Puerto Vallarta was once a quiet fishing village, but ever since it served as the backdrop for John Huston’s 1964 film “The Night of the Iguana,” starring Ava Gardner and Richard Burton, the sleepy seaside town has grown to become the blockbuster resort that it is today. This longstanding popularity only seems to be increasing among both tourists and retirees, and as a result, Puerto Vallarta’s real estate market is thriving.
Many foreigners looking to retire in Mexico have chosen this seaside town for its beautiful scenery, its small size and the relative ease of conducting day-to-day life with limited Spanish required. Interest among international buyers is so great that almost all real estate agencies quote prices in dollars.
About Puerto Vallarta
Located on the Pacific coast, the municipality of Puerto Vallarta occupies 502.19 square miles and has a view of the beautiful Sierra Madre mountains. With its estimated population hovering around 300,000, the city is the fifth largest in the Mexican state of Jalisco.
Tourism is the largest industry in the area, followed by agriculture and fishing. Puerto Vallarta is the second most visited resort town in Mexico and welcomes 2.2 million tourists annually, according to Visit Puerto Vallarta Mexico, an online guide to the city.
The city’s official slogan, “where Mexico comes to life,” rings true to John Youden, founder of Puerto Vallarta’s real estate multiple listing service, Multi List Vallarta, and owner of Vallarta Lifestyles Publishing Group, he said. “Puerto Vallarta is a Mexican town that became an international tourist destination. Los Cabos and Cancun, for the most part, were planned destinations,” he said. Puerto Vallarta has a lot of Mexico to offer, according to Mr. Youden. “Its downtown central area with its plaza and Malecon offers something truly unique. It is also very close to Guadalajara, Mexico’s second largest city.”
The lights of Puerto Vallarta at dusk along the Pacific coast| alt=|Puerto Vallarta along the Pacific coast at dusk|]Puerto Vallarta’s real estate market
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Puerto Vallarta was ranked in NuWire’s top five Mexican real estate markets in 2008. In 2000, Puerto Vallarta sold roughly $50 million in resort real estate, which is defined as property purchased by retirees or as a second home, according to Darryl Bowie, the general manager of Coldwell Banker La Costa Realty. Million-dollar homes were rare and there were only a few large scale developments. In 2007, resort real estate sales reached $500 million. There were condos selling for $2 million apiece and homes garnering a hefty $5 million, according to Coldwell Banker La Costa Realty.
As of summer 2008, there are more than 100 developments around Banderas Bay, making Puerto Vallarta first in resort property sales in Mexico. Punta Mita, one of the better known developments, has Four Seasons, Ritz Carlton and St. Regis Hotels and two Jack Nicklaus Signature golf courses. “The whole area is booming, from Rincon de Guayabitos in the north to Mismaloya in the south,” Bowie said.
The major property buyers in Puerto Vallarta are Mexicans, Americans and Canadians and mostly they come looking in one of three categories, according to figures from Coldwell Banker La Costa. Some are seeking full-time winter homes. Others are looking for a second home that can also double as a rental property. Many are looking to retire in Puerto Vallarta.
“This year, with the sub-prime crisis, election, price of oil and other economic factors, we have seen a noticeable drop in American buyers and a noticeable rise in American sellers. The Canadian buyers have really stepped in with a strong dollar, however, as the oil-based inflation woes make the news, even the Canadian buyers are being more cautious than usual,” Bowie said.
Those who are looking for properties under $250,000 but want amenities such as a pool, beach, security, view and proximity to downtown are finding a market where prices are much higher than they expected, according to Bowie. The market under $400,000 is strong, especially in the condo sector. However, sales from properties valued between $500,000 and $1 million are not doing as well. “At this price range, buyers are faced with a major investment decision and when the economic indicators are all screaming ‘buy gold, inflation is looming, oil is going higher, cash is king, the sky is falling,’ they put the dream on hold,” Bowie said.
“The $500,000 to $1,000,000 market seems to be softening at this time, with a desire toward either less expensive condos in the $300s or very high-end condos and villas, typically over $2 million,” said Wayne Franklin, president of Tropicasa Reality. The top end of the market is doing quiet a bit better than any other portion of the market. “This makes sense because economic fluctuations affect high profile clients less,” Franklin said.
A coastal resort in Puerto Vallarta| alt=|A coastal resort in Puerto Vallarta|]Buying real estate in Puerto Vallarta
The paperwork and real estate language used during property transaction may seem similar to those used in the United States but international buyers must remember that similarity does not translate into sameness. They must research every turn and ensure all procedures are completed in accordance to Mexican law. Generally, property purchase involves a bank, a lawyer, a real estate company and a public notary, according to Mexonline. Transactions that are not within restricted zones don’t need to involve banks. Read more bout Mexican real estate law in our article The Myth of Mexican Property Ownership.
“Investors need to do their homework and work with an AMPI [Mexican Association of Real Estate Professionals] agent to make sure that they are being represented properly,” Franklin said. Buyers must review and evaluate documents of their chosen development critically to ensure that everything is as it seems. “If the investor has found a valid project, preconstruction developers sometimes offer great discounts for entry level into a development. Others offer terrific terms throughout the course of the construction. In Mexico, prices increase on developments as inventory decreases, so price escalations are typically built into the model. You may also find a developer whose sales have stagnated. They’ve reached a plateau and they need to get moving again. Being in the right place at the right time can pay off in these projects. You may be able to convince a developer to give you that ‘special deal’ on the next unit sold so that he can get sales moving again,” he said.
The next few years
Real estate agents are optimistic about the future of the Puerto Vallarta property market as new developments are planned to open the town to even greater numbers of tourists. “A new highway is under construction to Guadalajara, which will bring more visitors to the beach. This will be a huge boom for Vallarta. People will need lodging, food and want to shop and drink. All businesses will enjoy an uptick in activity, real estate and hotels especially,” said Franklin.
“The baby boomer population continues to retire with huge wealth despite U.S. economic factors. Vallarta, with its proximity to major wealth centers in the States, will continue to grow and be among one of the top vacation and retirement destination as baby boomers look for more out of life,” he added.
“[The market] will certainly continue to grow. A slowdown is taking place, as elsewhere in the world, but it will pick up again,” Youden said.