What are the threats to the real estate sector in this 2023?

2022 was a difficult year for the real estate in Mexico, since like other industries, it was affected by the remaining effects of the Covid-19 pandemic, the war between Russia and Ukraine, inflation and the risks of a recession.

For this 2023, the panorama does not look different, since these same factors continue in the panorama and which exert pressure on the activity of the sector, especially, in the production, access and marketing of housing.

According to the new president of the National Council of Directors of the Mexican Association of Real Estate Professionals (AMPI), Ignacio Lacunza, this year a slight rebound of around 1% is expected for the property industry. real estatein its different segments.

“We see an optimistic year. One of the good things that the pandemic left us is the understanding that we must work in alliances. We hope to have a prosperous year, the real estate market is dynamic and will grow 1% in all segments,” Lacunza commented.

However, Eduardo Orozco, founder of the proptech Alo Home, indicated that there are still difficulties for activity in the market, which slows down production, so it is expected that in 2023 there will be 15 to 20% less inventory than in the 2022.

It is worth mentioning that, in the last seven years, the housing production new has been reduced to almost half. According to data from Unique Housing Registry, in 2015 301,819 units were built; while, from January to November 2022, only 124,154 homes were built.

Financing and regulation slow down production

The drop in the housing production It is generated by various factors that developer companies must face; one of them is the increase in the cost of financing for construction.

It is worth mentioning that last year, the Bank of Mexico opted for increases in the reference rate, so that the interest rates of bridge loans (loans for the development of real estate projects) went from 9.5% to 15% per year on average .

On the other hand, Orozco pointed out that the sector is excessively regulated, since the process to start a work requires too many procedures that hinder and delay construction.

“These factors create the perfect storm for the industry. On the one hand, there are a lot of restrictions on the part of the government, and on the other, we have very high construction and financing prices”, commented the specialist.

In this sense, the founder of the proptech remarked that support from the government and the availability of mortgage loans for the population will be key elements to encourage real estate activity during 2023.

Alo Home will place 400 million dollars

Despite the fact that the industry has had difficult moments, Alo Home has made use of technology to facilitate the housing developer your business processes.

Through this business model, in 2022 the company sold 40 million dollars and for this year, it plans to reach 400 million dollars in the countries of Mexico, Colombia and Brazil. Likewise, it is preparing to raise an investment of 3 million dollars to continue the expansion of its operations in the different countries of Latin America.