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UPDATE 2-Mexico to offer 1.5 bln pesos in new homebuilder subsidies
June 28, 2013 / 11:36 PM / in 4 years

UPDATE 2-Mexico to offer 1.5 bln pesos in new homebuilder subsidies

MEXICO CITY, June 28 (Reuters) - Mexico’s government said on Friday it would offer 1.5 billion pesos ($115.16 million) in additional housing subsidies, a 25.9 percent boost from what has already been allocated this year to help a sector hit by slowing sales and liquidity problems.

The subsidies will be available immediately, along with new financing options for builders that develop projects in line with the government’s new priorities, the country’s minister for land development, Jorge Carlos Ramirez, told a press conference.

Mexico’s government has said it wants homebuilders to focus on infill developments in urban areas, after a housing plan that prioritized cheap suburban projects during the last decade led to thousands of abandoned homes.

Ramirez said that 68 percent of the land recently compiled in a registry will qualify for subsidies.

Qualifying projects include those close to places of employment and schools. Developments will be assessed on a points system, with greater subsidies being available to homes in well-placed developments, he said.

Some 5.8 billion pesos in subsidies have already been offered this year, and the new allocation will bring the total close to last year’s subsidies of 7.5 billion pesos.

Mexicans are increasingly choosing to look for homes closer to offices and schools, which has caused sales of cheap suburban homes built by the country’s largest homebuilders to plummet in the last year.

Mexico’s three largest homebuilders, Geo, Homex and Urbi, are facing a liquidity crunch and seeking to restructure debt.

Homebuilders that develop homes that meet new government requirements - ones nearer to workplaces and schools - will also qualify for new financing programs, Deputy Finance Minister Fernando Aportela said at the same conference.

Latin America’s second-largest economy has a housing deficit of about 9 million homes, according to recent government estimates.

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