Sunday, June 16, 2024

Mexico City has put the brakes on megaprojects worth US $500 million

The Mexico City government suspended eight massive construction projects worth US $500 million last month, citing building irregularities.

Mayor Claudia Sheinbaum ordered a review earlier this year of all building permits issued in 2017 and 2018 for large real estate developments.

After inspections were conducted at 174 building sites, the government announced on February 7 the suspension of 26 projects, including eight so-called megaprojects.

Among the large projects that have been halted is a US $85-million Hyatt Regency Hotel that was slated to open in the second quarter of 2020.

The Santa Fe Hotel Group announced on February 5 that it had been awarded a contract to operate the hotel that was to be built on Insurgentes Avenue in front of the World Trade Center but the government announcement two days later placed the agreement in doubt.

Impera Reforma, a 47-story tower planned for the capital’s emblematic boulevard Paseo de la Reforma, and a 30-story tower, The Summit, in the Santa Fe business district – two of this year’s most anticipated projects – are also suspended.

The other five suspended megaprojects are three other office towers and two residential developments.

The combined area of the office towers was to be 155,151 square meters – 15.5% of all new office space slated to be added in Mexico City this year – while 650 new apartments were to be built in the two residential developments.

A real estate developer who asked to remain anonymous told the newspaper El Financiero that some companies were undertaking construction projects that were larger and taller than those for which they had received approval.

Other building sector experts suggested that the suspensions could have been politically motivated in some cases.

Guillermo Sepúlveda, CEO of the commercial real estate firm Avison Young México, said the suspensions generated uncertainty among investors and that as a consequence they will take their money elsewhere.

“There will be companies that think that developing [projects] in Mexico City is very complicated and they’ll choose to go to Querétaro, Guadalajara, Monterrey, where there are more investment guarantees,” he said.

Source: El Financiero (sp) 

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