Homex, who traditionally have developed low-income housing, decided a couple of years ago to get into the lucrative luxury market with a program to have developments throughout Mexico. Their project in Vallarta, located in Costa Banderas on the North Shore, is called Villas de Mexico and will eventually have 1,000 units. However, it looks like they are cutting back, although they will continue with the Puerto Vallarta development:
Mexican homebuilder Homex will pull out from the high-end residential market and reduce land acquisitions through the end of 2009, focusing on cheap houses to better weather the financial crisis.
In a move to save money and allocate resources to the most profitable market segment — cheap homes selling for under $50,000 — Homex HOMEX.MX HXM.N will put off further projects in the luxury market, although it will continue with its developments in the beach destinations of Los Cabos, Puerto Vallarta and Cancun.
“We have a land bank close to five years of future sales,” Chief Executive Gerardo de Nicolas said during a conference call with analysts. “Due to the actual macro conditions … that’s why we are significantly reducing our land acquisition for the next five quarters.”
De Nicolas said smaller competitors were starting to suffer from liquidity problems as bank and government-funded mortgages dry up.
“This is a unique opportunity for us to gain market share … and consolidate business in the cities where we already have a presence,” de Nicolas said. “The Mexican housing market is already witnessing some signs of deceleration.”