Opportunities in Mexico

Transcription

1 Opportunities in Mexico Real Estate Forum 2014 Global Property Market Toronto, Canada December

2 Agenda Mexico Fundamentals Retail Residential Industrial 2

3 Mexico Fundamentals 3

4 Low Debt-to-GDP Government debt levels in Latin American countries are well below the major advanced economies such as the G7 and European countries. After coping with their own debt crisis in the mid and late 90 s when interest rates soared, Latin American countries had to learn to cope with more austere measures. 160% 140% 120% 100% 80% 60% 40% Mexico s Debt-to-GDP is 46% (US-106%, Canada- 88%, Brazil 66%) General Government Gross Debt (% of GDP) Projected Today, Mexico is very solvent with GDP growth projections between 4% and 5% through % 0% Argentina Brazil Canada Colombia Mexico United States Source: International Monetary Fund (IMF), World Economic Outlook Database, Oct The IMF estimates final figures for 2013 and forecasts thru

5 MXN/CAD Currency From 2004 until 2010, MXN devalued against CAD Since then, the peso has been fairly stable, trading in a relatively tight range $16.0 MXN/CAD $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 10/25/ /25/ /25/ /25/ /25/ /25/ /25/ /25/ /25/ /25/2013 5

6 Enhanced Liquidity Mexican Pension Funds Growth in Pension Plan AuM The growth in formal jobs is correlated to the growth of the Pension Funds Contributors to Mexico's Pension Fund System Millions of People Assets Under Management by AFOREs MXN Millions $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 0 $0 Growth in Vehicles Investing in Real Estate Source: BMV (Mexican Stock Exchange) 6

7 Economic Reforms Status Fiscal Reform - Boosting Tax Revenues Passed Non-oil tax collection in Mexico is among the lowest in LatAm, according to the OECD. Addition of 3 new income tax brackets with tax rates to increase taxation on the richest 1% of the population. Energy Reform - Opening to Private Investment Passed Increase energy output and efficiency through greater private sector participation. Required a Constitutional amendment Foster private participation through several forms of contracting, including profit and production sharing agreements, licenses and service contracts. Financial Reforms - Boost commercial and development banks lending to the private sector Passed Lowering financial costs and boosting competition within the sector. Strengthening the legal framework through specialized courts to facilitate banks' claims on collateral. Telecom Reform - Increase Competition Passed Allow foreign investment up to 100% in the telecom and satellite communication sectors.. Introduce measures to curb monopolistic behavior (ex. Asymmetric connectivity tariffs and must offer / must carry Labor Reform - Increase labor market flexibility by trimming hiring and firing costs. Passed Introduce temporary contracts and outsourcing as legal figures. Create specialized labor courts to bring down litigation costs. Include productivity as a driver for job promotions and remuneration 7

8 GDP Growth Expected Impact of Reforms on GDP Growth Natural GDP growth rate could increase significantly in a 3 to 5-year period, if reforms applied correctly. 6.0% 5.0% 1.0% Expected GDP Growth Rate % 3.0% 0.1% 0.5% 0.3% 2.0% 4.9% 3.0% 1.0% 0.0% Natural GDP Growth Rate Labour Reform Telecom Reform Financial Reform Energy Reform Total Source: GEA. 8

9 Retail 9

10 Mexico Today = Canada / US in 1970 s Mexico s demographics today are similar to Canada and the US in the 1970 s. Both Canada and the US have experienced significant economic growth in the last 45 years. Mexico is in a position to benefit from its favourable demographics. Mexico 2013 Canada 1970 US Workforce Age Groups Male Female Source: CONAPO (Mexico National Council of Population), 10

11 Shortage of Formal Retail Shopping Center Square Meters per 1,000 Inhabitants by Country US Canada Netherlands Portugal UK France Spain Italy Germany Russia Turkey Mexico Brazil

12 Residential 12

13 Housing Deficit 9M Current Housing Deficit Houses in Substandard Conditions (7m) Physical Deficit (2m) Source: Mexican Housing Overview

14 Housing Deficit Annual Incremental Deficit 84, , ,000 Estimated Demand for 2013 Average 2011/2012 Sales Deficit Source: BBVA Housig Market Report Jan

15 $/Share Top 3 Developers in Bankruptcy $16 Stock Performance Top 3 Residential Developers $14 $12 $10 $8 $6 Homex Geo Urbi $4 $2 $0 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Month Source: Yahoo Finance 15

16 Industrial 16

17 Rank Skilled Competitive Labour Force 21% of graduates in engineering and manufacturing versus 7% in the US According to KPMG Mexico had an average cost advantage of 18.7% compared to the US Mexico Russia India South Korea Indonesia China Brazil Source: IMD Competitiveness Yearbook,

18 Number of Countries Mexico Fundamentals Diversified Trade Platform 12 free trade agreements (FTA) with 45 countries, representing 1.2 billion people and 61% of the world s GDP more than any other nation in the world. 50 Number of Countries with Privileged Access [VALUE] Mexico United States China Colombia Canada Brazil 18

19 Global Leader in Automotive Production and Export Sources: ProMexico Announced Date US$, mn State Nissan 1Q12 1,900 Aguascalientes Mercedes Benz 1Q12 10 Nuevo León Ford 2Q12 1,300 Sonora Audi 2Q12 2,000 Puebla Hyundai 2Q Baja California General Motors 3Q S.L. Potosi & Gto. Nissan 3Q Morelos & Aguascalientes Nissan 4Q12 90 S. L. Potosi Ford 4Q12 59 Chihuahua Mazda 1Q Guanajuato Nissan 1Q Aguascalientes Mercedes Benz 1Q13 15 Nuevo León Daimler 1Q13 20 Nuevo León Honda 2Q Guanajuato Audi 2Q13 1,300 Puebla General Motors 2Q Gto., S.L Potosí & Edo.de México Chrysler 3Q Coahuila Nissan 3Q13 57 Aguascalientes Mazda 3Q Guanajuato Total -- 10, Sources: ProMexico

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