Investing in real estate or real estate developments has become a good business decision for many investors in Mexico, who have gotten great returns after purchasing property. This real estate boom has led to some experts beginning to see a a property as a real estate commodity. However, others disagree with this statement. Today, we'd like to delve deeper into this concept, so you can decide whether investing in a development, a home, or a lot, is investing in a commodity.

Defining commodity

In a very broad sense, a commodity can be defined as a tangible material that can be traded, bought, or sold. Usually, when talking about commodities, these are understood to refer to raw materials or primary goods such as wheat.

One of the main features of commodities is that they are traded with no qualitative differentiation in buying and selling operations, and their price is determined based on the supply and demand conditions of the market.

In recent years, the concept of commodity has expanded, because some experts consider that any industry that evolves by allowing many suppliers to create something that used to be made by one company can be referred to as commoditization of a product or industry.

Does real estate qualify as a commodity?

If we consider the above definition in parts, we can agree that real estate is a tangible material that is traded, bought, and sold. However, although the right to decent housing is a fundamental human right in Mexico, real estate are not considered primary goods or raw materials.

On the other hand, while it's true that some real estate businesses sell identical residences within the same neighborhood, property in general does have a qualitative differentiation which affects its market value. That is why some real estate agencies include special amenities within their developments; elements like sports centers or green spaces that increase a property’s market value.

This way, we can conclude that real estate does not qualify as a commodity, as its value and demand depend on external factors, such as location or social environment, as well as qualitative factors having to do with its infrastructure and design. However, real estate has become an element of speculation, since investing in a property could ensure long-term returns thanks to appreciation or profits received by renting out or reselling the property in question.

Invest in a real estate company that makes a difference

If you'd like to get returns on your investment, we encourage you to explore the real estate portfolio offered by SIMCA Real Estate. We offer everything from residential lots amd luxury apartments near the beach to industrial lots with a privileged location. At SIMCA, we have more than two decades of experience in the market, backed by more than 27 completed projects; we're a company that always focuses on our clients' needs, studying the environment, and offering the best quality and design.

You may be interested in: SIMCA’S Top Secrets or Why We Offer the Best Real Estate Options