Reasons to invest in northern Mexico

by Advance Real Estate 28 de July, 2022 610 Views

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With a privileged geographical location, the cities of northern Mexico make possible the commercial exchange between the United States or Canada markets. This advantage is far beyond those offered by other locations, which attracts investors’ attention from all over the world. It is estimated that in 2020 alone, 12 Asian companies¹ settled in strategic areas of the country, and in March 2021, the presence of Chinese investors requiring industrial space was expected to increase significantly in the following 36 months.

Investment benefits in northern Mexico

1. Tax incentives

The Mexican government² has established various tax incentives for industrial companies operating in Mexico’s southern and northern borders.

The aim is to encourage investment, increase productivity, create regional jobs, and promote trade between countries.

These incentives represent a solid reason to invest in industrial real estate because they involve:

A Value Added Tax reduction (VAT) for goods and services rendered in these regions. This benefit includes a tax credit with a value up to 50% VAT, which will be applied directly to the usual 16% rate, resulting in 8%. The condition is that the establishment of the benefited legal entity is located in the northern or southern border regions and that the delivery of the goods or services takes place therein.
An Income Tax reduction for companies and natural persons with business activity in border areas. In this case, the incentive is a support through a tax credit³ equal to one-third of the income tax accumulated in the fiscal year or in the provisional payments, amount that will be credited to the tax incurred. This way, taxpayers — natural or legal person — who carry out business activities in the country’s northern and southern border regions, will pay a lower income tax caused by their activity.

2. Excellent location for nearshoring strategies

The so-called nearshoring has been the answer when faced with the need for nearby suppliers to address the problem in supply chains between 2020 and 2021, particularly in those dependent on Asia.

In this regard, northern Mexico’s cities are proposed as the most favorable locations to invest in real estate to find a prompt and effective solution to the supply crisis. Monterrey is a city that has concentrated a significant part of the demand for industrial space in recent years.

Skilled labor, space availability to implement projects, and stability in export levels are some of the characteristics that explain the high demand for the sector in cities such as the capital of Nuevo Leon, which in 2020 represented 52% of the absorption of industrial space⁴ by nearshoring companies in the country.

3. Industrial infrastructure

Mexico’s northern border is recognized for having the necessary infrastructure for the automotive, aerospace, electronics, electrical and metal-mechanical industries to thrive by developing clusters that integrate a production chain with skilled labor.

At Advance Real Estate, we provide our clients with industrial space suitable for their operational needs in northern Mexico and other strategic areas of the country. Contact us and find the ideal space for your company.

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About us

Advance Real Estate

Advance is a leading company in the acquisition, leasing and operation of industrial and logistics assets, with presence in 12 cities within Mexico and a portfolio of 11.5 million sf of industrial space.

informes@advance-realestate.com

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