| | |  Puerto Vallarta Real Estate 
Mexico Clears Way for REIT Investments
 Patrick Rucker - Reuters
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May 08, 2010
 |  | Many potential investors have been pushing for reform and say that they are ready to expand their holdings in the country. |  | | |
Mexico City - Investors will soon begin to pour capital into Mexico's real estate market now that cumbersome tax laws have been changed, a senior finance official said on Friday.
Lawmakers created a Mexican version of real estate investment trusts more than five years ago but the securities have not been used due to adverse tax implications.
The Finance Ministry has helped shepherd important reforms through federal and local legislatures in order to ease the tax hit and make the investments more attractive, Deputy Finance Minister Alejandro Werner told the Reuters Latin American Investment Summit in Mexico City.
"We have made several changes to the tax regime on income tax, business tax, that will influence potential issuers of a Fibra," he said, referring to the Mexican version of real estate investment trusts (REITs). "In the next few months of this year we will see more activity, a broader scope of Fibras."
Since they bundle a variety of real estate projects, REITs add liquidity to the market while hedging risk for investors. The securities, which can be traded like shares, typically shield the fund from corporate income tax.
Many potential investors have been pushing for reform and say that they are ready to expand their holdings in the country.
"Our expectation is that this will all be resolved soon - within months - and the framework will be adequate for a real issuance of Mexican REITs," said Roberto Ordorica, Latin America director of Prudential Real Estate Investors.
Werner said he expects the market to quickly draw investors.
"Fibras will be profitable for many investors in the real estate sector as vehicles to diversify wealth and investments," Werner said. "In fact, these are going to have attractive valuations."
(Editing by Gary Crosse) |
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