Risk Assessment for the Housing Market in Mexico

Abstract

The lingering experience of the U.S. housing market crisis has underlined importance in seeking new markets for the companies involved in housing construction. However, expansion to new markets requires a deliberate strategic plan to efficiently adjust to a new business environment. Identifying potential opportunities and threats may help to devise plans and spot areas in which knowledge transfer of the foreign market is essential. Mexico enjoys a growing economy and an accelerated growth of its population, which increases the need in the housing market. It is therefore an attractive market for the U.S. housing industry considering the existing channels of trade between the two countries. Therefore, a study was conducted with the focus on U.S. construction firms and their challenges upon entering the Mexican housing market. The study was defined based on the International Construction Risk Assessment Model-1 (ICRAM-1) that was developed for assessment of potential risks involved in expansion into new construction markets at the international arena. To facilitate decision making, the study identifies high-risk indicators for the U.S. firms and mitigation strategies that may assist those firms to minimize risks involved in the Mexican housing market. Finally, high-risk indicators suggested by the model such as land planning, societal conflicts, or laws versus practices have been discussed under their related topic to illustrate knowledge areas critical for this specific market expansion.