Urbi Desarrollos Urbanos SAB (URBI*) plunged for a fifth day, leading Mexico’s benchmark index lower amid speculation homebuilders aren’t poised to adapt to changes in government housing policy that favor apartment construction.
Urbi, the country’s third-largest publicly traded homebuilder by revenue, declined 8.7 percent to 3.46 pesos at the close of trading in Mexico City. It was the biggest loser today on the country’s benchmark IPC index, which fell 1.6 percent. Desarrolladora Homex SAB (HOMEX*), the largest homebuilder, sank 1 percent, while No. 2 Corp. Geo SAB (GEOB) sank 8.4 percent.
A lack of cash flow, pressure from changes in government housing policy and looming loan-covenant tests are creating “the perfect storm,” for homebuilders, said Aldo Miranda, a trader with Intercam Casa de Bolsa SA in Mexico City.
“They have to restructure their whole business,” Miranda said in a telephone interview. “It’s going to take time before we start seeing improvements.”
Investors may also be worried that the government’s housing policy, which favors apartment construction, will decrease the value of some land reserves, according to Carlos Hermosillo, an analyst with Grupo Financiero Banorte SAB in Mexico City.
“People are concerned about the value of the land they have,” Hermosillo said in a telephone interview. “That’s why you see Geo and Urbi falling more than companies like Homex that have other assets on their balance sheets like the penitentiaries.”
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