MEXICO: An introduction to Real Estate
The Mexican real estate market is characterised by its diversity and regional variations, stemming from the country's federal structure. With 31 states and Mexico City, the legal framework governing property ownership and transactions is shaped by both federal and state laws, requiring a nuanced understanding of local regulations. Due to such diverse legal landscape, as well as the specific economic and geographical circumstances of each state, distinct regional markets have emerged, each with its own dynamics and legal particularities. The different markets’ unique aspects include diverse property registration processes and diverse cultural influences that impact real estate trends and buyer preferences. Understanding these factors is essential for anyone looking to participate in the Mexican real estate sector.
Shifting dynamics: the mixed realities of Mexico's real estate market
Over the past 12 months, Mexico’s real estate market has experienced mixed dynamics. Although inflation has gradually declined throughout 2024 and 2025, it remains above the central bank’s target, keeping interest rates relatively high. This, along with a strong peso, has contributed to a slowdown in certain segments—particularly in mortgage transactions, new developments, and leasing of commercial and office space—while also raising construction costs. Nonetheless, key subsectors such as residential and industrial real estate have demonstrated notable strength. Despite broader economic challenges, the real estate sector continues to be viewed as a safe and resilient investment, with projections for expansion, especially in industrial logistics and tourism-related real estate assets.
Key sectors
Residential
The residential sector has grown notably, driven by rising housing demand and remote work trends. Many U.S. and European nationals have relocated to Mexico post-pandemic, with residence permits for U.S. citizens doubling since 2019. Short-term rentals like Airbnb have attracted both local and foreign investors, while long-term rentals have seen rent increases, especially in upscale neighborhoods, due to high demand. In major cities, rents rose 15–25% year-over-year, prompting local debates on regulating short-term rentals amid concerns over housing shortages and gentrification.
Office
The office sector remains challenged by remote and hybrid work trends, reducing demand for traditional spaces. However, 2025 has seen a rebound in flexible and coworking spaces, especially in financial and tech hubs seeking hybrid solutions without long-term leases.
Industrial
The industrial sector is expanding due to nearshoring, as companies relocate to improve supply chains and access the U.S. market. Vacancy rates remain below 1%, with strong demand in cities like Monterrey, Juárez, Tijuana, and Saltillo.
Retail
The retail sector is adapting to changing consumer behaviors and economic conditions. While some areas have seen slowdowns, others, particularly in emerging markets and popular tourist destinations, are experiencing growth.
There has been a noticeable increase in mixed-use developments that combine retail, residential, and entertainment components, especially in high-density urban zones and coastal cities with rising tourism.
Geographical hotspots and investment climate
Mexico City, Guadalajara, Monterrey, Querétaro, León, Silao and Aguascalientes, continue to be the country’s major hubs for real estate activity, offering opportunities across residential, commercial, and industrial sectors.
Nearshoring is evolving into a more strategic and long-term shift in supply chain planning. While the imposition of U.S. tariffs on Mexican products initially introduced uncertainty and prompted a cautious stance among developers, sentiment is gradually improving. Companies that had temporarily paused real-estate investment decisions are beginning to reactivate select projects, driven by greater clarity on trade dynamics and long-term competitiveness considerations.
A recent example is Fibra MTY’s acquisition of a logistics center in León, Guanajuato, leased to e-commerce giant Mercado Libre. The USD100 million transaction secured a long-term lease with one of the world´s biggest digital retailers, reflecting confidence in Mexico’s logistics infrastructure.
Mexico’s deep integration with U.S. and Canadian supply chains, developed over decades through NAFTA and USMCA, remains a structural advantage to drive in investment. However, decisions are increasingly shaped by a broader set of factors, including regulatory certainty, infrastructure readiness, and skilled labor.
Tourism-driven regions remain highly attractive. Destinations such as Los Cabos, Riviera Maya, Nayarit Riviera, and San Miguel de Allende continue to draw significant investment in hospitality and branded residential projects. Costa Alegre has been identified as an emerging luxury destination with strong development potential over the next few years.
Despite economic challenges, the overall investment climate in Mexico remains positive. Real estate is viewed as a stable and lucrative investment, benefiting from Mexico’s demographic growth, strategic location, and trade integration with the US and Canada.
Economic factors
Mexico’s economy is experiencing modest growth for 2025. Key sectors such as manufacturing, logistics, and tourism continue to support economic activity.
Although inflation has shown signs of stabilization, persistently high interest rates and borrowing costs continue to impact the real estate sector, which may affect transaction volumes.
However, Mexico remains a top destination for tourism-related real estate investment, thanks to its cultural heritage, biodiversity, climate, and proximity to the US and Canada.
Sustainability and environmental concerns
Sustainability has become an essential factor across all segments of Mexico’s real estate sector. In 2025, the adoption of green building standards such as LEED and EDGE continues to expand, particularly in industrial, commercial, and hospitality projects, as developers respond to investor expectations and incorporate ESG principles into asset planning and valuation.
Recent regulatory developments, especially at the state and municipal levels, have introduced stricter environmental criteria in areas such as land use, permitting, and resource management. These requirements are particularly relevant in regions experiencing pressure on water and energy infrastructure. In this context, ESG compliance is no longer a market differentiator, but a baseline condition for project financing and long-term viability.
Nearshoring
Nearshoring remains a key driver of Mexico’s real estate sector. What began as a wave of optimism and accelerated industrial growth has shifted toward a more strategic, long-term phase. While demand for industrial space remains strong, investment decisions are now shaped by infrastructure capacity, regulatory clarity, environmental compliance, and access to qualified labor.
Recent U.S. tariff measures, primarily targeting distant manufacturing hubs, have added complexity to cross-border trade dynamics. While not directly aimed at Mexico, they introduce uncertainty that reinforces the need for resilient, well-structured relocation strategies.
Mexico continues to offer solid structural advantages: proximity to the U.S. market, competitive labour costs, and preferential trade access under the T-MEC. Sustaining nearshoring momentum will depend on the country’s ability to close regional infrastructure gaps and strengthen institutional coordination to support long-term growth.
Key challenges
While Mexico’s real estate sector maintains strong fundamentals, several structural challenges remain. Regulatory hurdles persist, as permitting processes continue to vary by state and municipality, which can affect development timelines and certainty. Infrastructure, energy and labor availability are under pressure in high-demand regions such as the north and Bajío, where the nearshoring has amplified demand for industrial space and skilled talent.
Trade dynamics are also evolving. The recent U.S. tariff measures, while designed to reduce reliance on remote suppliers, may affect nearshoring strategies. Although Mexico’s integration under the T-MEC continues to offer a stable framework and tariff-free access, investors might adopt a more selective approach to site planning.