Mexico's Homex optimistic about growth

By Noel Randewich and Jason Lange

MEXICO CITY (Reuters) - Homex, Mexico's top homebuilder, sees a massive housing shortage fueling several years of solid growth, as it also looks at eventual expansion into Brazil, India and China, a senior executive said.

Homex chief financial officer Alan Castellanos told the Reuters Latin America Investment Summit on Friday he is "very optimistic" the company will make its 18 percent target for real revenue growth this year.

He said Homex (HOMEX.MX: Quote, Profile, Research, Stock Buzz) (HXM.N: Quote, Profile, Research, Stock Buzz), with sales of $1.5 billion last year, is also studying housing markets in other developing countries with an eye to expanding outside Mexico, although not in the near term.

"We have an agent in Brazil looking around and another agent in India also looking around," Castellanos said. "We think our business model can be reproduced but we aren't finished with Mexico yet."

Mexico's homebuilders have been booming for more than five years thanks to improved economic stability and a government push to end a shortage of millions of houses.

The sector focuses on mass producing homes that sell for less than $40,000, although builders also dabble in more expensive homes with higher profit margins.

GROWTH POSSIBILITIES

Homex plans to maintain low-cost housing as more than 90 percent of its business.

"It's a small difference in margins ... but there's a big difference in growth possibilities," Castellanos said.

Lenders authorized a record 1.16 million mortgages last year, putting developers on track to reach President Felipe Calderon's goal of 6 million homes built and sold by 2012.

Mexico is short as many as 10 million homes, and young people are adding demand for 650,000 more homes each year, Castellanos estimated. He said the industry could keep growing at about 13 percent over the long term.

Geo, Homex's main competitor, told Reuters on Thursday it is betting much of its future on turning empty fields into carefully planned "mega-cities" of hundreds of thousands of houses, industrial parks and shopping malls to fuel growth in coming years.

Castellanos said Homex will stay focused on its core market of low-income buyers in medium-size cities, though it would like to make those housing projects more densely populated to make infrastructure investment more cost effective.

"We don't believe in the concept of mega-cities. We believe in diversification," he said.

Already present in 33 cities, Homex this year is expanding into Cuernavaca, Monterrey, Merida and other areas.  Continued...