Selling smoke in Mexico: this is how million-dollar homes are offered in neighborhoods that don’t exist

Real estate companies have bet on “renaming” some popular neighborhoods in Mexico City to offer real estate at prices inaccessible to most Mexicans.

This phenomenon, warn experts consulted by Sputnik, could have a major impact on the population’s quality of life.

“Live in Reforma Norte!” reads the controversial advertisement of UBK, a real estate company that offers apartments ranging from 51.92 to 121.04 square meters, with a minimum price of Mex$2.7 million (about US$149,000).

Although at first sight, the advertisement may seem to be just another one among the hundreds seen daily, the truth is that this one has caused peculiar indignation beyond its high price.

This new construction is being built at 57 Gorostiza Street, in a neighborhood called Morelos, which is actually a popular area famous for being home to the famous Tepito street market, nationally and internationally known for being the largest in Latin America and also for its high crime rates.

The offer made by UBK is a fallacy, since the Reforma Norte neighborhood does not exist.

The location of the construction is closer to Avenida Circunvalación than to Paseo de la Reforma, a historic thoroughfare of the Mexican capital that, to reach, one must travel at least three streets: Tenochtitlán, Toltecas, and Jesús Carranza, which are full of neighborhoods, that is, housing units where, generally, people with low purchasing power live.

The Morelos neighborhood, where real estate agencies offer properties under the name of Reforma Norte, is one of the most dangerous areas of Mexico City.

According to data from the Secretariat of National Defense (Sedena) leaked by the hacker group Guacamaya, this neighborhood is the third most dangerous in the capital.

“Will the gentrification of Mexico’s most neighborhood of neighborhoods be achieved?”, “Will gentrification reach the so-called Barrio Bravo?” and “Aspiracionismo clasemediero de la CDMX” (CDMX middle-class aspiration) were some of the comments on social networks about the controversial announcement. And this case is not the only one.

Another example is the real estate company Homie, which rents apartments for between Mex$10,000 and Mex$14,000 a month (between US$550 and US$773) in a neighborhood that does not exist either.

Condesa Sur, the name with which they renamed the popular Tacubaya, is an area characterized by being surrounded by bus stops and housing and neighborhoods several decades old.

One more case.

The construction company Verda Verde advertises its apartments located on Avenida Cuitláhuac, in the famous and popular neighborhood of Clavería, as luxury housing in another renamed area: Nuevo Polanco.

Experts claim that the answer lies in the financial speculation behind the real estate sector, which has made rents more expensive and relegated social housing to focus on a mercantile logic that rewards those who have the possibility of acquiring houses or apartments with prices that are unattainable for the bulk of the population.

In an interview with Sputnik, Diego Tamayo, economist and research professor at the Colegio de México, points out that, during all of 2022, of the housing built in the country, only 13% was social housing, a figure that, he says, is worrying, but that responds to market logic.

“Those who demand new housing are people who have money to buy. In other words, people buying apartments or houses are probably buying their second or third homes; in other words, it is not a market focusing on low-income people,” he said.

In addition, Tamayo said, the increase in the sale and rental prices of real estate in the Mexican capital is not in line with the salaries received by citizens, which forces people to choose to live in the outskirts or share expenses with one, two, three, or more roommates.

According to data from the Ministry of Economy, the average monthly salary in the third quarter of 2022 was Mex$3,880 (about US$214), a figure Mex$555 lower than the previous quarter.

Meanwhile, according to data from the company Inmuebles24, the average price of a two-bedroom apartment of 65 square meters in the Mexican capital is Mex$14,446 per month (about US$800).

“Prices are going up, and what happens is that, with this, there are fewer people who can rent or buy a property in certain areas of the city and areas that, in themselves, were already expensive, but now there are more and a supply that can meet the demand is required,” he said.

“If someone two years ago paid Mex$15,000 in the Del Valle neighborhood, now with those Mex$15,000, because salaries are not going up, they have to find their supply somewhere else,” he added.

Dr. Roberto Ponce López, research professor at the School of Government and Public Transformation and the Center for the Future of Cities of the Tecnológico de Monterrey, assures that the fact that luxury apartments are already being offered in areas such as Tepito, Doctores, and Tacubaya means that there is an intention to gentrify, a process that usually ends up expelling the original inhabitants from the areas where they live.

“It is desirable to regenerate an area of the city that is in economic decline and that drags insecurity problems, such as the Doctores neighborhood; it will always be desirable that capital arrives and the area is regenerated.”

“But the issue is a tipping point: if you go too far, it gentrifies. No city in the world has been able to solve this problem satisfactorily. So how do you regenerate an area and improve living conditions without displacing the original inhabitants?”

“When the project is successful, it ends up gentrifying,” reflects Ponce López.

SOCIAL HOUSING POLICIES ARE URGENTLY NEEDED

Ponce López agrees with Diego Tamayo that social housing -which should cost between half a million and a million pesos at most (between US$27,000 and US$55,000)- has been completely left aside due to the high cost of land in Mexico City.

“In the central areas, they no longer exist; Infonavit housing is no longer being built because the cost of land is prohibitive; there is no way; the prevailing model is social housing in the periphery,” says Ponce Lopez.

Both experts assure that possible solutions to this problem must come from the public policies of the Mexico City Government, where the gentrification process has accelerated in recent years.

“There must be an affordable housing policy. On the one hand, public institutions such as Infonavit can raise, within the limits of public finances, raise credits to at least cover the increase in costs [of construction materials],” said Diego Tamayo.

He indicated that in terms of rents, regulation is more difficult, as it could only be solved by setting ceilings.

Based on data from the latest Inmuebles24 report, last year alone, the average rental price of a two-bedroom apartment rose 7.8%, a figure above inflation.

With information from Sputnik