Impact of Foreign Direct Investment on Mexico’s Industrial Real Estate Sector
By Ana Maria Reyes | Real Estate Treasurer at American Industries Group®
Mexico is one of the top emerging nations in receiving foreign direct investment (FDI) and is the ninth-largest recipient in the world according to UNCTAD’s 2021 World Investment report. In 2021, Mexico received an estimated 31.3 million dollars in FDI, 49% of which was made in the manufacturing sector.
According to statistics from Mexico’s Secretariat of the Economy, in the first semester of 2022, Mexico captured 27.5 million dollars in FDI. Thirty-four percent of this was made in the manufacturing sector, and the majority was from the United States and Canada.
Why are foreign companies investing in Mexico? Mexico has all the factors necessary to ensure a return on investment in the long term. It has a privileged location neighboring the largest economy in the world, natural resources, a qualified labor force, international treaties regulating trade, and solid financial institutions. In addition, Mexico is a member of the OECD, G20, Pacific Alliance, and the United States–Mexico–Canada Agreement (USMCA).
How is FDI in Mexico impacting the industrial real estate sector?
The continuous flow of FDI to the manufacturing sector has allowed for growth in industrial real estate in Mexico. In recent years, the industry has undergone a significant transformation in a relatively short period.
Some examples of how the industry has evolved as a result of FDI in Mexico include:
Although all change implies challenges, this growth translates into the generation of employment and the opportunity for the continued evolution of the industrial real estate market. To leverage this, it is vital to continue promoting Mexico as a place for growth and obtaining a return on investment.
There is a high demand for industrial spaces that should be utilized to continue supporting and incentivizing foreign investment in Mexico. Even when infrastructure offerings are limited, this is also an opportunity to open the door for creativity and innovation by adapting the structure of negotiations, spaces, and products in new ways.
Despite its adversities and challenges, Mexico still has much to offer foreign investors.
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