be a maximum of 8% for buildings who opt for a Gold-level LEED certification, and that saving is over 30% depending on the specific certification level. With these numbers, in the next collaboration we´ll analyze its financial impact on real estate development of office buildings.

Seguir leyendo Economic Benefits of the Sustainable Construction

Green Building in Mexico: Present and Future, a vision from a practical point of view

In the next 30 to 40 years, norms, codes and practices in USA will have each and every new building mandatorily designed on a green building program basis.

Early in the 60s, few persons in USA were in touch with computers. In the 70s the use of computers gradually expanded to many companies and early in the beginning of the 80s, when personal computers appeared, the utilization generalized in such a way that, at present, nobody or a few may deny Computers as a quotidian device.

In USA, as in the past with computers, similar reactions are taking place regarding to green buildings. Climate change, environmental pollution, indiscriminate use of finite resources and recurrent energy crisis, led to urban planners, engineers, architects and other real estate professionals, to realize the necessity of reverting the high consumption of raw materials – as well as water and energy resources – in the construction industry. Consequently, in the 90s, fundamentals were set in force for the creation of World Green Building Council and United States Green Building Council, as well as the emergence of LEED Program (2000) as a tool for the development of green buildings.

We understand as green buildings, those fully planned, designed, built and operated on the basis of a code that requires and checks the fulfillment of some minimum requirements – such as choosing the construction location, efficiency in water, energy and materials management – in order to provide environments in favor of a better performance of human activities, thus contributing to a sustainable management of available resources in the projects construction, improving their economic benefits and providing positive impact to the adjoining communities.

At present, building projects with LEED certification in USA are more than 5.000. Many projects have adopted other programs (Green Star, BREEAM or HQE), thus proving a growing awareness among developers, planners, governments, architects, engineers, contractors and users, of the necessity of an efficient and rational use of natural resources in the real estate activity. In the next 30 to 40 years, norms, codes and practices in USA will be in such a way responding to sustainable development requirements, that each and every new building will be mandatorily designed on a green building program basis. Then, the leading buildings will be “Living Buildings”: the summit of efficiency, energy and environmental performance of a building.

¿What’s happening in Mexico? Currently, we lack of a nationwide system or program applicable for planning, designing, building and operating friendly buildings or, at least, environmentally neutral, energetically efficient, and with an optimal use of materials. We haven’t any Mexican Building entity dedicated to green building issues, bringing together all the involved sectors, while being widely recognized, accepted and supported in leading the market transformation process towards green building.

There is few or no interest in local authorities in promoting nationwide norms and rules on this issue, and even worse: little or no awareness and much indifference in transforming Mexican real estate activities in sustainable industries, professions and business units.

The almost incipient development of green building projects in Mexico is a clear reflection of the actual problems that we have to face in order to impulse the transformation towards a sustainable real estate activity in our country.

Hereon we’ll try to describe some of the reasons that influence the lack of success in the implementation of green building projects in Mexico; we’ll also suggest some actions that may contribute to change this situation. The major issues (but not the only) that prevent green building projects in Mexico, are:

– Lack of incentives for developing green construction.

– Lack of information regarding to green buildings and their potential benefits.

– Misinformation and biased beliefs related to the costs involved in green buildings.

– Lack of practical schemes for equitably distributing costs and benefits.

Lack of incentives for developing green construction

Federal incentives in Mexico (mostly fiscal) for the development of real estate green projects are practically null. There are some local programs for sustainable building, but incentives are scarce, valid during short periods and not enough for encouraging developers to explore green building initiatives.

Regarding to norms, there are some Mexican Official Norms oriented to have some elements (pumps, engines, lighting devices) energy efficient, but there are no norms focused on the real estate goods as a whole, and we are far from nationwide rules obliging to build in an integral and fairly planned way, including systems that provide energy and water efficiency, internal air quality and an efficient utilization of materials.

We need incentives, both in federal and local levels, promoting the development of real estate green projects. Said incentives – in the federal level – should impulse tax reductions for those companies developing activities in green factories or offices, and speeding up proceedings for green initiatives. In the local level, incentives could focus in a more dense occupation of land in central urban areas, discouraging the use of rural and forest areas for urban utilization, thus preventing the increase of urban spots, or exempting the payment of fees, charges and taxes for construction permits of green buildings projects.

We primarily need to encourage the academic institutes and professional societies to propose and develop a national code of sustainable buildings, which may include all the relevant technical issues regarding to green building, the way of quantifying and proving its fulfillment, and a system for checking that projects are accomplishing with the code requirements.

It is also necessary to encourage and rule to the industry to produce materials and equipments for the building industry, which not only might be sustainable, but also be supporters, among others, of better lighting, and/or better vertical and horizontal transportation, thus contributing to a more efficient water, energy and other resources consumption in buildings.

Lack of information regarding to green buildings and their potential benefits

At present, USA has many green buildings worth to be used as a basis for monitoring and checking the actual performance of projects, knowing their actual energy consumption and savings generated against classical buildings of similar characteristics, also allowing to evaluate the life cycle total cost of the project, and so discovering the both environmental and economical benefits that green projects produce.

Statistics have shown that green buildings energy consumption is ranging 26% savings, about 13% savings in operation costs, 33% less emission of greenhouse gases, and 27% increase in users satisfaction. (Kats, 2003).

In Mexico we haven’t a sufficient lumber of green buildings for measuring and comparing costs and benefits, and most of the analysts are skeptic about dates coming from USA experience, considering that environmental (weather conditions in USA are more extreme) as technological (availability of more green products and systems), and even cultural patterns (more education and more community consciousness of the population) will not allow to reach the same costs and benefits.

To solve this issue, it is required that owners and managers of the few green buildings in Mexico, ease the path informing about the performance of their buildings, thus allowing a team of experts (meeting academic and field practitioners) to analyze the actual behavior of green buildings in Mexico, and publish results, recommendations and experiences that will contribute to reach more successful green projects. This kind of analysis, based on the current real estate status, will not necessarily reflect that present green buildings save much energy, but will surely teach us the already earned expertise in Mexico, and how we can build better buildings.

However, as far as possible, this analysis or others about projects under construction, must provide hard data about the real cost of building in Mexico. More those hard data about costs and benefits are available, more will be the chance of future developments really planned under sustainable criteria, while incentives will be a consequence of potential benefits from reasonable costs, rather than deficits generated by the lack of governmental stimulus (which should gradually disappear when replaced by the ad-hoc norms) Misinformation and biased beliefs related to the costs involved in green buildings Nowadays, a green real estate project based on LEED, implies an additional cost of 0.6% compared with a conventional project, when a basic certification is requested, and 2% additional cost if Silver or Gold certification is required, reaching an additional 6% for Platinum projects (Kats, 2003).

Initial investment of an additional 2% for designing a green building, will in average result in 20% savings of total construction costs through the life cycle of the building: more than 10 times the initial investment (Kats, 2003), while sale prices or leasing of energy efficient buildings are 10% more than conventional buildings (Miller et al, 2007).

Reasons that contribute to obtain such benefits, are: expertise and capability of project planning and development teams, (added experience in every new project, produces reduction in time terms, and avoids unnecessary costs in the new construction), merge of new technologies gradually included in new projects (as time goes by, new products reduce their cost, new materials are available, and systems and equipments provide more efficiency to construction processes of new constructions). In USA there exists an increasing demand of green buildings, as well as more practitioners and companies offering better capabilities for executing this kind of projects.

For reaching such a level of competitiveness in Mexico (regarding to costs, time terms, and quality of green projects) we need training professionals in developing sustainable building, thus giving them the chance of planning, designing, constructing and operating, teaming up persons and companies capable of managing projects during long time terms, in order to earn experience. If such is the case, each and every project will allow the team being more and more efficient.

Lack of practical schemes for equitably distributing costs and benefits

In residential buildings, the cost of building green is paid by the investors but benefits of savings in water and energy consumption, fresh internal air, etc., are received by the final users who are not always in conditions of paying for that; therefore, the economic risk of building sustainable housing falls on the developer, discouraging its application.

In industrial or logistic buildings, it happens as well. Developers of these speculative buildings fear to make them sustainable, because they think that investment costs in the required infrastructure will not be recovered. If they transfer to the final price the additional costs of building green, they fear losing clients against conventional products investors.

The same position is taken by developers of commercial centers: the tenants may decide paying less in a conventional plaza, befote paying more in green commercial centers. This trend is more evident in green retrofits, when green elements are implemented in existing conventional buildings.

The first step for equitably share costs and benefits in sustainable buildings, consists on evaluating which costs are produced and which benefits are reachable when building green in Mexico, and publishing those results to share with the real estate community; but, especially, among their clients in order to build consciousness and generate demand of green building.

In the means that consciousness makes merge demand of green buildings, the extra costs will be transferred from the developer to the final users of the properties.

At the same time, when more usual and extended is the initiative, extra costs will tend to reduce, so that the final users will be able to afford them, given that more benefits will be available.

This here and there will find a balance. On a side, developers investing in sustainability, having more capable and experienced practitioners, more materials and equipments oriented to sustainability, less “conventional competitors” and more clients and tenants ready to pay for green housing or green retail spaces, will be able to reduce the consequent extra costs.

On the other side, the final users will have energy savings and other green building benefits, as well as a broader offer for choosing, with marginal extra costs, and will be also inclined to accept as well as to claim for green buildings for working and living.

Final Comments

We think that the key to success for the Mexican real estate industry transition towards a green industry, will be the synergy and the balance that could be reached between the creation of incentives and the publication of accurate information about real costs and benefits of building green in Mexico. It is required to educate and build consciousness among the actors of the real estate development process, including from those investing capital to the final users of the developed goods. Pressure of public opinión and main actors (investors, developers, contractors, professional and academic) in generating demand of buildings to solve our requirements of sustainable properties for living, working, studying or any other human activity, will be able to transform this industry.

References:

Davis Langdon (2007). Cost of Green Revisited:

Reexamining the Feasibility and Cost Impact of

Sustainable Design in the Light of Increased

Market Adoption.

Kats, G. (2003). The Costs and Financial Benefits

of Green Buildings: A Report to California’s

Sustainable Building Task Force.

Miller, N., Spivey, J. & Florance, A. (2007). Does

Green Pay Off?

Seguir leyendo Green Building in Mexico: Present and Future, a vision from a practical point of view

Taking advantage of sun and wind, we generate energy

Masterfan has a lot of experience in the air circulation market in Mexico and in other Central and South American countries. They have a wide range of products providing industry with Decorative Ceiling Fans and Bathroom Extractors, among other products, currently offering Hybrid Lighting Systems (Solar & Wind), as company management says, “taking advantage of sunlight and wind, we generate energy.”

Today Masterfan is conscious we are facing a crucial time in the history of the planet, where a sustainable future is a must and that this is no longer an option rather an obligation; also that countries and companies that meet this challenge with innovative and creative solutions will be those that will mark the way.

The company has outlined plans to work together with governments, with partners in development, and with investors. The goal is to do successful business that makes a sustainable future possible at the global level.

At Masterfan, they are thinking green

There is no doubt that variables such as the high costs of producing energy, the need to reduce dependence on fossil fuels, increased awareness regarding climate change, and preserving the environment, have led Masterfan to develop new technologies.

Their strategy is to take advantage of wind and solar rays in a more efficient manner, as these are clean and unlimited sources, and as company management states: “this contributes to reducing the effects of global warming.”

“This translates into significant savings in fuel costs and frees us from high fluctuations in hydrocarbon prices. In socio-economic terms, this initiative is considered to be of great interest for the states and municipalities in our country, contributing to the creation of local jobs”, Tecnolite´s director says.

The company’s policy on sustainability provides for a series of notable benefits:

– Creation of a clean energy source

– Infrastructure growth

– Attractive investment for economic and tourism activities

– Increase added value at the regional level

– Improve living conditions as a result of benefits

Hybrid Lighting System

This product was successfully launched at the recent Guadalajara Suppliers Expo, reflecting certain factors that are encouraging for the market and above all for users and customers.

Let’s take a look at these:

From an economics perspective:

– Financial stability against price and rate increases

– Medium term recovery time for the investment

– Reliable and inexhaustible resource

– Diversity of applications, advantage of not being connected to the local network

– Autonomy

From an investment perspective:

– “Green Building” focused marketing

– Practicality to integrate solar and wind power

– Investment fund support for both the private and government sectors

– The investment cost is amortized in the property value

– Advantage of not relying on the local network and “owning power”

– Lease or financing option for the system.

Seguir leyendo Taking advantage of sun and wind, we generate energy

AMPIP Think sustainable

The Mexican Association of Private Industrial Parks (AMPIP, by its acronym in Spanish) is working hand in hand with the Federal Environmental Protection Agency (PROFEPA, by its acronym in Spanish) in a series of initiatives that will soon be translated into what the industry has called Clean Park. How do they perceive the market? What specific activities are they carrying out? These are some of the questions answered by the new Chairman of the Association, Jaime Roberts Vildósola.

The agreement of the National Program for Environmental Audit signed on 2009 between the AMPIP and the PROFEPA, demands that industrial parks are incorporated to such initiative, creating thus the title of Clean Parks. However, this will be granted to industrial real estate developments that have complied with the Environmental Quality and the Clean Industry Certification.

It is important to mention that the Environmental Quality Certificate is focused on the environmental audit of common use areas of an industrial park, therefore, it is granted to the management of the Park. The Clean Industry Certificate includes the environmental audit of each company within the industrial park, but it is individual. So, when a park has certified its areas and its industries, the Clean Industrial Park Certificate is obtained.

On the other hand, the AMPIP, along with the PROFEPA and the National Council for the Maquila Export Industry (CNIME, by its acronym in Spanish) is working in such a way that the Association will cover part of the industrial parks and the CNIME, the tenants. This initiative will start with a series of workshops and training courses in different parts of the Mexican Republic for parks’ owners and tenants. The idea is to have the highest number of Clean Parks possible.

In order to know the works of the Association in regards to sustainability, their idea of the market and other measures and initiatives, we talked with the new Chairman of the AMPIP, Jaime Roberts Vildósola.

Inmobiliare Magazine (IM): How do you perceive the industrial market this year?

Jaime Roberts Vildósola (JRV): Regarding industrial parks, the 2011 – 2012 term looks promising. We made a survey about the Mexican industrial parks tenants and 80% of them are thinking on expanding their current operations; this number is very good because it seems they had already absorbed inventories they had in site and consumption indicators have increased. Therefore, plants are planning to grow their installed capacity in order to satisfy the market. Some sectors, like the automotive industry, have very positive indicators. Mexico has become a very interesting market for future investments in the sector and this has a multiplying effect on the auto parts sector, which is the one that uses the most space in industrial parks.

IM: ¿Where is the AMPIP focusing its sustainable development initiatives?

JRV: As of the agreement with the PROFEPA, all industrial parks are heading towards the Clean Industrial Park Certification. Right now, the Queretaro Industrial Park has complied, and all AMPIP members are working on that. We think that sustainability will be the way to work and this will take us to renewable energy aspects. So, we are inviting our members to get the PROFEPA certification so then they can work, in the same sites and parks, with energy recollection from solar panels, which many companies are already using due to the certification of their LEED buildings. Also, we have to work on water recycling because many governments of the Mexican Republic are giving incentives to those companies reusing water. This is easier if we work as an industrial park.

IM: Economic Development Ministries are already working on sustainable development aspects, has the AMPIP approached some of these Ministries to join efforts?

JRV: We are working with the Mexican Association of Economic Development Ministers (AMSDE, by its acronym in Spanish) regarding logistics, Federal Government incentives and local training by State so we grant those supplying companies new to the sectors, like Aerospatiale, Automotive and Medical, a certificate of the services they are providing.

IM: Being and becoming a Socially Responsible Company (ESR, by its acronym in Spanish) is important nowadays. Are there some AMPIP members with this title already? What do you think about the ESRs?

JRV: Since I became chairman some months ago, one of the topics I consider very important was Social Responsibility. In fact, we are assessing the national program that we will adopt shortly and we want the different members to participate at each of their entities.

IM: Which problems do you think sustainability can bring and how can they affect the industrial real estate development?

JRV: Regarding sustainability the government must be involved with certain incentives, like taxes. For example, regarding the energy, we are working on a legislative agenda to help Mexico advance, and on offering incentives to developer that, when constructing their buildings, use renewable energy so we can have long term sustainability. This agenda has to be constantly pushed and we have to insist on it.

IM: Finally, it has been said that the last COP 16 reunion in Cancún received a wider support; which reflects and important advance towards a more democratic and integral approach of negotiations about the climate. However, there are many opinions about the policies proposed by the Cancún Agreement, what do you think about this? Do you really think the protection to the environment has a difficult future?

JRV: I think that the collective awareness in Mexico is changing, everybody is focused on the sustainability aspect, but we will need buildings that use 40% of energy involve in renewable energy programs with the incentives that the Federal Government can give to companies.

This is something we have to do as Association and with different actors of the government so we can create the needed changes. If we are able to do it, we will start providing specific solutions to the protection of the environment.

Some numbers of the AMPIP

• It is expected that the investment levels of AMPIP members during the 2011– 2012 term gets to values similar to those of 2008, this number is more than two billion dollars.

• AMPIP members represent about 30 million square meters of built areas.

• In 2010 the use of spaces in all industrial parks members of the AMPIP was 86%.

• 1.7 million jobs have been created by the tenants installed in the AMPIP members industrial parks.

• The annual average value of assets, lands and buildings, reported by AMPIP members is around 9 billion dollars.

Source: AMPIP

Seguir leyendo AMPIP Think sustainable

Technology And Compliance, Key elements of valuatio

Due to my experience of more than 10 years in the International Real Estate Industry and to my actual position as International Director of Grupo Sociedad de Tasación, which main company is the leading independent valuation firm in Spain, I have had the opportunity to attend several real estate and valuation seminars and congresses in Western and Eastern Europe, North, Central and South America.

During those years, I have been able to verify how the concern with regards to the valuation industry has increased in a substantial manner since the international financial credit crunch between governmental authorities. As a matter of fact, at this moment in time the valuation and real estate congresses internationally meet and gather authorities, financial institutions and of professionals involved in the valuation industry searching for solutions which can offer security to their respective mortgage markets.

It is clear that the residential valuation system is broken and that there are several factors which imply risk which should be avoided. Some of them are the following: heterogeneous criteria between the different professionals envolved in the valuation industry, heterogeneous content in the valuation reports, not existence of independent quality control over the valuation reports, Data Bases are not audited, information is not standardized, in several areas there is a monopoly of valuers, processes are not automated, pdf´s can be manipulated, etc. All of those factors create systematic risks in the valuation market, which prevents making an efficient quality control of the valuations linked to mortgage loans.

Due to the factors above mentioned, deviations can be produced in the opinions of value expressed by the valuers about the subject properties, and when the real value of a property is not shown in the valuation report, there is a substantial potential financial loss. This loss at a micro level affects the lender, the borrower, and the valuer, in a macro level it can have devastating effects over the mortgage market, real estate market, domestic market, and global economies and markets; what we have widowed in the passed years make us aware of the importance of protecting the market from this practices which can severely affect future of the global economy.

The deterioration of the valuation market has not been produced from one day to another but it has been evolving influenced also by the globalization of the markets. Since the mortgage market has become global, securitization has become a double edged sword by, from one part offering liquidity to the real estate market, but also creating a dangerous thought that through a great liquidity the risk could be eliminated, and that standards over collaterals and credit could be soften. In some cases, this situation, accelerated the mortgage processes in a way that it was priorized to originate mortgages over doing quality control over the valuations linked to mortgage market loans, which created the subprime crisis and a series of disastrous consequences to the global economy.

The need of change in processes and methodologies already existed in several markets but now, the need, is much more evident due to the international financial crisis which we have witnessed, It is necessary to make depth and significant changes in how the valuation is produced and delivered, and in the regulatory arena. From now on, secondary markets will analyze more carefully and precisely the processes, methodologies and technologies used in the different mortgage markets when acquiring Securitized Mortgage Products.

In order to achieve security to the mortgage market, it is key to achieve an optimum control over the valuation products. In my opinion the combination of strict regulations implemented by governmental authorities with technologies, which allow statistical and numerical analysis in the valuation process, and which would guarantee accuracy of the valuation through the process of developing the report and through the quality control process are essential. In order to achieve the change, it is extremely important to receive the support of the governmental authorities and of the financial institutions. Authorities must implement strict regulations and financial institutions must assure that the valuers or the valuation firms which work for them, work in a professional manner following the standards and specifications requested by the bank and by local regulations in order to follow “good practices” in the valuation market.

An example to follow is the model imponed in Spain where there is an existing model of valuation management companies, and the market is regulated by the Bank of Spain, who audits and sanction the different organizations involved in the valuation industry.

Through the implementation of an effective regulation, and through the use of intelligent valuation technology platforms, the mortgage market will see how the risk is reduced substantially, and will be able to achieve heterogeneous technical criteria, heterogeneous reports, make sure that the appropriate quality controls are produced, shared and audited databases, and standardized information which will allow a better analysis of the valuation works. Additionally in markets with high volumes of valuations, it is virtually impossible to conduct the business in a secure way without the use of specialized software, which manages and automate the process of the valuation work. If you are a valuer or a valuation firm, the workflow processes must include technology which will allow to receive orders, highlight important deadlines, track the status of the report, assure that compliance is being met, that the criteria, procedures, and methodologies used are the appropriate, and checks the coherence of the certified values, with the main goal of offering security and quality control tools to the mortgage market.

The valuation market in each country has its own characteristics but we have been able to prove, that the methodologies, procedures and technology that Grupo Sociedad de Tasación uses are 100% adaptable and exportable to diverse legal and socio economic environments and that we can help through them to offer security and safety to international mortgage markets.

Also, those technologies must be robust, flexible, trustworthy and secure. It is necessary to make aware the industry that it is extremely profitable in terms of security to invest in quality and automation of the valuations process to achieve productivity and profitability.

We can conclude that the binomial regulation/ supervision accompanied by technology is key in order to achieve quality and professionalism in the sensitive valuation activity. More specifically, at the mortgage market the base over which the mortgage loans are supported, must be correctly valued, not only so that the relationship between the lender and the borrower is configured appropriately, but overall, so that the investors of mortgage securities, can access to them with security and trustworthiness.

In any case, something which I have perceived is that change is hard and that status quo is a powerful opponent, and that independently of the need that a change is produced, this change will be produced gradually as it is impossible to change the behavior of the markets from one day to another. However, I am optimistic, and I understand that the International valuation and mortgages markets will adjust with the goal of offering much more security to their internal mortgage markets.

For any additional information: Santiago Herreros de Tejada, Grupo Sociedad de Tasación, C/ Principe de Vergara 43, 28001, Madrid, Tel (34) 91 175 41 39; web: www.stvalora.com e-mail: sherreros@st-tasacion.es

Seguir leyendo Technology And Compliance, Key elements of valuatio

What would Alejandro, the nobody, do? An instructional Marketing story

Our industry faces an extraordinary challenge. Worldwide the purchase of residencial real estate, particularly second homes and leisure residences, has drop off a cliff. The market will come back, but no one knows how soon and how well. It could take a generation to fully clear caution from the buyer’s psyche. It did for the Great Depression of the 30’s.

So, what should today’s marketer do?

Plan for the worst, that usually offers the most protection; and press down on the accelerator if the events prove more positive.

Where to start? One should always start with the foundation. If that is not solid, nothing that follows can be counted upon. And, frankly our industry has never paid adequate attention to the foundation, because it hasn’t had to. The incoming tide of the last 30 years has floated all boats.

The marketing process begins with a good definition. Here is how I define marketing…

The more you can satisfy the customers’ Desire for special experience the more likely they will be to buy your product. The more you can provide superior experience the higher the premium they will be willing to pay, and the more likely they will be to recommend you to others.

Now for marketing’s essential steps, I use the word “steps”, as opposed to “components”, because there is an order that should be understood. And, the best way for me to illustrate the essential steps is to tell you a story, which I shall refer to as “What Would Alejandro The Nobody Do?” I will italicize the steps and important considerations for easy reference.

Our Alejandro faced a challenge at least the equal of what developers face in today’s marketplace.

He was confronted with an almost impossible task, in his case of overcoming a competitor who was far and away #1 in the marketplace; a competitor who possessed unlimited resources; and had withstood all challengers in the past. At the time, Alejandro’s brand was a relative nobody, while his opponent’s was the biggest somebody of the day.

Alejandro possessed certain assets going in that were critical to empowering his thinking. And importantly, he had a keen sense of what mattered most and how to leverage resources.

He also was well grounded in approaching problems. He thought strategically and wasn’t afraid to innovate. Alejandro’s assets without which his power never could be leveraged to meet the challenge were that he had invested in infrastructure in the form of an intelligence apparatus, and had a highly developed process within his corporate structure. These were the Tools for success. Properly deployed they would give Alejandro an edge. His intelligence apparatus informed him how this particular target would behave (in marketing terms, he knew in detail who the customer was, what the customer liked, didn’t like or might like). And, he knew what he could count on from his internal resources. Further,

Alejandro had a clearly defined objective, with the consequences of winning or losing plainly spelled out. It was left to him to design a winning strategy. He could have followed conventional wisdom, “this is the way we have always done it” or “…what everyone else does”. However, Alejandro was no fool. Conventional wisdom might pass for conventional problems, but certainly not in this case. Alejandro had to “think out of the box!” He began by identifying the tipping point that would irreversibly turn the situation in his favor. With this point as his focus his sole focus, he set about thinking how he could achieve his objective through creative strategy, and tactics.

By now you may guess that I am referring to Alejandro, King of Macedonia, who faced Darius the Great, Emperor of Persia, the most powerful ruler with biggest army the world had ever seen, at Issus (333 B.C.). Alejandro, with the same brilliance and innovation with which he had so recently solved the conundrum of “untying the Gordian Knot” (he had simply slashed it open with the blade of his sword) employed his Phalanx as bait for the main Persian force. With their oversized shields to form a protective turtle shell, and their extra long lances sticking out like the quills of a porcupine the enemy would have a tough time breaking the defense. The Phalanx would give Alejandro a couple of hours to operate. Being cautious as well as brilliant, Alejandro practicad good risk mitigation. He positioned the Phalanx with their backs to the river to ensure his men would fight that much harder.

Having bought the time he needed, Alejandro feinted far left with his cavalry letting them spread out and kick up dust the better to confuse the enemy. When the much larger Persian cavalry had sufficiently committed and scattered themselves, Alejandro wheeled his horsemen around to form a tight wedge and drove them straight through the unexpecting Persians for the spot where Darius’ imperial banner flew.

Darius recognizing the threat fled. His army seeing that their emperor no longer “had skin in the game” quickly followed. The known World turned upside down in a few hours. Thus, Alejandro The Nobody became Alejandro Magno by dint of excellent infrastructure (let’s think of this as “good marketing genes”) that led to empowering intelligence, which enabled brilliant “out-of-the-box” strategy and tactics. (NB: We do not have to add in this case the need in planning for “Full Accountability”, as Darius’ turned tail sufficed. However, Accountability should be a part of every marketing plan.) I find Alejandro’s example instructive when faced with a particular difficult marketing problem. What would Alejandro The Nobody do? inspires me to meet the challenge.

This is probably not what you had expected in a marketing article. If so that will make me happy, as my intent is to get you to think differently about marketing, to approach marketing with a sound strategic process; and, to appreciate that marketing can offer no “quick fixes” or “free lunches”. (If that’s what you want you should talk to a magician not a marketer).

I would appreciate whatever comments and suggestions you may have.
Please email me at len@lensilverfine.com. Thank you.

Seguir leyendo What would Alejandro, the nobody, do? An instructional Marketing story

Municipal Planning in Mexico

As example of this urban planning we can start mentioning Curitiba, Brazil, that launched a new bus rapid transit (BRT) system, a bus that runs in a dedicated street lane reserved specifically for its use. This transport system but not as fast as the subway is faster than regular bus and costs a fraction – about a tenth — of a typically underground metro system. The affordability of this solution enabled Curitiba to dramatically improbé transport options for all of its residents.

Bogotá, Colombia is another example of outstanding urban planning, led by two of his best and most innovative mayors. Antanas Mocus promoted a culture of civility and a new urban consciousness through fun and innovative strategies. Enrique Peñalosa followed through on this vision by investing in bike paths, BRTs, and public spaces rather than investing in more infrastructure for cars. Together, both majors helped improbé the quality of life in Bogotá.

These efforts, creative and effective, in Latin American cities have given new hope and inspiration to other cities in the region and around the world. We have shown that even cities that face serious social problems and lack of resources can change your future. But how exactly were these changes made? And what elements of these strategies may be appropriate to our own cities? To begin this discussion of the Municipal Institute of Urban Planning of San Pedro (IMPLAN), along with the Monterrey Institute of Technology (TEC de Monterrey) and the state government of Nuevo León, organized a conference for professionals in the field. The intention was to discuss the different areas of urban planning and bring together international experts who could share their experience with the community. The presentations at the conference covered a variety of topics that critical for the successful planning of a city, from urban transport systems to the financial models and the structure of organization that can facilitate change. The conference was attended by experts from Colombia, Brazil, Spain, U.S., London and Mexico. Three lessons in particular stood as critical to a good urban planning process.

Vision

The cities that make a difference had a vision for the future; they knew where they wanted to go. As several of the experience shared by the presented demonstrated, articulating a vision is not easy. One has need to dream, forget about the obstacles, and believe that anything is possible. In most of cases presented, agencies were founded and charged with articulating a vision and develop master plans that followed from it. Many of these change-focused organizations were structured in a way that resembled San Pedro’s IMPLAN. In one example presented at the conference featured Bilbao, an industrial city that was in decline, re-invented itself as a tourist city with an economy based on the service sector. Bilbao Ria, a change-focused local planning agency, articulated the specifics of this vision and followed through with a series of projects that transformed and revitalized the city.

Leadership

The leaders of these successfully stories did two things that allowed them to carry out their vision and build the physical structures to make it manifest. First, they fostered the capacity of local government to implement new urban development interventions. They supported a mayor or other leader in government with the ability to identify innovative ideas and the administrative power to create and protect the necessary processes to allow actual construction. They formed a team with deep technical expertise, strong commitment, and organizational ability to execute the projects designed. The mayor of Medellin, Sergio Fajardo, for example, assembled a team of people who possessed detailed knowledge of the local context, a strong technical base, and the leadership qualities. These projects also turned these formally depressed areas into major tourist attractions. Second, to create projects that have significant impact, the leaders worked to collect ideas from the community. Projects in Medellín as well as in Bilbao, for example, grew out of an intensive process of public consultation. During the consultation process, people were articulated their vision for a livable city, but they were also forging important ties. They are, as a community, proud and protective of their new physical space.

Priority of projects

Effective urban planning and renewal depends first on the definition of a clear portfolio of feasible, financially viable, and buildable projects, and then on the prioritization of projects among this group. Guillermo Peñalosa, who, in his discusión of Alternative Transportation Systems and Public Spaces, used a photograph of Bogota to illustrate the significance of the prioritization of projects. The photograph showed paved a bike path right alongside to a dirt road. He then described how the city of Bogotá channeled resources that could be used on roads for community- supportive projects, like the bike paths, but also public transit projects, green spaces, and plazas. This decision not only produced more transportation options for Bogotá, but it also transformed a city characterized by automobile traffic congestion into a city with easy to move through, with recreational areas for everyone. Hurricane Alex drove home very dramatically the relevance and importance of the lessons shared in this conference. The proximate cause of the damage was the storm, but the underlying reason was several decades of reckless urban development decisions. The rain, mud, and stones released by the storm merely followed their course. Because we made the mistake of building in creeks, streams, and ravines, and on slopes greater than 45%, however, the flood of water and debris took down the houses, the streets and any other construction that stood in the way as it poured through the city. During the days following the storm, groups of people in the community approached the town and the IMPLAN for solutions to solve the problem. As we move to rebuild the city, we will need to start with a vision, we must take care to build our city in harmony with the natural context, we need to densify in land that is suitable for this and create a robust public transport system to make this densification viable. We need to create an urban consciousness to ensure that citizens and developers to support the regulations and advice of professionals, rather than seeking an injunction to build in inappropriate places.

Following the example of other successful countries in the area of urban planning, Mexican municipalities have established autonomous agencies, with some independence from government, to manage urban development in its territory. These institutes are called Urban Municipal Planning Institute (IMPLAN) and now number 35 across the country. In 2003, the Association of Mexican IMPLANs was established, with 21 member organization. One aspects that set the IMPLANs apart from other planning agencies is their mandate to develop innovative financial models that initially allows them to receive funds from both public and private sector sources, but that will ultimately allow the organizations to be financial self-sustaining as they receive remuneration for the planning services they provide. Another aspect that sets them apart is the important role they play in mediating agreements between landowners and government to create master plans for new areas that are consistent with the overall vision of the municipality.

These institutes have helped transform cities, improving the quality of life for all citizens. The Municipal Institute of Urban Planning of San Pedro Garza Garcia (IMPLAN) was created in December 2005 as a public agency that was vested with the authority to manage itself as an independent entity. It was established as an organization that would guide and advise the municipality in planning for the orderly and sustainable urban development in its territory, but that would also promote civic participation and the development of an urban culture. The political independence of this decentralized agency has allowed urban planning to continue seamlessly despite the political transitions after each election cycle.

The planning process carried out by the IMPLAN of San Pedro rests on four basic elements: a strategic vision that ensures the orderly development in the short, medium and long-term; the management capacity to carry out urban renewal projects and to negotiate agreements between the public and private sectors that will allow them to go forward without disruption; the development of high levels of citizen participation and the integration of community ideas into the design of urban projects; and finally, a team with the professional expertise to ensure the highest quality of studies and projects. Where necessary, the IMPLAN also proposes reforms to the legal and regulatory framework to allow projects to be implemented; its institutional independence lends its legal intervention important credibility as technical opinions that are not tied to the positions of any political or economic group.

Seguir leyendo Municipal Planning in Mexico

Perspective Of The Industrial Real Estate And Office Sectors For 2011

Mexico shows a GDP growth that will be favorable for a continuity in space demand by companies, which in turn, will contribute to the national real estate sector’s recovery.

Since the end of 2009, a heterogeneous economy recovery has started taking place around the world. Economic difficulties in some European countries, along with a vigorous drive, especially in Brazil and China, have brought about an important investment flow reorientation. American economy, on which ours depends in great measure, has not achieved its full recovery and there is a persisting concern about a certain relapse in the short term. Mexico, in line with the rest of Latin America, had a greater economic growth during 2010 than in the previous year, even though a down turn is expected this year.

There have been both favorable and adverse conditions nationally in order to return to growth. The federal government has made efforts to keep a low control over the main macro variables, and the stock market has decisively moved forward. Unfortunately, because of loans scarcity, insufficient job creation, absence of structural reforms, and the delay in some of the greatest infrastructure projects as a whole, there has been a competitiveness loss and thus, investments have been inhibited.

Within this context we have been watching a moderate recovery in the real estate sector, even though it has also been inconsistente among different regions.

The industrial real estate sector

Industrial developers in general have been more than careful in new space constructions, especially regarding the speculative ones, with the strong intention for placing empty spaces before producing new inventory, although those with better funding access have been willing to carry on with projects upon request.

The volume increase in manufacturing production -with special emphasis on the automotive/ auto parts sector-, as well as the growing importance of logistics outsourcing, have contributed to a slight improvement in the industrial spaces’ demand. If financing costs remain low in the short term and the confidence index improves in the country, for 2011, we could foresee there will be the necessary conditions for those industrial developers who have the greater global portfolios in order to restart constructing speculative buildings, especially in those places with favorable conditions regarding unemployment and demand rates.

Now, we will examine the main sites’ situation in a panoramic way.

Due to the fact that Mexico City’s industrial market is highly focused on distribution centers for local consumption, this was the least affected by the crisis. After several months of continuous low levels, towards the end of 2010 prices had a slight rise adjustment as a consequence of the reduction of the vacancy percentage.

Mexico City shows adequate conditions to resume speculative developments, even though they could be limited because of a land shortage for development; therefore, those developers who have or control territorial reserve will play a predominant role in this regard.

Toluca’s submarket showed an outstanding recovery in net absorption, which during 2010 was four times stronger than in 2009, driven mainly by manufacturing users, especially the automotive/ auto parts and pharmaceutical sectors. A land reduction for great developments in the short term can also be seen in Toluca, which could trigger an increase of rent prices. There are two outstanding developments in the “Bajio” area, and will still be so during 2011: the Aerospace Park in Queretaro and the Interior Port in Guanajuato, thanks to the opening of the Bombardier Aerospace plant and the announcing of the Volkswagen engine plant, respectively. This region’s market has had a moderate but steady absorption of industrial space, keeping certain predominance of manufacture in the demand, which we hope will remain stable during this year.

The Guadalajara market has also shown a discreet improvement. In this area, the aggressive price strategy has allowed the vacancy percentage that prevailed in 2009, to be reduced by half, and a greater logistics and distribution participation as demand generators can be observed, which, we foresee, could show a moderate upturn throughout this year, even though not to the extent as to favor new speculative developments in an important scale.

The Monterrey market had a significant improvement in 2010 compared to the previous year, mainly regarding absorption, which tripled, and although the vacancy percentage was reduced, price levels have remained stable, with a possible pick up trend throughout this year. Except for Tijuana and Monterrey, the strong link of the industrial sites in the northern border with the export economy, has caused their performance to have the lowest levels in the last few years; and this situation is expected to remain until consumption levels achieve a full recovery, and unfortunately too, as long as the public safety crisis this region is going through, continues.

The office buildings’ sector in Mexico City

The office buildings’ market in Mexico City suffered the remains of the crisis during most of 2010, and it was until the end of last semester when an upturn in the activity was registered. In a review of 2010 we notice a remarkable increase in the vacancy rate, of almost 30% compared to the previous year, due to an important increase in the construction of new developments, especially in Santa Fe with Park Plaza or Samara, or in “New Polanco” where Plaza Carso or Corporativo Cervantes Saavedra were delivered.

The space net absorption has been uneven among the different office corridors, although to a global extent, it has been below the new construction rhythm. Vacancy rate in Santa Fe is still high, bringing as a consequence a decrease in rent prices; on the contrary, a great part of the new inventory in Polanco has been given for prelease, which has allowed rent prices to stay stable and has encouraged the construction activity in the area. In Insurgentes corridor, favorable conditions were given for the new inventory renewal by including new buildings such as Corporativo Napoles, or remodeling old buildings such as Bufete Industrial; therefore many important firms have paid attention again to this submarket, obtaining very attractive rents in a traditional location with excellent access and services.

Throughout 2010 subletting was left aside and instead, preleasing started being more nhcommon, as it was the case for Nestle and Mead Johnson in Polanco; this trend seems to

go on in 2011. The construction activity will continue in the entire city in 2011 with more than 900,000 square meters in process, out of which, 30% is expected to be finished this year. Polanco and Lomas Palmas are at the top of the list of markets

where more construction is taking place, with buildings such as Corporativo Dos Patios, Corporativo Polanco and Green Tower, which will lighten the space shortage that Polanco and Las Lomas had registered for the past few years and we hope this helps stabilize rent prices. Santa Fe will continue being the corridor with more available space, and since this will bring about a price drop, it will be a especially attractive area for companies that look for A+ spaces obtaining savings up to 25% in rent prices compared to what is registered in the business center (Polanco-Lomas-Reforma area).

Rent prices in this corridor are expected to recover when local government carries off important announced road projects, such as the Camino Real-Santa Fe corridor that will communicate the area with the Anillo Periferico (beltway), or the Supervia Poniente (West route), linking the area with Luis Cabrera Avenue at the southern part of the city; and obviously until the global vacancy rate falls to levels that are closer to those of other office corridors.

Reforma’s urban profile will keep on changing with the skyscrapers construction, to become the city’s Financial Center, with projects such as Capital Reforma, Corporativo BBVA Bancomer, Punta Reforma, Torre El Angel and Sede del Senado (Senate’s Headquarters), among others, some of which are mixed use projects formed by housing, commerce and hotel components.

Another trend for 2011 and the following years will be the sustainability practices incorporation and even the granting of international certifications in new building construction, as it has been the case for Altezza and Terracota 100.

Due to the high construction volume for new office spaces within Mexico City, there is a risk of an oversupply in the short term that might cause rent prices and absorption rates to fall.

As a conclusion

In spite of the uncertainty regarding the soundness of the world’s economy recovery, Mexico, sustained by the strength shown by Latin America, and its internal consumption improvement, as well as the recovery of the manufacturing activity, shows a GDP growth that will be favourable for a continuity in space demand by companies, which in turn, will contribute to the national real estate sector’s recovery.

Seguir leyendo Perspective Of The Industrial Real Estate And Office Sectors For 2011

Perception Is Not Synonymous With Reality Mexico Perspectives 2011

Mexico’s biggest initiative will be getting Americans back to buying real estate in the country.

Now is a great time to buy real estate in Mexico. It is, really. “No, it’s not. You’re crazy,” some say. Mexico is a dangerous country. Why would anyone want to travel or vacation there much less buy real estate in that country? “Don’t you read the newspapers about all the narco violence and the hundreds of killings that are occurring in Mexico? No, no, not me. It’s way too dangerous.” Sounds familiar from many Americans who do not know Mexico or much about the country’s geography. This general opinion likely comes from negative press that is published and subsequently read in U.S. publications.

It is the perception that Americans have, that Mexico is not a safe country. Interestingly, and of particular note, CNN Headline News reported that killings per capita of 100,000 citizens rank Mexico far less deadly than other countries in Central America like El Salvador, Honduras and Guatemala. At 14 deaths per 100,000 inhabitants in the Republic of Mexico, this figure is considerably less than Washington, D.C. and Detroit by comparison. Drug cartel violence does not target Americans or tourists. They kill other rival cartel members, federal police and militia, fighting for control of territories and strategic points of drug traffic entry.

Last November, Mexico’s secretary of tourism, Gloria Guevara, addressed concerns about security and safety south of the border in an exclusive webinar for host Arnie Weissman, Editor in Chief of Travel Weekly. Secretary Guevara assured her host and the thousands of registered participants in the hour-long event that “Mexico is a safe tourist destination.” She commented that there are a few places to avoid like Matamoros and Ciudad Juarez, both border towns with Texas, but for the rest of the country, Americans and Canadians can relax and enjoy themselves. “All countries or societies have problems to resolve,”

Guevara said, “but Mexico is one of the top 10 tourist destinations in the world.” In a survey conducted by Virtuoso, their members rated Mexico the number two destination as a preference, a value-rich vacation market that is popular and safe. Tourist figures support this fact.

In-bound tourism, mostly from north of Mexico’s border with the U.S., increased 18.8% in 2010 from 2009. Flight arrivals are up 15% in 2010 as well. Interestingly, Canadian travellers have increased their visits to Mexico 22% over 2009 arrivals. The paradox is that in the face of all the negative U.S. press and criminal violence, Mexico’s economy has not been particularly impacted. In fact, according to the November CNN Mexico Report, macroeconomic statistics showed sustained growth, financial stability, growing reserves and solid industrial recuperation in Mexico. Since March 2009 until October 2010, the Mexican stock market has increased in value 106%, a historical high. Wow! With GDP forecasted by Morgan Stanley at 4.9% for 2011, Mexico will continue to flourish economically.

The Mexican real estate market has changed dramatically in the last two years since the economic meltdown of the United States.

Overall, Mexican sales activity has been minimal at best with agents reporting about 5-10 closings per month in many markets. Property values that hit all-time highs in 2007 have adjusted downward 30-50%, depending on which geographic market you consider, coupled with the stress that particular locale has endured, relative to the buying profile of the prior purchasers. Previous to 2008, Mexican property values appreciated quickly along with those of the United States fueled by frenzied buying, putting “perceived” home equity to work in a second-home acquisition down south – México.

When the U.S. mortgage market crashed causing calamity in the American housing sector, Mexico could not be far behind to get hit next. As an example, there is a significant disparity between the Puerto Penasco market and Los Cabos for several reasons and economic considerations. All of the other residential Mexican markets fall somewhere in between.

Puerto Penasco is Scottsdale by the Sea of Cortez, Phoenix’s beach as it were. It is no secret what has happened to property values in the Phoenixmetro area along with those in Tucson.

Homeowners became upside in their stateside residences and it was the “paper” home equity play that fueled the vast majority of Penasco seaside acquisitions. The same can not be said of Cabo in large part because Cabo buyers did not necessarily come from one geographic area. West Coast purchasers were for sure the dominant buyers in Cabo, but there have been many acquirers from Texas, Colorado, New Mexico, the Midwest, Chicago and New York. These were not, for the most part, home equity players in the Mexican residential market. The price points for Cabo realty have been historically different and much higher per square meter by comparison.

Cabo has been a predominantly cash buyer domain with little, if any, seller financing, another subtle difference in the two markets. This is in no way a slap or a “dig” at Puerto Penasco. It is more a statement about the economic reality of this particular market. Penasco’s woes are a result of buyers and where they come from. Their woes, though, have also created a tremendous opportunity for any buyer who has cash or can take advantage of seller financing or a purchase on a distressed asset.

Much of the same can be said for most of the Mexican resort residential markets. Prominent Puerto Vallarta agents indicated that their buyers are Canadian, Mexican and American. They said they all have one thing in common: their buyers are bargain hunters looking to purchase a residence at $0.30-0.50 on the dollar.

Still, there are only 7-10 closings per month with many offers going back and forth before a sales price is reached. A lot of homeowners are not willing to sell at a reduced price unless otherwise forced to. Many of the real estate venues in Mexico also have something in common; inventories of existing properties, many that are distressed in value due to the seller’s situation, need to be sold before any new construction can commence.

New construction prices can not compete with the many residences that are available at 30-50% price reductions. Mexico now faces a difficult dilemma when it comes to their second-home market. Canadians and Mexicans have become the predominantbuyers in Mexico’s second-home locales.

That is certainly wonderful news for the nation. The troubling question for Mexico is how does the country get the U.S. buyer back in the game and when? How do they get Americans to get off their wallets? Due to continued uncertainty in the U.S. economy, unemployment issues and loss of personal net worth for many, Americans simply are not comfortable with their own financial disposability.

In a recent national press release, it was reported that more than 10 million U.S. homeowners are “upside down” in their residential mortgage. With national unemployment at 9.4%, how can anyone afford to buy a house, much less a second home, without a job? Mexico can only hope that with the recent elections in the U.S. and the extension of the Bush-era tax cuts for another two years, Americans will begin to feel better about their personal and financial situation.

Mexico will continue to be the number-one retirement destination for Americans and Canadians. As was mentioned in a prior article, the International Retirement Foundation predicted in April 2010, that 6 million Americans will retire to Mexico by 2025.

Mexico understands the retirement dynamic and its importance to the country. Moreover, Mexico “gets” tourism and the intrinsic benefit the nation receives when tourism flourishes. As a major generator of gross domestic product for the Republic, it’s all about new jobs, infrastructure, roads, utilities, ta
x revenue, ancillary goods and services. It’s also about real estate.

Tourism generates sales and development opportunities in the resort areas. No one understands this dynamic better than FONATUR, Mexico’s 40-year-old tourism agency. They have plans for new mixed-use projects in the coming years, a multi-billion U.S. dollar platform that have already received federal government approvals. Mexico will be successful because they have an open-arms attitude towards tourists and the industry in general.

Mexico welcomes the opportunity to provide services to Americans, Canadians and Europeans. The country’s biggest initiative will be getting Americans back to buying real estate in Mexico. Couple that with changing the perception that too many Americans have about this beautiful country.

The challenge they face will be to make both a reality. Just ask members of AMPI, the Mexican Association of Real Estate Professionals. They probably understand this issue better than anyone and how important it will be to get the U.S. back in Mexico’s secondhome market. Here’s to a better 2011 for all of us in Mexico. Let’s sell something!

Seguir leyendo Perception Is Not Synonymous With Reality Mexico Perspectives 2011

No Siesta for Mexico

While the world’s attention on Mexico suffers from tunnel vision concentrated on the warfare against the drug cartels and organized crime that President Calderón has relentlessly lead -without a foreseeable end at sight-, the other war, the one against the worst recession that the country has experienced since the depression, Mexico seems to be winning battles in most fronts. The dynamics of the recovery would be even stronger if it was not affected by the insecurity factor. The BBVA-Bancomer’s research team released on November 4, 2010 their findings regarding the estimated costs to Mexico derived from the violence and insecurity: a staggering 1% of its PIB! Mexico’s economic recovery has been stronger than previously predicted. At the closing of 2010 the PIB (i.e. Mexican GDP) annual growth was estimated at 5% according to Agustín Carstens, President of Mexico´ Central Bank (Banxico); a figure revised as high as 5.4% in early January of 2011, after having contracted 6.5% in 2009. However, expecting a deceleration during 2011, the IMF has lowered its expectations of growth of the Mexican economy to 3.9% given its strong ties to the USA.

Mexico’s proximity to the USA along with its geographical and economical detachment from Europe, and its strong commitment to fiscal consolidation have been factors supporting its recovery path. Non-oil related exports to Europe are small (1% of Mexican GDP). Additionally, if anything characterizes Mexico today it is its strong fiscal policy. Mexico has a relatively small public deficit, less than 2% in 2010, in contrast with large deficits in Europe that have created economic unrest. Mexico has one of the more open economies in the world.

Exports of goods and services are one third of the total PIB, with NAFTA playing a major role in Mexico´s output performance. Not only does Mexico send 80% of its exports to the United States, but 41% of Mexico’s foreign direct investment and 78% of tourists visiting Mexico comes from the USA. Conversely, these close ties create a worrisome dependence on the USA economic performance.

According to projections from Mexico´s Ministry of Economy, foreign direct investment was expected to regain as much as 75% in 2010, potentially reaching $20 billion. Auto manufacturing is at the heart of Mexico’s export economy. According to reports from the Mexican Association of Auto Industry, Mexico’s auto production during November 2010 set an all times production record, reaching 207,560 vehicles, and exports of during the January- November 2010 period was 11% higher than the same period in 2009, reaching 1.86 million units exported. To the surprise of those who may still think Mexico is taking a siesta under a huge sombrero, Mexico exported twice as many light vehicles to the USA than Germany or Korea and almost as many as Japan during 2010, according to data from Castillo Miranda´s Automobile Industry Report.

Despite the prevailing economic and security issues, Nissan plans to spend $600 million to upgrade plants in Mexico and will start making three new low-cost cars, positioning the country as its supply hub for the Americas, while Chrysler just inaugurated its new plant in Saltillo, Coahuila with an investment of $570 million that will employ 700 people to produce up to 400,000/year of the Pentastar V’6 engine for the Jeep Cherokee and several other models. Additionally, Volkswagen recently increased their investment in Mexico by $550 million to build a plant where 330,000 engines per year will be manufactured. Mexico’s growing aerospace industry is also bouncing back to its accelerated level of expansion with new investments that in 2010 were estimated to reach $1.2 billion.

Querétaro, a charming city only 2 hours drive from Mexico City, has become a favorite site for international companies settling manufacturing facilities in Mexico. Querétaro has experienced a boom in the aerospace industry after the creation of the Querétaro Aerospace Park (with participation of CIV Infrastructure) adjacent to the international airport, home of Bombardier and four other companies: Meggit, Snecma, Messier-Dowty and AE Petsche, who manufacture and assemble parts for Bombardier as well as for export to the USA and Europe. To meet the demand of especially skilled workers and engineers, the state of Querétaro, with the support of Bombardier, established the Querétaro University of Technology (UTEQ) in 2006, having the first generation of students graduating in 2008 with jobs positions waiting for them at the various aerospace plants in Querétaro.

Inflation has remained under 5% and unemployment has provided a favorable surprise.

According to the National Institute of Statistics and Geography, unemployment decreased to 5.23% as of June 2010. On January 5, 2011 the Mexican Government stated that during 2010 there were over 730 thousand jobs created; a 14 year record. The Mexican Peso has appreciated and the exchange rate Vs the US Dollar is expected to be approximately 12.15 by May 2011 and 12.10 by October 2011. Mexico´s country risk factor decreased to 140 BP as reported by J.P. Morgan in December 30, 2010.

Real estate prices and rents declined during 2009 but started a slow stabilizing process during 2010. Vacation and secondary homes in coastal areas, which have typically sold to foreigners, were the most impacted properties experiencing price declines of about 35%. Industrial rents declined 10% to 15% in 2010, but are starting to rebound. Leasing activity in the Monterrey metro area during 3Q-2010 included leased space on new Class A spec buildings at $4.25/SF/Yr and $2.90/SF/Yr for Class B, 20+ year-old buildings. At the beginning of 2011 rents for new industrial buildings class A are being offered in a range from $4.56 to $5.16/ SF/Yr, and class B buildings at $3.60/SF/Yr, indicating a trend of rental rates recuperation.

On May 25, 2010, The Economist reported “The office market panorama in Mexico City is quite optimistic” as more than two million square feet of office space were expected to be added to the existing 52 million square foot inventory. Santa Fe, Mexico City´s new corporate heart, is fastest growing office market with over 8.6 million square feet of office space. Santa Fe is outpacing the Reforma-Polanco corridor; however, the latter still commands the highest rents ($2.78 to $3.25/SF/Mo) and remains the most exclusive and desirable zone. Most notably, rental rates have generally stayed stable.

The Insurgentes-Periférico corridor is probably the best choice for tenants seeking lower rent levels.

The BMI México Retail report forecasted that the country retail sales will grow from $182.58 billion anticipated in 2010 to over $250 billion in 2014. Although retail rents and leasing activity contracted during 2009 and the first quarter of 2010, a recovery during 2011 is becoming more apparent as the population´s disposable income increases.

México’s tourism industry had to contend with the H1N1 influenza, the economic recession, the bankruptcy of Mexicana airlines, and the insecurity factor that afflicts the country.

However, there have been clear indications that the tourist industry is recovering as tourist arrivals by plane have increased 19.2% YTD to 7.1 million. Additionally, new investments are taking place. Starwood hotels inaugurated the St Regis Mexico City, and they have two major projects under development in the Santa Fe financial district. Westin is scheduled to open a new property in late 2010. “W” Hotels plan to open a property in 2013. Hilton unveiled its luxury tower in Mexico City, and the Park Hyatt is now scheduled to open in late 2011. Marriott in partnership with Mexico’s Pulso Hotelero are planning to build 36 Fairfield Inn properties throughout Mexico.

Mexico has also substantially improved the way of doing business. The latest rating (11/03/2010) from the World Bank and the International Finance Corporation (IFC) placed Mexico as number 35 of 183 countries rated and as the No. 1 economy of Latin America where is easier to conduct business, having improved 6 spots from the previous rating. Mexico´s international reserves grew 25% in 2010, reaching an all-time high of $113.597 billion dollars on December 31, representing a cumulative $22.759 billion higher than in 2009, as reported by the Central Bank.

EL Universal, one of Mexico’s top newspapers, on December 1, 2010 published an article about Mexico’s optimistic future as envisioned by Carlos Slim (presumably the world’s richest man), the SHCP (the Treasury Dept.) and Banxico (the Central Bank). I quote Mr. Carlos Slim affirming: “The Mexican Economy has a huge opportunity to break the underdevelopment barrier in 10 years, reaching a per cápita income between 10 to 12,000 dollars, creating a great middle class that will generate growth”. Furthermore, Mr. Slim said “Mexico has now an enviable situation; never there have been so many opportunities, to utilize the existing investment and rentable financing conditions to grow.” Recently I had the opportunity to speak with several industry leaders of real estate investment funds, portfolio managers and developers in Mexico. Although they are following a cautionary course, they have an appetite for new acquisitions to expand their holdings in Mexico.

They are stacking their chips on the side of the opportunities that the recovery is generating.

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