Investing in Mexican Real Estate

I want to share with you this very interesting article wrote by Sylvia DeSoto.

Investing in Mexican real estate will never be more affordable.

Let’s face it- if we believe every thing the media’s saying about Mexico these days, you’d think 110 million citizens in this country are hiding in doors, armed to the teeth, ready for the next invasion from the cartels or the military pursuing them. It’s just not the case, but people love bad news stories and they love to generalize. For those who believe in this nonsense, please hide at home and prepare for the end, which according to the Mayans, is coming in December, 2012. For the rest of you, and particularly those considering Mexico as a retirement destination, the important news is that Mexico has faced its own “perfect storm” in the past few years. Let’s look at what happened. In 2008, the global economy tumble, and vacation home sales in Mexico immediately cooled off, just like real state practically every where in the world. Most foreign investors considering Mexico suddenly didn’t have the equity or access to capital to buy. In 2009 the swine flu kept a lot of tourists away, while in fact it was very minor problem in any of the tourist towns. Once again, potential second-home buyers didn’t arrive in significant numbers. In 2010, the media relentlessly portrayed Mexico as a war zone. What the media usually failed to report was that an estimated 90% of the murders were very bad guys killing very bad guys. Seven per cent of this related deaths were the “good guys” (ie, police, military) being killed by the bad guys. Only 3% were civilian innocent bystanders – a huge number if that was part of your family or community, but a relatively small number compared to what the news would have you believe. These numbers were reported on Fox news a few weeks ago (middle of march) by US DEA official, and what the absolute truth is hard to know it’s probably a fair representation. Once again, foreigners didn’t rush in to buy vacations homes in Mexico. So we have seen three slow years for beachfront and other vacation home real estate sales. Although nationals continue to invest in their own beach retreats, the numbers are not supporting the level of inventory currently available. When supply exceeds demand, prices soften, terms become more advantageous to the buyer and deals are to be had. What the news fails to report is the official numbers of North Americans traveling to Mexico show they are still coming in very large numbers – over 18 million in 2010, according to USA Today. Mexico is investing in “cleaning up its image and improving tourism infrastructure”, and is already the world’s tenth most visited country, according to The Economist. Despite the “perfect storm” it has endured Mexico’s GDP grew by 5.5% in 2010, according to Bloomberg, significantly better than its mighty neighbor to the North. What does the future hold for a country whose economy does well when times are tough? Many economists, bankers and investors are betting that as general global economic conditions improve, Mexico will boom. At this year’s World Economic Forum in Switzerland, Mexico’s President, Felipe Calderon, said Foreign Direct investment flows to Mexico increased 53% in 2010, the largest increase in a decade. Meanwhile, its currency continues to strengthen against the US dollar, its stock market has noted a continuous double-digit growth and its government continues to invest in major infrastructure projects, such as the $3.5 billion dollar Mazatlan-Durango superhighway, due to complete in 2012. Industry experts predict that when the highway is completed, liking the Mexican Golf and Pacific Coast, it will not only open many new trade opportunities, but make Mazatlan an attractive destination for northeast Mexico and the Eastern US, currently relatively untapped markets. A boom is coming! Foreign investment in residential Real Estate will also continue to gain momentum. Prices for coastal real estate in particular will only go up, Baby Boomers and snow birds will most certainly continue to retire and look for warmer (and more affordable) destinations and the inventory will eventually find its equilibrium. Don’t be one of those people kicking themselves for not investing when prices were depressed. At least once in our life time, most of us have said, “if only I’d bought when the price was only…”

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