The new Mexico now destination for tourist and investor alike
Business-transparency reforms and anticorruption measures have helped boost the economy
As a property fund manager, I like to look at the horizon and skyline in the distance, to see across the buildings and cranes of a city.
Arriving in Mexico City late afternoon after travelling for 27 hours from SA, the air quality isn’t that great, so my view is limited. That is one of only a few limitations I find in this incredible city.
Once renowned for crime, traffic congestion and pollution, the city has morphed into a voguish international player. The country’s achievements are remarkable, and yet often unnoticed until you visit the place, which is three times the size of France with a population almost two-and-a-half times larger than SA’s, and an unemployment rate of 3.5%.
Mexico is 14,000km from SA, on the same latitude as West Africa, and is able to generate employment for almost its entire population of 127-million people. I don’t think I need to point out that SA’s unemployment is 26% based on a population of 55-million.
If there was ever a story of achieving the impossible, Mexico would be right up there.
Inflation was reduced from 139.7% in 1987 to 2.9% in 2016. The margin between first and second contender for the elections for the president in 2012 was 7.3%. In 1976, it was 91.9%. Exports as a percentage of GDP in 2015 were 35.3%, up from 8.4% in 1976.
Mexico is the seventh-largest producer of motor vehicles in the world. And it has moved up 10 places in global competitiveness in the past three years due largely to its reforms in business transparency, national anticorruption measures and a national code of criminal procedures.
Even more remarkable is the extent of achievements in a shorter time frame than SA. Democracy really only came to the country just more than a decade ago.
I visited Mexico to attend an investment ideas conference and revisit our property investments, which now account for 12% of the Stanlib Global Emerging Markets Property Fund.
Our focus is on industrial opportunities (specifically logistics) with investments in companies such as Fibra Prologis, Terrafina, and Vesta. Also, diversified (offices, retail and industrial) property company Fibra Uno.
These have added most to the portfolio’s performance in 2017 and are supported by strong macro fundamentals. GDP growth outlook is 2.7% for 2017 (SA’s is 0.6% with risk on the downside) and oil as a source of revenue is declining, being taken over by tourism.
The Mexican economy has been resilient despite recent challenges, which include US President Donald Trump’s antiMexico stance.
These are the key themes driving this market and our property investments. Additionally, domestic consumption is continually strengthening. Boutiques on Avenida Presidente Masaryk are almost comparable to those you find on Rodeo Drive in Beverly Hills and attract as many chauffeur-driven limos.
Logistics requirements are growing, linked to the strong domestic consumption market and rising online shopping. The other strong segments supporting the industrial sector are the automotive, aerospace and the medical sector.
Tourism is improving, in part due to the weaker Mexican peso, good service levels, great culture and history as well as concerns around terrorism in other parts of the world. Mexico is now the eighth-most visited country in the world.
Due to open in 2020 and located just 5km from the airport, the new Mexico City International Airport is the secondlargest airport under construction in the world. With one large 743,000m² terminal, it will cost just under $10bn, financed 50% by the government and the balance by private investors.
Three aircraft will be able to land and take off at the same time to help minimise delays. From landing to disembarking, it took my aircraft 30 minutes as we gave way to a lot of other aircraft.
When fully built, the airport will be able to handle 120million passengers a year. Heathrow Airport manages 75million passengers a year. OR Tambo International Airport is Africa’s busiest airport with capacity to handle up to 28million passengers a year.
Mexico City used to be a connection to the country’s other cultural destinations and holiday resorts such as Cancun. This is changing. Mexico City’s mix of ancient and modern now attracts more diverse tourists.
There are many museums, World Heritage sites such as Aztec ruins and Spanish colonial architecture as well as amazing new high-rise buildings. It has great shopping, art, fashion and food scenes — from burritos and tacos, to tortillas and nachos.
For tourists and investors alike, Mexico is now the place to be.