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February 2011
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Investing in Mexico

“As individual investors, it makes sense that we would look to the investment activities of larger corporations and governments as an indication of where to put our money. When considering investing in Mexico, it might help to take a look at who else is investing here, what they are investing and what they are saying about it.

According to the United Nations Conference on Trade and Development, UNCTAD, the total foreign investment in Mexico in 2010 reached a total of $19 billion dollars (USD). This placed Mexico at Number Six in the list of countries receiving direct foreign investment, ahead of places like Germany and the United Kingdom.

Canada, as it turns out, is one of the leading investors in Mexico. From the year 2000 until 2010, Canada accumulated a combined investment of $9.125 billion USD in Mexico. The leading Canadian corporation investing in Mexico is the mining company, Gold Corp, which invests in real estate for reasons different from most of our clients. Last year, Gold Corp was the leading foreign investment entity in Mexico, with a total 2010 investment of $1.5 billion USD.

Other Canadian companies that heavily invested in Mexico last year include Bombadier, which will be building its Learjet 85 near Queretaro and auto part maker Magna International, which is building a new plant in the state of San Luis Potosí.

According to the State Department website, Mexico’s total foreign investment in 2009 was $14.4 billion USD, showing us what effect the economic downturn has had on Mexico in terms of foreign investment (FDI was $24.7 billion in 2001). The United States was (and still is) the largest foreign investor in Mexico, with a 2009 figure set at $6.4 billion USD.  The Netherlands and Spain are also large investors, with the Netherlands investing $7 billion USD in the first half of 2009.

Of course, Foreign Direct Investment (FDI) in Mexico has increased dramatically since the North American Free Trade Agreement (NAFTA) started, bringing with it many questions about its effect on the Mexican economy and culture. What isn’t in question, however, is that the Mexican economy presents many opportunities for investment and for realizing substantial returns on that investment.

How does this apply to the individual looking to buy real estate in Mexico? Certainly, the more foreign corporations that invest in Mexico, the more there will be an influx of foreigners coming to look after those investments. In addition, the large corporate investments here speak to the inherent growth of Mexico as an economy. Mexico is a country full of young, upwardly mobile and acquisitive citizens… many of them getting degrees, good jobs, houses and cars that were not in the picture for their parents or grandparents. Anyone who lives here can attest to the consistent building and development that has been continuing, despite a slowdown that occurred from the worldwide economic downturn and from the swine flu scare.

The swine flu scare is now a thing of the past. The increasingly negative press coverage of violence in Mexico fails to discriminate or make comparisons to levels of violence in other countries, but truthfully that violence affects a very tiny percentage of areas and people in Mexico. And the economic downturn’s effects are definitely diminishing. The Mexican population and the attractiveness of Mexico as a tourist and retirement destination continues to grow and flourish… we think that means investing in Mexico is a good idea, now more than ever.