The Rise of Mexican Multifamily
Private real estate LPs and GPs are eyeing Mexico’s emerging multifamily development sector
When it comes to Mexico and international investors, attention is firmly focused on the primary real estate food groups of industrial, hospitality, retail and office. Little is ever said about multifamily.
Indeed, over the past two years more than 37 percent of all cross-border capital targeting Mexico has been invested in the industrial sector, with hospitality, office, and retail attracting roughly 20 percent each. Multifamily didn’t even make the list, according to data provider RCA.
That lack of attention is starting to change though, with several private equity real estate GPs and LPs eyeing the country’s manufacturing base and growing urbanization and affluence as key demand drivers fueling multifamily growth.
Among them is Ivanhoe Cambridge, the C$55B [$43B] real estate investment subsidiary of Canadian pension plan La Caisse de Depot et Placement du Québec, which in 2014 bought a 50 percent stake in the Mexico residential and mixed-use development platform, MIRA.
Ivanhoe expects to invest up to $500M in MIRA, which was first launched by Denver-based private equity real estate firm Black Creek Group in 2007 and invests in multifamily as well as other residential development projects, as it develops condos and master planned communities, including tens of thousands of units in Monterrey, Mexico City, Cancun, Todos Santos, and Guadalajara.
“We continue to firm up our presence in Mexico, where the economy is expected to be robust,” says Rita-Rose Gagné, executive vice president, growth markets. “[Our] projects are focused primarily on residential, office, and commercial space in an urban environment, taking advantage of the growing trend toward urbanization.”
Black Creek did not respond to requests for comment, but the firm is “aggressively” focused on Mexico apartments, according to the firm’s website, with plans to grow a separate dedicated multifamily development platform, Gran Cuidad, to more than $1B in assets under management over the next six years.
At a 2015 National Multifamily Housing Conference, Seth Martin, president of the Pritzker Realty Group said the sheer lack of multifamily inventory in Mexico was one of the appealing facts about the sector.
A youthful population, a manufacturing-based economy, and a housing policy that was promoting urban core development was helping fuel demand for apartments, he said, but added: “[In an] entire country of 118M, [it] has six purpose-built multifamily properties.”
Mark Hafner, senior managing director-international at Greystar, one of the world’s largest managers and owners of multifamily apartments, agreed saying at the same event that despite Mexico’s 80 percent homeownership rate, demand for multifamily was a “law of numbers”.
“There are 23 million people in Mexico City,” Hafner said. “There are definitely some renters there.” Greystar currently manages six high-rise multifamily assets with a total of 1,814 units in Mexico City and Monterrey.
Private real estate LPs and GPs are eyeing Mexico’s emerging multifamily development sector, says an expert from Ivanhoe Cambridge.
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