As the Mexican economy continues to display stability and resilience in the face of global challenges, a favorable environment is anticipated for the expansion and growth of the commercial real estate sector in the country. While attention remains on the evolution of banking policies and economic indicators, this juncture presents an opportunity for real estate investors to assess their strategies and capitalize on the benefits of a positive landscape for property development. These projects could be pivotal in the country's economic growth and job creation.

Following the August 10th decision by the Bank of Mexico (Banxico) to maintain the interbank interest rate at 11.25% for the third consecutive time, on the 24th of the same month, the bank shared the rationale behind this choice, along with potential scenarios for the Mexican economy.

Regarding inflation, Banxico notes its persistently high nature, although its trajectory continues downward. The central bank suggests that by the end of 2023, the 3% target inflation rate could be reached. However, it emphasizes that given the multifaceted causes of price increases, the risk of a resurgence remains, as many current inflationary issues stem from the pandemic and the Russia-Ukraine conflict.

Nevertheless, there has been a recent improvement in supply chain operations and reduced raw material prices. Additionally, the peso's appreciation has helped alleviate pressures on specific prices in Mexico.

Another noteworthy aspect of Banxico's Board of Governors meeting is the diminishing short-term recession risk. This occurs in a context where domestic consumption, exports, industrial activity, foreign direct investment, and government spending have propelled Mexican economic growth.

A particular focus lies in the construction sector. On the one hand, government civil engineering projects have largely driven industrial sector growth. On the other hand, Banxico emphasizes that due to business relocation to Mexico and incoming investments, private construction in industrial, commercial, and service segments has reaped benefits. Furthermore, the central bank highlights an increase in credit allocation for industrial parks and facilities, implying that expansion could continue.

In this regard, SiiLA has demonstrated remarkable performance in the Mexican industrial real estate sector. Vacancy rates are at historic lows, absorption rates surpass new supply rates, and prices have reached historical highs.

Lastly, Banxico suggests that some central banks have already begun decreasing their reference rates, potentially marking the end of upward cycles. However, the initiation of a reference rate reduction will hinge on Banxico's next Board of Governors session, the sixth of the year, scheduled for September 28, 2023. Meanwhile, monitoring decisions by the Federal Reserve (FED) and inflation data in Mexico will be crucial.

For further insights into the commercial real estate market and the macroeconomic factors influencing its performance, we invite you to explore SiiLA REsource or contact us at contacto@siila.com.mx.