Today, the reform to the federal judicial system was approved in the Senate and with this, the way will be paved for its implementation so that in 2025 the election of more than 1,600 judicial positions will be carried out by popular vote. This will apply to ministers of the Supreme Court of Justice, members of the Federal Judicial Council, magistrates of the Federal Electoral Tribunal, circuit magistrates and district judges.
The elections to choose these officials will be divided into two parts; in 2025, the ministers of the Supreme Court and half of the district judges and circuit magistrates will be elected, while in 2027 the remaining half will be elected. It is contemplated that the elections will be organized by the National Electoral Institute (INE).
But, will this have repercussions in other areas? Will it affect productive activities? Will it have an impact on the real estate market? Below we list the most important points that, in our opinion, could be affected by the approval of this reform:
The judiciary was created as a counterweight to the other two branches (executive and legislative) that are elected by popular vote. The executive and legislative branches by definition follow an agenda that is aligned with the ideals and commitments of the political parties.
The judiciary, being made up only of nonpartisan professionals, refrains from following political guidelines and is dedicated to applying the law and resolving controversies based on the knowledge and interpretation of our laws.
By electing members of the judiciary by popular vote, it is not guaranteed that the most capable will be in charge, but rather those who can mobilize the vote. This is where political groups come in that will support certain candidates in exchange for loyalty. If judges and magistrates do not have independence, then the rule of law will be compromised and will respond to the most powerful political groups instead of responding to our constitution.
The famous “nearshoring” (relocation of supply chains from China to the United States) is probably the most important opportunity that Mexico has had in its modern history to develop and position itself as one of the most important economies in the world.
With the approval of the judicial reform, the rule of law in Mexico is clearly at risk and this has not gone unnoticed by both national and foreign investors. In this sense, the US government has taken a clear position against the judicial reform, warning American investors about the risk of investing in Mexico in light of the new reform.
Likewise, there has been talk about possible violations of the Free Trade Agreement with the United States and Canada due to the policies that the current government wanted to take at the time and that were blocked by the Supreme Court. Without the counterweight of the court, these violations could not be blocked and a potential conflict could arise between the countries of the region, putting an end to the benefits that nearshoring could generate in the Mexican economy.
It is clear that since election day, economic activity has experienced a slowdown due to the uncertainty generated by the qualified majority in the chambers and the real estate market has not been the exception.
We believe that the growth of the real estate market is linked, on the one hand, to the population growth and internal demand generated in the country, and on the other hand, to the additional demand that would be generated by the “nearshoring” effect in all sectors (industrial, commercial, offices and housing).
Considering the effect of the reform to the judicial power, we estimate that the purchase and sale of real estate by Mexicans could slow down during the next 6 months or a year, until there is a little more clarity on the public policies that the new administration will adopt and that once again encourages individuals to seek to acquire a home or another type of asset.
As for the demand that nearshoring would add, it will be very important for the new administration to generate enough confidence so that foreign investment does not stop and can be reflected in the development of new industrial real estate assets that in turn generate demand for other types of properties such as housing, schools, offices, shopping centers or hospitals.
At Beleta, we believe that although in the short term the outlook does not look encouraging for the confidence and destination of new investments, Mexico is much bigger than a reform. Mexico is not a political party, Mexico is not an ideology, nor is it represented by a group of people who hold public power. Mexico is its people.
We are more than 120 million people who aspire to a better country, a country where our children can live safely and where there are opportunities for everyone. To achieve this, private investment, both national and foreign, is key, and our future president understands this. We cannot conceive of a president who does not want the best for her country. Claudia Sheinbaum will have the responsibility of governing for all Mexicans, and by attracting investment, she will ensure employment and opportunities for the millions of Mexicans who placed their trust in her.
It is time to demand as a society that Mexico be thought of as a unit, enough of polarizing and creating divisions. The incoming government has the opportunity to define the direction of the country, and with responsibility and maturity, we trust that the president will make the best decisions for the common good, and it will be up to all citizens to remind her and demand that she do so.
Rulers come and go, but Mexico as a country will prevail. Mexico is greater than its rulers, because Mexico is its people and its families. It is not time to lose hope or give up, it is time to continue working tirelessly for the benefit of all, through reconciliation and with an eye on the great future that awaits us. The time is now and only we are responsible for forging our destiny. The destiny of Mexico.
