10 CITIES ACROSS MEXICO

Mexico 2019 | REAL ESTATE & CONSTRUCTION | VIP INTERVIEW

TBY talks to Eduardo Mellado, New Developments and Commercial Director for Cápitel Desarrollos, on geographic spread, a diverse portfolio, and plans for the coming year.

How has the portfolio of Cápitel Desarrollos developed over the years?

We have 30 years of experience in the real estate business, having developed more than 70 projects located in 10 cities throughout Mexico. We have developed industrial spaces, hotels, office buildings, apartments, shopping plazas, single-family neighborhoods, medical centers, and mixed use developments. As of right now, we are mostly focused on mixed-use buildings that satisfy the market's real estate needs and helps improve quality of life. We offer spaces where people can work, eat, receive medical attention, enjoy, and so on. Our buildings are Real Shared Benefits Colaborative Communities where people reach their goals making networking and business relationships. For example, Azuna Cancún, which has 16 floors for offices, four floors for medical offices, and 4 floors for commercial spaces. Another exaple is Centralia Cancún, a mixed use development which includes offices, a commercial and services plaza, a hotel, and an industrial park with buildings that can be adapted into industrial offices. These industrial offices are modern premises, for the production industry where in the same place there can be production capacity as well as a sales show room or an office. Our project offices are located in Monterrey, Hermosillo, Querétaro, Mérida, and Cancún coordinating projects in seven cities.

Given Mexico's highly competitive environment in the real estate market, how can developpers work to differentiate their services?

Grupo Cápitel throughout its 5 subsidiaries offers the “CÁPITEL 360° Service” which is a Integrated Real Estate Service that starts form land acquisition, to the operation, ocupation and management of real estate space. Cápitel Desarrollos develops the projects, from land acquisition to the first round sales. Cápitel Properties runs a real estate investment fund and leased assets. Cápitel Connect, is a marketing and real estate brokerage company that commercializes both its own and third-party buildings. Redwood Property Management is a property management company that helps increase the property value by managing the properties operation and keeping high ocupancy. Last but not least, NEX Offices, our Business and Coworking Space Centers, where we offer serviced offices for lease including co-working spaces and virtual offices in our 6 centers in 4 cities. By 2020 well have at least 3 new Centers in Cancún and San Luis Potosí, and Monterrey. Our mission is to develop high quality real estate that increases value to its owners and quality of life to all that are involved and visit them. This allows us to keep developing back to back projects with high returns to our investors. The last 15 projects we have done in the last 10 years have produced a yearly ROI of 23% on average and an average occupancy of 94.7%.

What is the approach of Cápitel Desarrollos in Monterrey, Mexico's second-largest city?

Grupo Cápitel is constantly looking for unattended markets. Monterrey as big as it is, has many opportunities. Nevertheless, it has many saturated zones. For example there is what we call Valle Oriente known for its commercial plazas and luxury office and apartment buildings. Experts say that Valle Oriente has a luxury offices inventory that can supply demand for at least three years. In Cápitel we look for unatended markets. A perfect example is Azuna Monterrey our newest mixed-use project in the south of Monterrey which include commercial and services plaza, office and medical spaces and apartments. Moreover, we are developing a mixed use development in the heart of the industrial zone of the north of Monterrey. This project in a 17,000sqm lot will offer offices, plaza, medical spaces and a hotel. Cápitel already has the land for the next 2 projects in Monterrey.

How will new developments complement the current administration's efforts to diversify economic development throughout Mexico?

We believe that a city must grow in every economic sector in order to find balance. The Mexican presidents' vision focuses on developing the entire country and not just specific cities. This means that southern Mexico will see a major boost during this administration. Cápitel Desarrollos is already present in two of the biggest southern cities with plans to continue developing there. As with every new presidential administration, we must be cautious with our development strategies, invesments, and processes. Cápitel Desarrollos seeks to develop projects with good design and at the best possible price to satisfy the market's needs.

Which segments within the real estate sector will be further promoted to attract the attention of international investors?

Mexico's real estate sector, offers great opportunities for foreign investors. Investing in a property that generates long-term profits is good business. Given the US Dollar strength against the Mexican peso, it is highly recommended to invest in office space and retail for lease. To give and example, The Black Creek Group is a fund that handles USD13 billion of investments in Mexico. It is the largest real estate investor in Mexico, and according to them now is the time to invest in Mexico. Also expert say that now is the time to invest in high volume apartments for lease. The middle class in Mexico has remained solid with strong purchasing power. Notably, Mexico has an interesting financial platform due to credit institutions like INFONAVIT. All sectors of real estate in Mexico have great potential.

What are Cápitel Desarrollos' plans for 2019-2020?

As of right now, we have four projects under development, and two different ones are about to start. Moreover, we have land reserves that can hold at least 4 new mixed use developments. These six projects will be completed between 2019 and 2020. Grupo Cápitel wants to continue growing. We make strategic alliances in the cities where we are, and we want to keep in touch with the governments to continue with their help, developing high quality urban infrastructure for the local communities.Cápitel will continue to serve unattended markets, bringing smart and connected buildings to people across Mexico. That is what Cápitel has been doing for many years, and is our intention to continue by helping improve the quality of life through real estate developments.