The winds of change are blowing across the infrastructure industry with new players, new rules and new opportunities. President-elect Andrés Manuel López Obrador has indicated that infrastructure will be a priority, with promises of higher government spending and modernization plans. He has also pledged to revisit, and possibly halt, big projects like NAIM, while security and corruption remain in focus. State of the Industry provides an overview of the challenges and expectations as told by the sector’s top business and political leaders.
As of 2017, Mexico had a population of 123.5 million, according to CONAPO, scattered across 32 states and 2,462 municipalities. By 2030, 90 percent of the country’s population will live in cities, increasing the demand for urban infrastructure. As some municipalities change governments, project continuity continues to be a challenge. This chapter gathers the insights of local government leaders and the challenges they are facing to develop infrastructure and attract investment to their regions.
The NIP followed CONAGUA’s 2030 Water Agenda but projects such as Monterrey VI and the Zapotillo have yet to be completed. The construction and maintenance of water and waste projects through PPPs continues to be a controversial topic but with an even smaller budget for 2018, PPPs could quench Mexico’s thirst. Throughout this chapter, industry experts discuss the challenges in constructing these projects and the importance of private-sector participation.
The main areas of opportunity for Latin American countries are reducing commute times, higher service frequencies, security and more comfort, but there is another issue at hand for Mexico: the construction of public transportation alternatives. Only nine Mexican cities have BRT systems and only four have metro systems. In this chapter, experts breakdown Mexico’s urban transportation systems, development plans and policies to uncover the best solutions for cities’ mobility problems.
Smart Cities, Industry 4.0 and the Internet of Things are buzzwords taking over the infrastructure industry. Mexico’s largest cities are pushing Smart initiatives to introduce greater efficiency and sustainability. One development bottleneck is the lack of trustworthy data; to create solutions that will boost a city’s economic development supporting data should be available. This chapter highlights Mexico’s telecom projects and insider opinions on how to build Mexico’s future cities using technology and data.
Mexico’s booming real estate sector is demanding more innovative and sustainable structures to attract tenants. Architects are stepping up to the challenge of transforming the country’s skylines. With new design trends, materials and standards, architects strive to meet developer expectations while also adhering to budgets. In this chapter, architects and designers describe their vision of Mexico’s future infrastructure development and the importance of adapting to emerging trends and the needs of new generations.
The building blocks of the Mexican infrastructure industry go beyondcement. Technology and innovation are transforming infrastructure into sustainable and efficient structures. Rising commodity prices and market volatility are snipping company profits but international manufacturers continue to invest in Mexico. This chapter interviews the leading voices in this segment and details their perspectives on changing construction trends, challenging market conditions and the role sustainability plays in their products and operations.
According to CMIC, the construction market is worth approximately MX$2.4 trillion and is divided into 23 percent public sector and 77 percent private sector. In the aftermath of the September 2017 earthquakes, the Civil Works Law and Safety Regulations will be changed to demand more from the construction sector. Within this chapter, Mexico’s top companies and experts express the main challenges and the countless opportunities they have encountered in building Mexico’s future infrastructure.
The country’s residential sector is growing, especially in cities such as Monterrey and Guadalajara. While the social and middle housing sectors are seeing the most demand, they are also the segments that have not been completely catered to. CAF suggests that for Mexico to finally meet its demands, it must improve its zoning and building codes. In Residential Real Estate, experts evaluate policies and housing demand and propose solutions to Mexico’s housing gap that create a win-win situation between investors and the market.
Mexico’s commercial real estate development continues to boom in Monterrey, Guadalajara and Mexico City as developers are turning to mixed-use spaces to balance their portfolios. Constructing in cities has unique challenges, such as social impact and land scarcity, but developers are looking to new solutions to create inclusive spaces where people can live, work and play. This chapter provides first-hand outlooks from Mexico’s top developers, their experience and the latest real estate trends in terms of financing and design.
The government is confident that its growing middle class, e-commerce boom, geographic location perfect for distribution will keep investors looking for new opportunities in Mexico. But for its manufacturing, logistics and e-commerce sectors to reach optimal levels, experts believe maintenance and construction of basic infrastructure is a must. This chapter provides an in-depth review of Mexico’s industrial and logistics infrastructure development directly from its leaders, from developers to logistics experts.
Apart from a smaller budget, each sector has identified the key factors that impact the success or failure of a project, especially under the PPP scheme. Adequate planning, transparent procurement processes and ROW continue to pose challenges in the development of transport infrastructure, leaving many of the NIP’s largest projects incomplete. These complexities are addressed by top transport experts in this chapter to provide a review of the status of Mexico’s transport network and the country’s infrastructure priorities.
While the industry continues to create new financial vehicles to fill its financial gap, the stock market will continue to play an important role in constructing Mexico’s infrastructure needs. Transport and water infrastructure continue to be priorities but low federal budgets have slowed development. This chapter gives an overview of the industry’s financial health, analyzing the performance of capital access and the viability of private-sector investment in infrastructure projects through the eyes of banks, pension funds and asset managers.
Mexico’s new administration will inherit various infrastructure projects and a hefty financing gap. While the private sector eagerly awaits the infrastructure priorities of the new government, it continues to find new opportunities in Mexico. The last chapter of this edition reflects on these expectations but also translates them into specific areas of opportunity according to the insight of its key players. Industry Outlook acknowledges infrastructure’s main improvements and envisions how the future of the sector is likely to look.
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State of the Infrastructure Industry
A country’s prosperity is intricately linked to the quality of its infrastructure. Concrete and steel are the building blocks of nation’s economy, boosting the competitiveness of its industries. For Mexico to join the world’s leading economies, it must invest more time and money in constructing and maintaining its infrastructure. 2018 will mark the end of Enrique Peña Nieto’s presidential term, placing the advancements of his National Infrastructure Plan (NIP) under a magnifying glass. With the country’s hefty US$544 billion infrastructure gap, Mexico would need to spend more on developing its road, rail, port and airport infrastructure fast, or else economic growth could be jeopardized. Against this backdrop, 2017 was a year of uncertainty and caution but Mexico was able to rise up and demonstrate its attractiveness to global investors. The private sector continues to boost the performance of the construction industry and a financial gap has created new opportunities for institutional investors to become involved in infrastructure through the Mexican Stock Exchange (BMV).
Ahead of the 2018 elections, SCT is eager to check off as many commitments as possible from its list and will place its efforts not only on the remaining projects, but also in rebuilding three states damaged by the September 2017 earthquakes. The clock is ticking and the country’s growth depends on the completion of much-needed projects such as NAICM and the Mexico-Toluca Interurban Train to keep up with its fast-growing cities. Sustainability will come through investment and the development of inclusive and competitive cities, which will drive the future of the country.