There is a housing development opportunity in CDMX, but regulations limit it: Softec

The Mexico City (CDMX) represents a great opportunity for housing developers, especially from the creation of various housing densification corridors in the downtown area; however, regulations, the scarcity and high cost of land, as well as the high volume of competitors are factors that slow down the creation of homes in this part of the country.

For Claudia Velázquez, Director of Operations of the Softec real estate consultancy, although, for the housing developmentthe opportunities are found specifically in the middle and residential segments to the east of the central zone of the capital, there are challenges such as high land cost, the normative and the restrictions on the feasibility of services, in many of the neighborhoods in the area.

“For the entrepreneurs of new projects, it will be very important to know their options and room for maneuver, because the opportunities are great, compared to the Housing development in the rest of the metropolitan area, but also, these opportunities are limited by urban regulations, the scarcity and high cost of land, in addition to the high volume of competitors”, Velázquez said.

According to the specialist, the Downtown area, which is defined by the market within the Interior Circuit, has had an evolution since 2000, when Bando 2 was decreed, which was an instrument of urban development, which sought to reverse the disorderly growth of the city.

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At that time, said decree restricted the housing development of the then Federal District, to the following delegations:

• Benito Juarez.
• Cuauhtémoc.
• Miguel Hidalgo.
• Venustiano Carranza.

Context

For example, from 1990 to 2000, the downtown area of ​​the city only contributed 7% of the projects and construction was concentrated in the middle segment, which represented 49% of the total projects, while 24.5% was residential, 20.3% of social interest and 6%, residential plus.

In this context, Softec estimates that between 93% and 95% of the units started in the Downtown area were built after 2000, already with the Bando 2 regulations.

It was from that date that the trend towards higher income housing changed, with a full impact on the social segment.

According to Softec, in 2000, the trend towards living place of greater value, since in that year 45% of the units started in the area were average housing29% residential and 4.4%, residential plus.

In 2010, in Mexico City, 42% of the units started in the area were in the middle segment, 48% residential and 9.5% residential plus, that is, the social housing began to fade.

Softec estimates that currently, 7% of the units started correspond to living place average, 62% to residential and 31% to residential plus, since since 2015 projects with offer of social interest housing.

Velázquez pointed out that it is necessary for developers who bet on this market, despite all its adversities, to have clear and current monitoring of the situation regarding which projects will deplete their inventories, which in turn will open up new opportunities.