32 | PEOPLE Whats going on in... Mexico?
WORDS | Alex Evans
www.opp.org.uk | APRIL 2010
Continuing our series
off ering brief insights into the residential tourism markets OPP readers are talking about, this month we focus on Mexico…
While the outbreak of swine fl u and instances of violence along the US border early last year increased its international profi le for the wrong reasons, Mexico is fast emerging as a retirement destination – particularly among those from the US and Canada. “There has been a shift from the investment buyer to people who want to live here permanently,” said Heidi Wosak, CEO of overseas agent Century 21 Sun & Sand, which saw an increase in sales in the last quarter of 2009. “Because of the economic downturn, fewer people want to buy holiday homes but more and more people are seeing Mexico as an option for retirement because of the cost of living and healthcare options.” Latin American portal VivaReal.
net saw a sharp rise in the number of enquiries for Mexican property last year, up 34% for Americans and 37% for Canadians between September and October. Mexico is the most searched for destination on VivaReal, and the site’s top four cities (all in Mexico) have seen searches rise between 30% and 60%. Mortgage availability is feeding North American demand, with Mexico’s largest fi nancial institution, BBVA Bancomer, reporting that its foreign home-loan lending was expected to reach $150 million in 2009. “We did have a sub-prime market
but credit criteria are tighter,” Enrique Saldana, of broker Advanced Mortgages, told OPP. “While a good credit score in the US is around 620, in Mexico it has to be at least 680 to get a mortgage.” Around 40% of Canadian buyers in Mexico now use mortgages, according to Saldana,
with the rest paying with savings or by releasing equity from their primary residence. It’s a diff erent story for European buyers, though. “Deutsche Bank was serving British customers but they pulled out of the market about a year ago,” says Saldana. “We also had lenders for clients in France, Holland and Italy but there is nothing for the European market right now, except for through developers who have partnered with Spanish banks.” But a decline in prices may draw
more Europeans to Mexico, says Wosak. “Prices have come down between 30% and 50% since 2006, and beachfront property that cost $1.5 million a couple of years ago is now around $800,000. Most of our sales are in $70,000 to $500,000 dollar range.” There is also a strong local market,
according to Mark Jeff ery, commercial director of Flamingo Lakes Resort. “We believe 50% of our market is now Mexicans whereas before we were almost 100% dependent on baby boomers from North America,” he says. Mexico’s resorts are seeing some
major investment, with Prudential Real Estate Investors (PREI) forming a ten-year joint venture with Mexican company Corporación GEO to invest in land and develop residential megaprojects (worth over $1bn). This will start with a $110m investment in the fi rst phase of a 640-acre development, Valle de las Palmas in Tijuana, including 18,000 houses plus retail and industrial developments. A $100m project to widen beaches
in Cancun (main image) will distribute more than 175 million cubic feet of sand over 7 miles of beachfront. This is likely to boost the condo market in Cancun, which receives over 3 million visitors a year.
Cancun Visitors
COUNTRY 2008 %
USA
1,223,224
MEXICO 761,871 CANADA 100,678 UK
SPAIN BRASIL
50,323 34,100 24,127
ARGENTINA 23,930 FRANCE 12,726 ITALY
JAPAN
TOTAL
12,074 9,454
2,252,507
Yucatan Peninsula - foreign visitors
REGION 2008 %
EUROPE 734,397 USA
2,219,427 CANADA 468,288
SOUTH AMERICA
REST OF WORLD
TOTAL
88,243 121,888
3,632,243
20.2 61.1 12.9
2.4 3.4
54.3 33.8 4.5 2.2 1.5 1.1 1.1 0.6 0.5 0.4
2009 %
1,016,309 754,385 94,786 38,680 18,899 16,323 16,313 10,808 8,365 4,205
1,979,073
2009 %
506,345 869,348 463,925
113,869
51.4 38.1 4.8 2 1
0.8 0.8 0.5 0.4 0.2
17.1 29.4 15.7
3.8 1,007,785 34
2,961,272
MARKETING
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BUSINESS
DESTINATION
PEOPLE
INDUSTRY
Market Snapshot
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