Why Are Smaller Cities Attracting more Investment than Big Cities?

• Infrastructure.

  • The Economy.

  • Innovation and the labor market.

  • The Rule of Law.

  • Society and the Environment.

  • The Political and Government System.

The Mexican Institute for Competitiveness (IMCO), in its most recent Urban Competitiveness Index (ICU), assigns scores as high as 75 points to cities like Saltillo and Hermosillo. But also to La Paz and Guaymas.

Cities with One Million or more Inhabitants820

Among the largest cities in the country, with one million or more inhabitants, Saltillo, in the state of Coahuila, stands out for its scores in law, labor market and infrastructure, surpassing Mexico City, Monterrey and Guadalajara.

Cities with between 500 Thousand and Less than One Million Inhabitants1106

For cities in the country between 500 thousand and less than one million, the challenge is significant to position themselves favorably against others with larger populations. Within this group of cities, the city of Hermosillo, in the state of Sonora, stood out, occupying first place in aspects related to infrastructure, innovation, economy and labor market. It is closely followed by cities such as Villahermosa and Veracruz.

Cities with between 250 and 500 Thousand Inhabitants1616

The city of La Paz registered the best performance for the category, of between 250 and 500 thousand, specifically due to the balance between the indicators reported for issues of law and innovation and the economy.

The city shows one of the best figures in perception of security of the adult population (3rd place), the percentage of hotel occupancy (4th place) and the number of research centers in relation to the economically active population (3rd place). In labor aspects, it exhibits one of the highest monthly salaries for full-time workers (3rd place). It is closely followed by Los Cabos in the same entity.

Small Cities

In the ICU 2024 for small cities, with less than 250 thousand inhabitants, Guaymas, Sonora stood out, in particular for its performance in variables of the sub-indices of innovation and economy, as well as society and the environment. It is closely followed by Sabinas Coahuila.

Criteria for Investing

For real estate investors, identifying expanding cities means evaluating criteria such as the population growth rate, the rate of labor occupancy and political and economic stability. Diversifying real estate investment in emerging markets allows for mitigating risks and taking advantage of the opportunities offered by booming areas. In addition, digitization and the adoption of technologies in construction have made it possible to accelerate building processes and improve efficiency in property management.

2025 will be a key year for the evolution of the global real estate market. Those cities with a vision of sustainable development, connectivity and economic growth will continue to attract real estate capital. For investors, the key to success lies in identifying trends, analyzing the value enhancement potential of each market and diversifying their investment strategies to maximize returns in a dynamic and competitive environment.

Most Attractive Cities for Investment

Cities with more than 250 and less than 500 thousand inhabitants, which turn out to be more attractive for investment according to the sub-index analyzed:

- **Innovation and Economy Sub-index**: La Paz, Baja California Sur.

- **Infrastructure Sub-index**: Ciudad Obregón, Sonora.

- **Labor Market Sub-index**: Monclova – Frontera, Coahuila.

- **Society and Environment Sub-index**: Ciudad Victoria, Tamaulipas.

- **Law Sub-index**: Monclova – Frontera, Coahuila.

- **Political and Government System Sub-index**: Playa del Carmen, Quintana Roo.

These are the cities with less than 250 thousand inhabitants, which turn out to be more attractive for investment according to the sub-index analyzed:

- **Innovation and Economy Sub-index**: Delicias, Chihuahua

- **Infrastructure Sub-index**: Sabinas, Coahuila

- **Labor Market Sub-index**: Piedras Negras, Coahuila

- **Society and Environment Sub-index**: Delicias, Chihuahua

- **Law Sub-index**: Sabinas, Coahuila

- **Political and Government System Sub-index**: Tecomán, Colima