VIEW FROM THE TOP
STEPS TO A SUSTAINABLE AND INCLUSIVE CONSTRUCTION SECTOR GUSTAVO ARBALLO President of the Mexican Chamber of the Construction Industry (CMIC)
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Q: What is CMIC’s 2017-2018 forecast for the construction
continued inflationary pressures and an additional cut in 2018
industry, especially with the elections around the corner?
expenditures for public investment in infrastructure.
A: CMIC expects 2018 to be as difficult as 2017. The real estate industry, especially the construction of medium and high-end
Q: What are the construction sector’s concerns regarding
residential buildings, mixed-use developments, shopping
the New Housing Law in Mexico City and the federal Human
centers and tourism infrastructure, will likely play a leading
Settlements Act?
role for the remainder of 2017 and in 2018. The Center for
A: CMIC’s greatest concern within this context is the
Economic Studies of the Construction Sector (CEESCO)
urban resilience required to adapt to redensification and
estimates growth for 2017 from a contraction of -1 percent
transformation that entails generating vertical housing for
to a 0.5 percent expansion due to fundamental factors
inhabitants. We support both changes to the laws and urge
such as the 23 percent cut in the public investment budget
prompt implementation. There has been an exodus of city
compared with 2016, as well as increases in interest rates.
dwellers due to the lack of housing for workers with incomes
A reduction of 40,000 jobs is expected in the event of a
equivalent to less than 10 times the minimum wage who are
contraction or the creation of up to 20,000 jobs if there
eligible for INFONAVIT and FOVISSSTE, but we hope the new
is growth.
laws will address this and expedite access to housing for this demographic. Another result has been a rise in speculative
From January to July 2017, the construction industry
practices and constant increases in the prices of urban
contracted 0.6 percent compared with the same period in
land and houses due to the low supply of popular housing,
2016. It is likely that, for the remainder of the year, factors that
with values ranging from MX$900,000 to MX$.5 million
inhibit investment and growth will include reduced public and
per dwelling. Additionally, with a lack of activity in popular
private investment and the rise in the official interest rate to
housing, the construction industry working in this sector has
twice its 2015 level, which will make infrastructure projects
become stagnant, resulting in job losses. In an effort to assist
more expensive. The result of the NAFTA renegotiation
the current Mexico City government, CMIC’s members have
could also have an impact by restraining vital exports, in turn
identified plots of land that are eligible for use under the new
negatively impacting investment in industrial and commercial
housing law to encourage and facilitate the construction of
construction and services.
housing for workers entitled to homes in urban areas. We want to promote the construction of 10,000 living spaces, which
Private investment has been the driving force behind the growth of the construction industry since it represents 75 percent of the total investment in the sector
is only a fraction of what the inhabitants of this city require. On the subject of the General Law on Human Settlements, we are interested in information about the adjustments that the local authorities will make to their regulations as well as to their urban development plans, and how this will impact the construction industry. We also wish to see clear commitments and actions that promote real changes in the human settlements of our country, toward competitive,
In 2018, the construction industry is expected to grow
connected, coordinated and equitable models.
between 0.3 percent and 1 percent. Residential construction geared toward the middle and upper classes, as well as a
Q: What would make the construction sector more attractive
robust tourism sector, commercial and service infrastructure
to both investors and contractors?
will be the industry drivers in 2018. Risk factors include
A: In the January-May 2017 period, credit granted by
an even greater reduction in oil prices or oil production,
commercial and development banks to the construction
