Real Estate Continues to Rise in Mexico, Unaffected By Fears of US Protectionist Pledges
Surbhi Jain - Frontera News
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May 20, 2017
Among the emerging markets (EEM) (VWO), Mexican real estate has been doing exceptionally well so far this year. Mexican real estate equity that is part of the Guggenheim Emerging Market Real Estate ETF (EMRE) portfolio is up 17.6% YTD. PLA Administradora Industria, with a 39.3% return YTD (as of May 5) has been the top performing Mexican real estate company in this regard.
... From a valuation perspective, Mexican real estate equity is relatively inexpensive at 8.65 times price-to-earnings. Mexican real estate equity also comes with an attractive dividend yield of 6.36%.
We maintain a positive outlook on the real estate market in Mexico (EWW), given the following:
The over subsidy in the Mexican real estate market that was prevalent before the 2013 crash, is now down to normal levels. The Mexican economy, in general, is recovering, despite the Trump administration’s protectionist pledges and lower oil (USO) prices. This is a good sign for real estate which gains with the overall health of an economy.
We see a supply-demand mismatch in the real estate sector in Mexico. There are signs of pent-up demand which should provide ample opportunity to real estate developers.
Mexico’s middle class continues to grow, and this rapidly rising segment coupled with urbanization should provide a sustained boost to this Latin American (ILF) economy’s real estate sector.
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Photo: CBS News
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