Times of economic uncertainty, such as the one currently experienced globally, force housing developers to be more cautious in their operation and perspectives, since a false step, such as borrowing more than necessary, can be dangerous for them, said Germán Ahumada Russek, president of the company’s board of directors.
In a recent event with developers, the director of the company founded in 1977 indicated that although Consorcio Ara has lived in scenarios of strong crisis in the country, this has also given it experience to overcome moments of uncertainty and learn from the past in order to overcome complex periods, such as the one we are currently experiencing.
“When they tell us what our secret has been, the reality of things is to be cautious, always fulfill our commitments, buy land at a good price, well located, make that land bank and always have an abundant cash”, he commented to the refer to the current moment, where the health crisis and the increase in fuel prices have combined to generate uncertainty at a global level in economic matters.
He noted that one of the recommendations to the industry is that companies should be cautious when receiving and requesting credits, since borrowing more than necessary, that is, without a plan to pay, can be the difference between surviving or disappearing.
“If there is something constant in our industry, it is that everything is changing,” he said.
moments of panic
After adjustment in housing policy in the past six-year term, only a small group of high-production public developers managed to “survive”. Among them, Consorcio Ara, a company that was born almost at the same time as the emergence of the ohousing agencies and when the right of workers to have their own house was consolidated.
After more than 45 years of existence, the firm has in its history more than one financial crisis that it has overcome to survive, with the reduction of its production and a diversification of its portfolio.
Ahumada Russek recalled that his exit to the stock market took place just after one of the biggest crises in the country, which was that of 1995, when the “December error” occurred.
“The first was the crisis of 95, the crisis of the ‘December error’ came and the banks practically closed, the debt we had at an interest rate of 24% went to 45%, 75% and 110% ”, recalled the director of Ara.
“Fortunately, the government implemented the Udis and that’s where we could more or less start, we were the first company in the housing sector that we signed the first loan in Mexico in Udis”.
Due to the high value of the debt at that time, Consorcio Ara went to seek financing among bankers in New York who, according to the businessman, did not have good expectations for the company, but managed to convince a group of investors to launch the Initial Public Offering in 1996.
“We were the first company in Mexico, of any kind, that made the first issue of securities after the crisis,” said Germán Ahumada.
one more crisis
More than a decade later, the subprime crisis of 2008 once again put the mortgage sector to the test and with it the living place; however, in Ahumada’s opinion, the biggest impact was the drop in sales, but not to problematic levels.
With the change of six-year term in 2013 and the implementation of the new National Housing Policyhomebuilders in Mexico faced another challenge, which was the announcement of containment polygons to contain urban sprawl.
“The crisis that did affect us enormously, that should not have been a crisis for us, was that of 2013 (…) We had a Housing Day, there the containment polygons were announced, (but) it was not announced properly,” he explained. Smoked Russek.
Thus, of five public developers at that time, Homex, Sare, Urbi, Geo and Ara, to date only one has avoided bankruptcy, that is, the one directed by Ahumada Russek.
“The containment estates possibly did accelerate the exit (of some companies), but in any case they did have stratospheric debts, one of them owed 64.5 billion pesos, even for these dates it is a stratospheric amount, in addition to the way we reported at that time they were advance sales”, explained the director of Consorcio Ara.
In many cases sales were “invented” to report in the financial statements as income, in the case of Ara it was only necessary to adjust the payment schedule; however, all funding was closed for the housing sectorfor which it was even necessary the intervention of the Secretary of Financesaid the businessman.
The company currently has 30.6 million square meters of space to build 118,000 households. Of the 10 developments announced for last year, five are already under construction while the rest of the projects are in the permit stage.