Mexicans who love Cuernavaca’s temperate climate affectionately refer to it as “land of eternal spring.” It is the city of choice for the wealthy who want a quick, nearby getaway from Mexico City’s hustle and bustle. “[It has] an average temperature of 80 degrees year round and little humidity. There is always something blooming and the gardens are lush and beautiful,” said Smadar Belkind Gerson, a partner in Casa-Mayor Grupo Inmobiliario, a boutique real estate company.
Just a little over 50 miles outside of Mexico City, Cuernavaca is the capital and the biggest city of Morelos. It is located in a valley at an elevation of 5,000 feet. On clear days, the snow capped, active volcanic mountain of Popocatépetl, also known as El Popo, can be seen from the city.
Per capita, Cuernavaca has more scientists than any other place in Mexico, according to Casa-Mayor Grupo Inmobiliario. The 2005 census put the municipality’s population at about 350,000. The city enjoys the presence of several big research institutes. All kinds of Artists work and live in Cuernavaca as it is far enough from the headaches of Mexico City but close enough to exhibit and sell there and internationally. Cuernavaca also has a Spanish language center and is full of students all year round.
Local tourism, mostly from Mexico City, plays a big part in Cuernavaca’s economy. While international travelers to the country tend to skip Cuernavaca all together, it is worth noting that the city is centrally located to many of Mexico’s cultural attractions. The colonial city of Taxco and Puebla are both a couple of hours drive away. The beach resort of Acapulco can also be reached by car in just a few hours.
Some retirees and expats who consider moving to the city find value in avoiding the tourist crowds. “Unlike other typical American colonies such as San Miguel de Allende, where the foreign community has pretty much taken over a small city, [in Cuernavaca] the foreign community is very much integrated into the Mexican society,” according to Smadar, an American-Israeli expat. “The city offers the best of both worlds, first rate schools, shopping malls, super markets, theaters, restaurants, museums, movie theaters as well as amenities such as high speed Internet and satellite TV while at the same time, it has little traffic, no pollution and a family friendly atmosphere,” she said.
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Cuernavaca real estate
“The city is majestically set on the slope of the mountain and one can find property with gorgeous panoramic views and surrounded by nature,” said Gerson. When compared to places like Los Cabos, Playa del Carmen or Cancun, Cuernavaca’s real estate prices are very attractive, according to Casa-Mayor Grupo Inmobiliario. Investors can buy real estate for a fraction of what it would cost in some of Mexico’s popular tourist destinations. New residents moving from Mexico City or looking for vacation homes make up most of the property buyers. The United States is the source of a large percentage of buyers in the international market.
“Cuernavaca real estate market is unusual in that it doesn’t follow normal market conditions. It’s very independent from the Mexico City market and the global market,” said Gerson. Property sales within the price range of $100,000 to $200,000 remains solid. However, growth in the upper crest of the market is slow. There is a surplus of high end properties priced at $1,000,000 and higher. However, these are mostly second homes of well heeled Mexicans that are not affected by the current global economic crisis.
The tendency for Mexicans not to finance their home purchase with mortgage means the real estate market hasn’t been affected by the credit crunch too much. “The trend in Mexico, when there is economic destabilization, is to buy real estate, because the population feels, real estate is a much safer place to invest money in the long run. So [we see] an increase in activity and interest in [property] when the stock market is down, and when there is a devaluation of the peso or the dollar,” said Gerson.
Buying real estate in Cuernavaca
Purchasing real estate in the city is a simple, straightforward procedure, according to Georgia Spencer, owner of Cuernavaca Real Estate Company. “A non citizen may hold the title to his property directly. A permit is required from the government, which is quick and easy to obtain. One only needs to have entered the country legally,” she said. No need to use a fideicomiso, where a property title is held by a bank instead of the individual investor. The restrictions that apply in certain places such as coastal areas and borders zones don’t apply to Cuernavaca.
The permit needed to purchase property costs about $500 dollars, according to Casa-Mayor Grupo Inmobiliario. In addition, several U.S. banks have business relationships with Mexican financial institutions, making it easier for American investors to get mortgages on Mexican properties.
The immigration status of an investor can make a difference in the amount of taxes paid on property related transactions. “Some foreigners opt for a permanent resident status to reduce their capital gain taxes. Mexican residents are mostly exempt from capital gain on their residential property on which foreigners maybe charged anywhere from 20 to 30 percent,” said Gerson. Investors can continue to live outside of Mexico while at the same time holding a residence permit.
The next few years
Mexico City’s economic health will continue to play a huge factor in the property sector of Cuernavaca, according to Casa-Mayor Grupo Inmobiliario. Bursting at the seams with its 20 million residents, the nation’s capital is the biggest source of clients in Cuernavaca’s real estate market. “The future is bright,” according to Gerson. “Though [property in Cuernavaca] may not be as lucrative as beach front property, [its growth] is steady and constant,” she added.