During the last 15 years, it is estimated that in Mexico the percentage of the population that prefers to rent a property to inhabit it has increased by almost 10%, which is why the so-called Multifamily or rental housing is becoming more attractive among investors who like real estate. According to a CBRE analysis, "Multifamily is a countercyclical asset, meaning that it performs better in periods of crisis. Being a counterweight to assets such as Industrial, Offices, and Retail which have a performance closely linked to economic growth.
The tenant profile for Multifamily in Mexico focuses on professionals, young couples, singles, nationals, and foreigners, for whom their activity is located near the business centers of major cities. Currently, there are eight projects in operation in Mexico with approximately 3,000 homes under construction and nine projects with more than 2,000 units which are expected to be completed during 2021 and 2022. Mexico City concentrates 70% of this type of project.
From the investor's point of view, they added, it is good to have very stable cash flows and the pulverization of their rents, which exceed 300 tenants in most cases, which minimizes the risk of renewal that would have with a smaller number of tenants. "The level of delinquency and vacancy rate is very low. As an example during the last crisis, the occupancy rate in the United States always remained above 90% and in Latin America, the level of delinquency does not exceed 2%".
Another goodness for the investor that the analysis highlights are that the Multifamily acts as a hedge against inflation, since in almost all cases rents rise in a greater proportion than inflation, in addition to the capital gain that the asset has.
"35% of the population in the United States prefers to rent rather than buy a house and this figure has grown over the years. In Latin America there is this same trend, particularly in Mexico, the percentage of the population that prefers to rent has increased by almost 10% during the last 15 years. It is estimated that the percentage at the national level is at ~25% and ~33% for Mexico City, having a greater concentration in singles under the age of 40," said CBRE.