VIEW FROM THE TOP
DEVELOPER POSITIONING FOR AFORE INVESTMENT EDUARDO OROZCO Managing Director Latin America of Greystar
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Q: As a multifamily property developer and manager, what
Q: What are the challenges in Mexico City’s regulatory
market characteristics do you look for when deciding where
framework for developers?
to develop?
A: For the first time, the new Federal Housing Law includes
A: The ideal characteristics we look for are comparable around
rental properties as part of its scope. Previously, the focus
the world: we focus on large cities with rapid employment
of public policy was on the volume of people who could be
growth, a young population and a demographic shift. Many
placed in housing rather than on the quality of that housing.
cities are growing quickly and the infrastructure is falling
There are large regions on the outskirts of Mexico City that
behind, which creates a great number of challenges from an
resemble ghost cities because it makes no sense for anyone
urban standpoint. This results in challenges to quality of life.
to live there given the working demographics and geography.
We are interested in at least 12 major cities in Mexico that are highly concentrated in the services industry, which tends to
One of the most encouraging signs as developers and
attract the younger demographic and millennials.
operators is SHF’s strong program for providing financing for multifamily developments. Commercial banks are still
At the same time, we see a complex infrastructure
trying to understand the product in Mexico, whereas it is
situation. Take for example Santa Fe, where almost
well-established in countries like the US. Every institutional
200,000 people work every day but there are less than
investor has massive exposure to multifamily development,
15,000 residential units. Between 100,000-150,000 people
which are the second-biggest asset class owned by REITs after
come and go to Santa Fe through two points of access.
retail developments. From a local government perspective,
This opens an opportunity for our market to provide
there have been several changes introduced by Mexico City’s
really high-quality residential developments with many
new Constitution. We are concerned about the repercussions
amenities and a high level of services for a demographic
from the constitutional changes that make Mexico City a state
with a real housing need and a lifestyle problem.
rather than a special district. Traditionally, we have witnessed that decentralization is not very conducive to transparency or accountability. As an institutional investor that has been present in Mexico for five years, we are committed to the market and we want to participate as much as possible in
There is a requirement for 40-60% more houses because people are living alone or with roommates
the dialogue. Q: Why did Greystar choose a CKD over other financing instruments like CerPis? A: As an experienced asset manager, we are raising and deploying funds from various global investors, including
In a pattern similar to the US in the last five years, we are seeing
insurance companies, pension funds, sovereigns, endowments,
a new preference in Mexico for renting rather than owning.
institutions and family offices. When we first came to Mexico,
There is a much greater drive toward lifestyle and the 24-
we started by investing a dedicated account from a Canadian
hour city wherein people want to be closer to work and have
pension fund and we were successful in deploying that capital
more convenience. The population is more mobile and less
into some landmark projects in Guadalajara and the Mexico
willing to commit, there are more single-person households,
City areas of Periferico Sur and Bosque de las Lomas.
people delaying marriage and parenting and similar trends. As a result, for the same population, now there is a requirement
When looking at the asset class, it makes sense to have the
for 40-60 percent more houses because people are living
returns denominated in the same currency as the investment.
alone or with roommates rather than in large family units.
The rents in Mexico are and always will be in pesos because
