Nearshoring worsens the housing crisis on the northern border of Mexico

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The relocation of value chains or nearshoring threatens to worsen the housing crisis on the northern border of Mexico, where the price of properties rose almost 12% in the last year only in Ciudad Juárez, according to the Mexican Association of Real Estate Professionals.

Nearshoaring has caused the arrival of thousands of foreign workers to Juárez, a border city with the US city of El Paso, Texas, which has led to housing becoming increasingly expensive and scarce, so the maquiladoras are already building apartment towers to house their workers.

“Many companies come to the city and that triggers the number of jobs. We need housing for those workers, there are even housing towers that are being planned in the maquila areas,” said Marisela Sáenz, president of the Mexican Association of Real Estate Professionals in Juárez.

For now, the organization does not have data on how many more homes are needed, but Sáenz explained that the companies with the largest expansions, such as Foxconn and Wistron, already have or are planning buildings for foreigners, as there are not enough in the market.

She added that, in general, the companies are responsible for the rent because, being foreigners, they do not have guarantors or guarantees in Mexico and do not meet the requirements.

“They pay from 15,000 to 25,000 pesos per month (between about 882 dollars and 1,470 dollars), depending on the position that each employee brings, but there is a lot of need for people who come to work in the companies,” the real estate broker said.

Mexico received a record of more than 36 billion dollars in foreign direct investment (FDI) in 2023, an annual increase of 2.2%, due to the boom in nearshoring, in which companies move production lines to the country that they have in other regions, especially in Asia.

The phenomenon has particularly benefited cities on the border with the United States, such as Juárez, but it has also exacerbated a crisis of affordable housing because construction in that sector has decreased and because the little that is produced is quickly absorbed by the market, according to Sáenz.

The real estate representative also pointed out the low wages of the manufacturing workers who, according to official data, average around 12,000 pesos per month (about 705 dollars), which limits them to rent or buy a house.

“The rent should not be more than 30% of what you earn, that is what you can pay for rent, it cannot be 50% because you have to live, the basic basket, plus the children, gasoline and everything,” Sáenz said.

Alejandro Téllez, director of CE Inmobiliaria, indicated that the manufacturing boom has brought a new trend: the maquiladora companies rent or build houses.

“We have noticed that, especially in the areas close to industrial parks, the demand has been very high and we have noticed that the maquiladora industry has been buying or renting properties for its staff. They rent up to 10 houses in one go,” he said.

“The houses they ask us for are houses that already have the furniture to be inhabited immediately and others are houses that are going to be used for longer, they are going to be used by people who are going to work in the industry and they take care of equipping them,” he added.

Juárez is the Mexican city with the most personnel employed by the maquiladora industry, with around 300,000 employees.

The interviewees cite that since the phenomenon of nearshoaring began until the first half of last year, Ciudad Juárez gained 56,000 jobs in the maquiladora industry, which caused a deficit of up to 25,000 employees, so the companies seek to bring workers from other parts of Mexico and the world.

Source: Forbes