Fitch Sees Mexican CRE Growth

Demand for commercial real estate (CRE) in Mexico is trending higher and should boost financing that employs commercial mortgage-backed securitization (CMBS) technology, both local and cross-border, according to Fitch. “Falling interest rates over the past few years, along with liquidity provided by foreign and institutional investors, have made the financing of new developments possible,” says Greg Kabance, MD of Fitch’s LatAm structured finance group. The near-term outlook for the CRE industrial market in Mexico is positive, helped by demand from North American manufacturers. “The industrial market is nearing its mature stage; new construction is almost always rapidly absorbed while general vacancy, and lease rates have remained stable over the past five years,” says Fitch. However, the agency believes there are still some hurdles to clear before true CMBS technologies are to be employed in the Mexican CRE market, such as the short-term nature of leases, possible liquidity shortages, tighter underwriting standards and fluctuating risk appetites, as well as the inclusion of non cash flowing properties in CRE portfolios.