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Mexico City Real Estate Rent and Sale Market Analysis

Mexico City real estate is attractive to many foreigners with a need to stay in the city for more than a few months. The idea of finding a rental property or buying a home in Mexico City will prompt questions about How much does it cost to buy a house? or How much is rent for a house in Mexico?

Growth in Mexico City’s residential sector has expanded in the past few years. More mid-range to high-end market units and homes are available. Mexico City’s residential neighborhoods, such as Condesa and Polanco, remain quite active. Properties for sale or for rent offer all imaginable amenities.

According to The Wall Street Journal, about 1.5 percent of Mexico City’s almost 9 million residents are wealthy. Naturally, Mexico City residents are most likely to buy a luxury property than all others. However, foreign buyers frequently purchase Mexico City real estate because it represents strong relative value as an investment.

Mexico City Market Overview

downtown Mexico City

Image Source: DepositPhotos

Mexico City Luxury Properties for Sale

Mexico City real estate continues to perform strongly. Because of many new developments, prices continue to increase across the board. The Mexican economy is strengthening and the supply of properties has decreased. There’s a new capital gains tax that sellers must absorb, too, making some hesitant to put their properties on the market.

The average Mexico City property stays on the market several months today. Currency volatility is a consideration for some buyers and sellers: the Mexican Peso has eased against the U.S. Dollar over the past few months. This fact gives foreign buyers greater purchasing power in Mexico City now. Keep in mind that currency rates rise and fall. The price of the peso may rise against the U.S. Dollar in the future.

If you’re looking for Mexico City real estate for rent, it’s possible to rent a small unit in an attractive neighborhood for USD 2-3,000. Recognize that luxury rentals for entertaining in Mexico City cost more.

Mexico City Properties for Sale

If you’re searching for a luxury apartment in Polanco, it will cost millions. Properties are available from USD 2.5 million to USD 10 million. An older, more traditional home in stately Lomas de Chapultepec begins at about USD 3 million.

To the west in Bosque de las Lomas, it’s possible to buy a luxury home for less. Prices of these homes start at about USD 800,000 to USD 3 million or more.

Mexico City Luxury Properties for Rent

Rents in some parts of the city have eased this year. Before you shop for a luxury rental in the city, look for an experienced guide. This will save lots of time and ensure a pleasant experience.

It’s sensible to Mexico City real estate first if you’re new to the city. The Mexican real estate market is complex. Explore the city to identify which neighborhood resonates best.

If you’re looking for an executive rental in the south or western part of Mexico City, or if you’re looking for an ideal furnished apartment in Polanco, Condesa, Lomas de Chapultepec, Sante Fe, Bosques de las Lomas, Cuauhtémoc, or Valle de Bravo, know that quality property rentals are available.

Closing and Monthly Maintenance Costs of Mexico City Real Estate

Not only a Mexican citizen may purchase land without any restrictions in Mexico. The purchase or sale of a property is handled by a notary public. Foreign buyers may also want to hire a real estate attorney in Mexico City to assure that your transaction does give you all of the rights you should have and that you are aware of any restrictions before finalizing the deal.

A seller pays closing costs in almost all situations, including the notary’s fee plus a value-added tax (VAT) on the notary’s fee, a property appraisal, land transfer tax, and zoning certificate. Costs of a USD 1 million property are about USD 57,000.

Monthly maintenance fees for a USD 1 million property are about 21,000 pesos, or approximately $1,000. Annual property taxes are approximately 40,000 pesos, or about $2,000.

Residential Real Estate Prices in Mexico City

Average prices of Mexico City real estate have increased about 10 to 15 percent over the past two years:

  • Middle market units in the capital district of Mexico City sell for approximately USD 125,000 to 300,000, depending on the desired location. Mexico’s middle class is expanding.
  • According to realtor.com, luxury apartments in Mexico City sell for approximately USD 5,000 per square meter (about USD 465 per square foot) without special finishing, other than pipe and electric installation.
  • Prices of luxury apartments rose to an average USD 1,000 per square meter (about USD 372) year-over-year.
  • Sales prices of luxury apartments can be up to USD 11,000 per square meter (about USD 1,023 per square foot) for a fully finished unit.

4 Reasons to Invest in Mexico City Real Estate

Mexico City is a frequent destination for corporate executives and professionals. Some investors are interested in owning Mexico City real estate because of projected growth. Others are interested in adding a property to generate annual rental income.

The cost of maintaining a property is relatively low when compared to other major metropolitan cities around the world, including upkeep and taxes. Although property prices have risen quite substantially in Mexico City in the recent past, it’s possible to find an attractive property with time, patience, and guidance from a knowledgeable real estate firm.

Own Mexico City real estate because you love Mexico City and you recognize the alignment of multiple positive financial factors, including:

1. Great Returns

After an adjustment for inflation, Sociedad Hipotecaria Federal says that home prices in Mexico City rose about 4.9 percent in year-over-year real terms. Home prices in Mexico City increased an average six percent per year between the years of 2005 and 2011.

2. Financial Stability

Mexico’s last housing crisis occurred in 1994. The Mexico City market has climbed steadily since then.

3. Influx of Foreign Investors

The International Consortium of Real Estate Associations reports that Northern Americans from the U.S. and Canada want to buy here. Low oil prices plus a currently strong U.S. Dollar are investment motivators.

4. Expansion of the Middle Class

Mexico’s middle class grew from about 37 million in 2000 to 44 million in 2010, according to Instituto Nacional de Estadística y Geografía (INEGI):

  • Inflation has decreased in Mexico. The inflation rate was approximately 10 percent in 2000. Today’s inflation rate is about 3.5 percent. The Bank of Mexico’s autonomy is considered instrumental in inflation management.
  • Trade openness is fostering the growth of the middle class. Foreign trade, or exports plus imports, account for about 60 percent of Mexico’s GDP. This makes Mexico one of the world’s most open economies. In comparison, Brazil’s 27 percent, China’s 48 percent, and the U.S.’s 30 percent can’t compare with Mexico’s competitive spirit.
  • Prudent public financial management is in place. From 2000 to 2012, Mexico’s fiscal deficit was less than one percent of GDP. Total public debt, both foreign and domestic, is slightly more than 30 percent of GDP.
  • Financial inclusion. More Mexican citizens use banking services now. About 33 million Mexicans used banking services 10 years ago. By 2012, the figure rose to 2012. During the period, banking services grew at an average annual 7.5 percent growth rate.

Final Thoughts

There are many reasons to buy or rent property in Ciudad de México, or CDMX. Mexico City recently took on many of the powers and responsibilities given to the states. Although it’s not a Mexican state, its size and importance merit a congress and constitution. Sixteen delegaciones, or boroughs of Mexico City, will each have a mayor.

As the heart of Mexico and metropolitan home to millions of people, why not have your own home in Mexico City?

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