How to Choose Your Mexico Real Estate Area

One of the important points in making a Mexico real estate investment is to choose an area which is appropriate for your type of investment. The following tips will …

One of the important points in making a Mexico real estate investment is to choose an area which is appropriate for your type of investment. The following tips will outline some of the key factors to consider.

1. Rapid Growth

Mexico has some really fast growing communities. During the first decade of the 2000’s, for example, Playa del Carmen was the fastest growing community in Latin America. Playa del Carmen continues to be a fast growing community, offering a variety of new development areas and real estate types to consider for investment. For example, an investor could consider a beachfront condo for rental income, or land in the newly developing areas back from the beach where land values have risen up to 20% as demand rises. In rapidly growing communities, while the traditional investment properties may seem less attractive, there are always new investment opportunities arriving with the growth.

2. Potential Growth

There are also many communities that seem to be just waiting for their real estate boom to happen. Tourism is on the rise, new investment and new services are on the way and people are starting to take interest in these places for vacation properties or retirement. Communities like this include Tulum just south of Playa del Carmen on the Caribbean and Campeche on the other side of the Peninsula. Observers are expecting Tulum to follow Playa del Carmen’s success and perhaps even become the next fastest growing community. Campeche’s situation now is strikingly similar to Merida about 10 years ago. With the emergence of a “pan-peninsular” tourism region, Campeche is probably soon to gain considerable more attention. Upscale real estate developments are already appearing, yet prices are still low anywhere else.

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3. Existing infrastructure & services

An important factor in investing in the kind of real estate area mentioned in point #2 is access to existing infrastructure and services. This serves as a safeguard; should expected investment, improvement or tourism growth take longer, close proximity to exiting services means that there will still be a certain level of appeal for resale. It also increases the chances of the area taking off. In Tulum, the services of Playa del Carmen and Cancun are an hour and two hours away respectively. In Campeche, the city of Merida is only 2 hours away. Both communities already include the basics, like large international supermarkets and high-quality health care.  There is also easy access to an existing and well-connected international airport.

4. Tourism strength & rental potential

Another angle to take on investment is to buy in a more established area, where properties will be higher-priced, but the potential for vacation rental is very high. Areas such as Cancun, Playa del Carmen or Puerto Vallarta can be good for this kind of investment. While all three areas also offer a variety of lower-priced properties, the ones which usually offer highest results for vacation rentals are those directly on the beachfront, which also tend to be the higher priced properties. Information on the rental records of any given area can easily be found. Experienced brokers will also be able to help find this kind of info.

5. Ease & price of access

As mentioned briefly above, it is important in any kind of investment property in Mexico’s tourist regions to have easy access by means of an international airport since this is how the vast majority of tourists now arrive. Arrival by car from the U.S. used to be more common, but this has now given way to air arrival, especially with the growth of arrivals from places like Canada or Europe. In some locations, like Rocky Point near the Arizona border, highways and car access are still a more important factor.

6. Price slow-downs

One observer once commented that “out of favor” real estate in Mexico has high potential to “come back.” In various locations throughout the country, prices have dropped, either because the market was saturated right at the time of the recession, or because the area simply stopped getting so much attention; large numbers of expats are still in these areas, the same services are still there, and Mexico is making a huge effort to boost international tourism and position itself in the #5 place worldwide. This means that a number of these areas show excellent potential to have prices rise again. Similar situations include occasional price reductions based on the personal situation of the owner or fixer-upper homes in communities that promise to gentrify in established markets.

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