Celebrities and investors alike continue to bask in Mexico’s charms
Long before the Southeast Asian resort boom there was Mexico, with its nature, history, and activities and a currency favourable to tourists. It’s far more diverse than it’s given credit for, and is in fact the 15th largest country in the world by area and 11th by population. Its rich history dates back almost 2,500 years, and Mexico has given us far more than tacos, Corona and telenovela: artists Frida Kahlo and Diego Rivera, author Alfonso Reyes, actors Salma Hayek and Anthony Quinn, filmmakers Alfonso Cuaron and Guillermo del Toro, musician Carlos Santana, revolutionaries Pancho Villa and Emiliano Zapata and Nobel Prize winner Mario Molina — who pointed out the CFC-based hole in that little thing called the ozone layer — are just the best-known among hundreds of notable Mexicans.
Home to the ruins of great civilisations and as vivid a capital as you can get, Mexico’s tropical climate and dual coasts on the Pacific Ocean and the Gulf of Mexico make it an ideal holiday spot. At the tip if Baja California Sur is Los Cabos, a stretch of resort property as naturally striking as any in the world. Striking, and a strong investment. “Today, real estate prices in Los Cabos have dropped about 30 percent from three years ago,” explains Julie Kershner, broker and manager for Los Cabos Sotheby’s International Realty. “It is an extremely good value. Tourism is up and vacation rentals are a good revenue producer.”
But Mexico is in a state of recovery. Not surprisingly, the country is heavily influenced by economics in the United States. “Our market was seriously affected by the US economy. 2009 was a terrible year for real estate sales in Mexico,” Kershner admits. “2010 saw a marked improvement and 2011 is looking to be much better than 2010,” she states.
Indeed, research by Spanish banking giant BBVA forecast general growth in the housing and construction market and recovery in the mortgage loan sector for mass housing for 2011 in its January Real Estate Outlook. CB Richard Ellis Mexico’s MarketView stated the Mexican economy was stronger than expected in the fourth quarter of 2010: exports, manufacturing, industrial production, and employment were all up in ’10.
Los Cabos would appear to be in a position to continue the tradition started in the 1950s of being a glitterati playground. “Los Cabos is an extremely popular destination for the celebrity crowd. Many own properties here. I think originally people came for the sport fishing, however since then the beauty of Los Cabos, the fabulous (reliable) weather, the proximity to the US, the number of golf courses, as well as the fishing, surfing and the warmth of the Mexican people are the biggest assets,” theorises Kershner of the area’s appeal.
Investment can be varied. There’s no shortage of luxury and/or second homes for consumers, and institutional investment leans to development. “The area is quite spread out and has a population of about 350,000 people, however it does not have a ‘big city’ feel. Most of the large hotel resorts are along the beach, with several fully owned condominium projects and large single family subdivisions as well,” Kershner elaborates, pointing out many non-resident (full time) owners do indeed rent out properties for vacationers. And the Mexican vacation season is a long one. But Kershner hastens to remind us of real estate’s golden rule. “Of course, for vacation rentals, beachfront location is of utmost importance.”
Los Cabos’s small airport simplifies accessibility from Mexico City, Los Angeles, Chicago, Dallas and New York among others. A good thing too, as investors are coming from increasingly far flung locations. Though Americans and Canadians have made up Los Cabos’s traditional investors, “the United States and Spain have been large commercial investors. We do have a fairly diverse foreign population, with a number of owners from Europe, Australia and South Africa.”
Sadly, despite its beauty and relative value (14,000 square feet of ocean-front property for HK$25 million?) Mexico is cursed with poor PR. As the saying goes, no news is good news — and good news doesn’t generate television ratings. According to statistics compiled by NationMaster, Mexico ranked well below the UK, Japan, Canada and Italy in total crime in 2010. As Kershner sees it, if you want to look for trouble you’ll find it — like anywhere in the world.
“People that have not visited Mexico probably tend to believe the media hype,” Kershner begins. “It is a conversation that any resident of Los Cabos (and most likely other spots in Mexico) have on a daily basis. [Crime] has less to do with the current real estate market than the economy in the US.” The Mexican market hasn’t reached the level of distress seen in the US, but Kershner expects a complete rebound will depend on the American market doing likewise, making cartels moot. “I have come to the conclusion however, that anyone that visits Los Cabos (and falls in love with it) knows that violence is not part of Los Cabos.” So in this case, believe only some of the hype.