In December 2019, the spread of a new virus began in the Chinese city of Wuhan. In a very short time, it collapsed the entirety of the forecasts that were held for this year, generating a great impact on the global economy. In almost all the affected countries, social distancing and quarantine measures were taken to prevent the virus from spreading. This has led to many productive sectors being affected. Prominent among them is the real estate market, which has suffered heavy blows as a result of the health crisis.

During the first quarter of 2020, in China, the country where the virus emerged, real estate transactions fell by 90%. This was reported by the China Merchants Securities Co. In March, stock markets around the world collapsed, in spite of interest rate reductions. In Mexico, on the other hand, the implementation of “healthy distance” measures began in the face of community outbreaks of coronavirus cases.

Real estate contractions were experienced throughout 2019. However, at the beginning of the current year, trends pointed to a 4% growth in the market. This, originated as a consequence of the reduction in interest rates promoted by the Bank of Mexico. It also had its origin in the impulse of institutional housing programs, such as Infonavit’s Unamos créditos program.

Despite this, according to the Mexican Association of Real Estate Professionals, during the contingency, real estate activity will be frozen and no real estate acquisitions will be made in order to avoid investment risks. It is considered that, until it can be announced that the pandemic has been controlled, confidence in the sector will gradually recover.

In terms of expectations, it is expected that the recovery will begin to develop during the third quarter of the year. Furthermore, it is considered that it may stabilize towards the last quarter allowing for a year of growth in 2021. It is believed that social interest real estate could remain stable, but residential housing will be the most affected.


Since the last quarter of 2019, the office real estate segment already presented a slowdown. This, mainly in the Mexico City market. There, a significant amount of office construction had slowed down as a result of the need for permits to carry out the task in the context of isolation.

Due to the health contingency, many offices have been suddenly closed. This has prompted companies to provide their workers with the necessary conditions to continue their tasks from their homes, by means of teleworking. This, as a way to continue operating in compliance with the sanitary measures implemented. This has a direct impact on the office real estate market, since it responds to the level of economic activity and employment. In this sense, 2020 is considered to be a slow year, where prices are adjusted downwards.

Industrial real estate

Demand for logistics real estate will also be affected. Over the last few years, it has been exceeding growth expectations, reaching between 250 and 300 MSF in recent years. This is driven by the modernization of the supply chain and e-commerce, which continues to grow. It is estimated that a return to a 7% break-even rate will require more than 350 MSF of vacant deliveries.

The healthcare side of industrial real estate could see more activity. This would help, according to recent studies, to offset the blows in the travel, events, hospitality and automotive industries.

Second half of 2020

During the second half of 2020, housing prices – both new and used – in Mexico City experienced a 1.9% increase. Since the beginning of the record in 2009, this is the lowest increase seen, according to data from the Federal Mortgage Society.

The covid-19 pandemic represented a downward trend in housing prices. Already since the third quarter of 2019, price increases started to be lower, going from almost 10% to 7% and 5.5%, finding their lowest increase from April to June 2020 with 1.9%.

The real estate sector, certainly, is not alien to the effects of the crisis generated by the pandemic, however, the economic recovery that is predicted for the post-pandemic, it is estimated, may imply a rise in real estate prices. At the same time, specialists expect a rebound effect of national economies worldwide, which is reflected in a large-scale recovery after the control of the sanitary emergency. Therefore, those who wish to acquire real estate are advised to take advantage of the current low prices to do so.

A Deloitte report on post-pandemic predictions indicates that:

“Remote working will become a permanent fixture in our lives so retail and shopping center owners will need to adjust their operations and business models, focusing on post-COVID-19 scenarios, in order to maintain the value of their assets and ensure their cash flow.”