Rise of ‘nearshoring’ worsens the housing crisis on the northern border of Mexico

The relocation of value chains or ‘nearshoring‘threatens to worsen the housing crisis on the northern border of Mexicowhere property prices rose almost 12% in the last year in Ciudad Juárez alone, according to the Mexican Association of Real Estate Professionals.

He ‘near shoaring‘has caused the arrival of thousands of foreign workers to Juárez, a city bordering the US city of El Paso, Texas, which has made housing increasingly expensive and scarce, which is why maquiladoras are already building apartment towers to house their workers.

“Many companies come to the city and that boosts the number of jobs. “We need housing for these workers, there are even housing towers that are being planned in the maquila areas.”indicated 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, since there are not enough on the market.

He added that, in general, 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 US$ 882 and US$ 1,470), depending on the position each employee has, but there is a lot of need for people who come to work in the companies,” the real estate agent added.

A crisis in the middle of a boom

Mexico received a record of more than US$36 billion in foreign direct investment (FDI) in 2023, an annual increase of 2.2%, before the rise of ‘nearshoring’, in which companies transfer 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 an affordable housing crisis because construction in that sector has decreased and because the little that is produced is quickly absorbed by the market, according to Saenz.

The real estate representative also pointed out the low salaries of manufacturing workers, which, according to official data, averages around 12,000 pesos per month (about US$705), which limits them from renting or buying a home.

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

The maquilas build houses for their employees

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

“We have noticed that, especially in areas close to industrial parks, demand is very high and we have noticed that the maquiladora industry has been buying properties or renting them for their staff. They rent up to 10 houses in one fell swoop,” Indian.

“The homes 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 a longer period of time, they are going to be used by people who are going to work in the industry and they are in charge of enable them”he added.

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

Those interviewed cite that since the ‘nearshoaring’ phenomenon 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 companies seek to bring workers from other parts of Mexico and the world.