In the past, the California 1031 buyers and “top of the market bidders” were synonymous. They have since been dethroned and the Mexican investor has taken their place.

The strength of the Mexican Peso hit an all time high since 2015. This essentially places U.S. real estate “on sale” for Mexican investors and the market is reflecting the effects of this almost 20% discount.

Several notable properties traded recently to Mexico based groups who purchased the assets all cash and later placed debt. This is in spite of the fact that the Mexican treasuries are offering considerably higher returns (currently around 11%) than the U.S.

Peso’s real exchange rate rises above historical average.

Mexican Buyers have indicated diversification and long-term appreciation as the primary motivator in investing outside of Mexico, and Texas’ proximity and economic stability have made it an ideal landing spot for those investment funds.

Will the trend continue? Perhaps. Even before the favorable currency market, the investment sales market in Texas has benefited from Mexican Buyers. Nearshoring of manufacturing has bolstered the Peso and Mexican economy and many analysts believe this trend will continue.

For the investment sales teams based in Texas, this is good news but requires a shift in marketing strategy for targeting the highest bidders for our Texas-based assets.