Market Trends of Residential Real Estate Industry In Latin America
Increase in Urbanization Boosting Demand for Residential Real Estate
- Latin America's economies span a spectrum, from emerging powerhouses like Mexico and Brazil to more established players like Chile and Uruguay. This diversity presents investors with a range of real estate opportunities tailored to their risk appetite and investment goals. Moreover, Latin America boasts one of the world's highest urbanization rates, fueling a surge in demand for both residential and commercial properties.
- The economic growth in Latin America is underpinning this real estate boom. For instance, the Brazilian economy is projected to grow by 2% this year, while Mexico is expected to register a growth rate of 1.8% to 2.5%. This economic expansion is translating into job creation and higher disposable incomes, further bolstering the demand for real estate.
- With a population of around 665 million in 2023, Latin America witnessed a 0.9% population growth in 2022. This uptick was driven by a trend of people gravitating toward urban areas in search of better education and employment prospects. As the urban population swells, so does the demand for residential properties in Latin American cities. Notably, some governments in the region are actively promoting pro-poor urban infrastructure, with a particular focus on housing initiatives.
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Increase in Apartments and Condominiums Property Prices in Mexico is Boosting the Market
- In 2023, Mexico City emerged as the costliest destination for residential property purchases in Mexico. The average price for a property in the nation's capital stood at nearly MXN 3.7 million (USD 0.19 million) in Q3 2023, nearly twice the national average.
- According to the Federal Mortgage Society (FMS), the average home price in Mexico hit USD 90,850 in Q1 2023, marking an 11.7% YoY surge. The Mexican housing market, known for its adaptability to global economic shifts, has witnessed consistent growth over the past decade. The robust Q1 growth underscores the market's resilience. Escalating inflation has further pushed up construction costs, leading to a steeper hike in prices for new builds, which constitute 40% of the Mexican housing market, surging by 12.8%.
- Investors eyeing Mexico, especially the Riviera Maya, have reason to be optimistic. The bullish trend in 2023 underscored the strength and potential of Mexico's real estate sector. With sustained demand and robust economic growth projected, regions like Riviera Maya are poised to fuel Mexico's upward housing market trajectory, offering enticing opportunities for investors and homeowners.
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