A short summary report on the state of investing on Mexican real estate from a 15 year vet of the market
Surprisingly and contrary to the great 2008 global recession, Mexico real estate has held steady and, in many domestic non-tourist markets, has actually grown.
Most who read this think of Mexico as a tourist mecca and it is indeed, however, with 110 million in the country and growing fast, the real estate market in the cities have made strides.
BIG CITY BIG PROFITS
It’s not uncommon to find upper middle class housing going for between $ 400,000 to $ 700,000 USD with small 250m2 residential single family home lots going for $ 100,000 USD.For example, in the city of Culiacan, the state capitol of Sinaloa in north central Mexico, we’ve seen tremendous growth in population lighting up demand for quality housing and commercial properties. And with scarcity within the city limits, well, boom town time Vegas style except without the overencumbered mortgage paper criminals sticking their hands in the back pockets of anyone and everyone…nope, we’re talking a huge pay in green checks only market.
Everywhere you look in Culiacan you see new housing, new restaurants, new shopping centres, along with brand new cars and women dressed in high fashion competing at a world class level. I mean, let’s just say that in Culiacan the plastic surgeons are super busy and raking in the bucks! It’s money time in this former cowtown!
I mean, while Culiacan has a long history of being one of the centers for cowboys and hot chicas, well that’s no longer the case; well, at least the former.
And yes, the agri-business is still huge and the center of Mexico food production for the international markets. But its more diverse now. Granted, some say the narco business that supplies U.S. demand has brought massive funds into the economy, but it’s more than that now.
Think of Las Vegas. Yes, it was once a Mafia center but it’s grown from that and become institiionalized over the years whereby the big casinos are on the big boards and traded daily. Vegas is no longer a mafia town and Culiacan is in the middle of this transformation. So put down CNN and FOX NEWS and get the real story from a guy who just was there a week ago! Okay!
Now Culiacan is NOT Vegas big yet. Take it easy okay! I mean, yes it has Casinos but not the Vegas huge style. It’s an emerging cosmopolitan city in a a country that The Economist says that maybe be a top 5 economy in the next 20 years.
Now lets move further shall we…..take the Valle de Guadalupe in the wine producing region of Mexico in Northern Baja California. Before the recession, residential lots with services were going for $ 7 per meter USD and now, you can’t find a lot for less than $ 13 per meter. And those prices never went down; not even after the 2008 rip-off!. Demand is high and the area is growing. It’s just another indication that the middle classes in Mexico are growing much faster than in the USA or Canada and is one of the top areas of the world where investment is a good long term play. The demographics and economics are calling folks!
RESORT TOWN PROFITS STILL ON SIESTA
Now, for tourist locations in Mexico. Well, those markets are driving by non-Mexicans and because the global economy is growing slower, those areas are indeed lagging behind and following the global action on the markets.
So yes, in 2008, prices dropped by 20%. But now it’s stable. The demand is no where near levels pre-2008 but its decent and stable. The good news is that the prices remain relative low.
For example, I just got back from a fact finding trip and now in Los Cabos you can buy a brand new 3 bedroom, 2.5 bath ocean view home at Cabo de Mar Ocean and Ecopark Village for $ 140,000 USD right now! Yeah really! It’s lovely indeed there and those prices are, in fact, much less than what you can find in U.S.A. with an ocean view; by far.
And in Playa del Carmen, just south of Cancun in the Riviera Maya, well, you can still get a good downtown vacation condo for $ 150,000 but if you’re looking for close to the white sandy beaches, you’re going to pay around $ 300,000.
Now will that investment pay off? Well, right now, it’s marginal. It all depends on the U.S. and global markets. When they finally get off the snide and get hot, the tourist resort spots of Mexico will light on fire again. So keep your eye out for the signs and you’ll make a good profit.
For this investor, well, I am bullish on Mexico and buying in now while I can get in a price before the world hits inflation and pent up demand kicks in making the Mexico market even more profitable.
Good luck investors or should I say good skill!
- Playa del Carmen: Gary Wendt @ Playa Citizen Real Esate
- Valle de Guadulupe: JoAnn Knox @ bajastylerealestate.com
- Cabo San Lucas: Ventennas Cabo and Leon Saenz at BajaSmart.com
ABOUT AUTHOR: Johnny Punish is a musician, artist, entertainer, businessman, investor, life coach, and syndicated columnist. Educated at University of Nevada Las Vegas, his articles appear in VT, Money News Now and his Johnny Punish Blog. His art music is promoted by Peapolz Media Records and played on net radio at Last.fm and more.
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