As the last undiscovered market on Mexico’s Caribbean coast, Costa Maya real estate may seem like a compelling investment. The region may be particularly interesting to pioneering investors, who would “have the opportunity to shape a future for the area with respect to [its] environment and culture,” Kevin Graham, owner of Costa Maya Living Real Estate, said in an e-mail interview.
However, the high potential for growth and appreciation comes with higher risks on investment, and the market in Costa Maya is not yet steady. The region is still recovering from the damage caused by Hurricane Dean last August, which significantly shut down tourist activity, and development in the region has been slow, with no definite timetable for advancement.
About Costa Maya
Costa Maya is an 80-mile coastal stretch on the Eastern side of the Yucatan Peninsula that includes two small towns—Majahual and Xcalak. Majahual, which is the larger of the two, is centrally located and has been the site for the major cruise port, Puerto Costa Maya.
The cruise port welcomed more than two million visitors over five years of operation, but was severely devastated by Hurricane Dean last year.
“Up until Hurricane Dean last August, Majahual was the second-busiest cruise ship destination in Mexico,” Kevin Graham said.
Since then, the port been closed for reconstruction. The setback has had a considerable impact on the local economy, which is largely dependent on tourism and port activity.
“The population in Majahual changes with seasonal work,” Lisandro Lenski, sales director for Promocciones Turisticas Mahahual Sociedad Anonima de Capital Variable, said in an e-mail interview. “For example, if the port is open, we have 3,000 people in the area; if it is [closed], we have 500.”
Port reconstruction has included plans for its expansion, and it is expected to welcome ships again by October or November of this year, Kevin Graham said.
In addition, the first phase of construction of a new 3-kilometer malecon, or beach walkway, is almost complete, he said.
Markers: Majahual in southeast and Chacchoben Mayan ruins in northwest| height=|260| alignment=|Right| marker=|18.73,-87.70| marker=|19.02,-88.17| control=|Small|]The immediate area surrounding the port has been recognized as a world-class diving site. In 2005, Costa Maya was called the “Best up-and-coming dive destination” by Scuba Diving magazine. The region’s potential as a major diving destination has not gone unnoticed by Port owners and the government, who have committed to the preservation of the unharmed Meso-American reef, according to a press release issued by Puerto Costa Maya last year.
Overall plans for development in Costa Maya are also designed to have a “low environmental impact,” so as not to repeat the mistakes of adversely impacted tourist areas such as Cancun and Riviera Maya, according to Brian Murphy, owner of real estate firm Mexira.
Majahual marked with red on Costa Maya peninsula| height=|450| alignment=|Left| marker=|18.73,-87.70| control=|Small|]Investing in Costa Maya real estate
As a potential tourist hotspot, the underdeveloped Costa Maya real estate market could experience a boom similar to that of it neighbors, Cancun and Riviera Maya. However, its immediate prospects remain unclear.
Costa Maya property prices have increased, but the region has been slow to develop, according to Murphy. A key player in development (or the lack thereof) has been Fonatur, Mexico’s national trust for the promotion of tourism, which appears to have “lessened [its] commitment to the area,” Murphy said.
Consequently, prices are “way too high,” he said. The average cost for a 20-meter tract of beachfront, for instance, has more than doubled in the past five years, going from $75,000 to roughly $200,000 today.
“It’s all based on anticipation [of development],” he said. “But it’s been years and nothing has really happened yet.”
The lion’s share of development has been limited to Majahual and its immediate surrounding areas; and while the towns of Majahual and Xcalak are powered by electricity, remote areas outside those towns are dependent on wind and solar energy, according to Kevin Graham.
In spite of uncertainties surrounding Costa Maya’s development, some experts remain optimistic about its potential for growth.
“Frankly, since [Hurricane] Dean and the uncertainties of Fonatur’s plans, we think the Costa Maya market is very unstable, which is not necessarily bad news at all for investors,” Alan Graham and Heather Moreau, real estate consultants and owners of LandInYucatan.com, said in a joint e-mail interview. “Astute investors of a 20-meter lot or a large tract will realize some great potential for growth.”
Additionally, “compared to areas north of Costa Maya such as Tulum and Rivera Maya, prices are still very affordable and there is much room for growth [in] values,” Kevin Graham said.
The best opportunities for investment in Costa Maya can vary, based on an individual investor’s risk tolerance. Buying property in or near Majahual and the port area is perhaps the safest bet, according to Lenski. The market in this relatively developed part of the Costa Maya has become a “reality,” he said, whereas growth in other areas has yet to be demonstrated.
Furthermore, if the neighboring tourist district Riviera Maya, which took 30 years to become fully developed, is any indication of what lies in store for Costa Maya, then investors might be waiting for decades before properties in undeveloped areas begin to bear any fruit, according to Lenski.
But for investors with higher risk tolerance, areas located 12 to 25 miles north of Majahual such as El Placer are supposedly where “the smart money is in terms of appreciation…and where the [majority of] development [should] be,” Murphy said.
Real estate in the northern outskirts is relatively expensive but offers beautiful beaches,bed and breakfast accommodations, and various recreational activities such as swimming with dolphins, according to Murphy.
Investors should also consider potential drawbacks in owning property in Costa Maya. An obvious risk is the region’s exposure to hurricanes; consequently, investors might wish to seek property that is relatively sheltered from natural disaster and “weatherproof” their construction plans as much as possible.
Additionally, the nearest international airport to the Costa Maya is in Cancun—a four-hour drive to Majahual. There are rumors that airports are being built in Tulum, approximately three hours away, and Chetumal, which is 90 minutes away, “but the time frame for either [airport] is indefinite at present,” Kevin Graham said.
Additional drawbacks include the region’s economic dependence on cruise ship tourism, lack of adequate medical care and facilities and the need to re-populate the area post-Hurricane Dean. And because the Costa Maya real estate market is still in its nascent stages, the traditional difficulty in obtaining clear title and obtaining the appropriate paperwork can seem especially pointed.
“There is no licensing, regulation, overseeing, or any official monitoring of real estate agencies here,” Alan Graham and Heather Moreau said.
Because of the lack of governing boards, visiting Costa Maya properties in person is recommended.
“If you don’t feel comfortable with the sales realtor, don’t just walk away, run away, because there’s a license to steal in Mexico,” Murphy said.
Investors should also “keep [their] eyes on Fonatur to see when in fact they’re going to [begin] develop[ment],” he added.