January 2009 - ProMexico
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ProMexico's Efforts on Second Homes
ProMexico - Grupo de Negocios de ProMéxico para el Sector de Residencias Turísticas y Turismo de Salud
Mexico’s geographical location is a broad network of economical agreements to gain access into the main markets of the world and, most of all, the talent and capacity of its people.
According to the magazine “International Living” through its Annual Retirement Index 2008 has cataloged it, as one of the best country in the world for retirement. For this reason, Mexico is a highly attractive destination for foreigners interested in buying a second home, a residential real estate purchased by individuals who already have a primary residence and move in occasionally for recreation, for its attractions, beaches, pleasant climate, biodiversity, cultural heritage, historical sites and the low cost of real.
Investing and growing in Mexico is a good business. In ProMexico we can help you accomplish the best business experience. We have 52 offices in the Mexican Republic and 35 international offices in 19 countries where one of our consultants will be able to guide you and to become your personal advisor for investment in our country.
ProMexico is the Mexican Government agency created to provide support and consultancy for investors in order to turn their business experience in our country into a great success. Our mission is to identify the strengths and the opportunities offered by our country for new investments development or global businesses consolidation. We have designed several businesses solutions to inform, support and guide investors in order to optimize their trade relation with Mexico and to assure the successful completion of their business plan within our country.
It has three fundamental objectives: first, to impulse Mexican exports in international markets; second, to promote foreign direct investment attraction, through the proper broadcast of Mexico’s competitive advantages; and third to group within a single entity and coordinate through it, all of the Federal’s government strategies focused in promotion and thus capitalize, in the benefit of the Mexican population, our businesses with the world; and so, investors can be benefited from ProMéxico in several ways: Soft landing, as their Ombudsman, One stop shop, Investor after care program and Government procedures advisory.
Mexico has the opportunity to explore the huge market potential that the United States and Canada represent, because of their proximity and socio-demographic characteristics, without ruling out Europe and considering the competition posed by Central and South America.
The buyer profile of a potential second home is people aged between 40 and 69 years (78.2 million people in the U.S.), with an income above the average, looking for options where real estate costs are lower than those of their habitual residence and where they find a pleasant climate, insurance and availability of sources of entertainment, culture and quality health services. It is estimated that the owner of a vacation home on average spends 39 nights a year in it.
During 2007, 18 thousand units of second homes were sold, representing a growth of 52.5% over the previous year. About half were placed among foreigners. The value of the volume of these sales added about 6 thousand 400 million dollars.
According to the U.S. Department of State, there are currently more than 1 million Americans living in Mexico and the National Association of Realtors reports that between 500,000 and 1,500,000 homes in our country are owned by Americans.
Most of second homes are built in coastal and border areas. Highlighted destinations are the traditional Tijuana, Los Cabos, Banderas Bay, Puerto Peñasco, Cancun, Mayan Riviera, Vallarta and Acapulco. In such areas, foreign ownership is subject to the figure of the Real Estate Trust on Restricted Zones. This trust allows foreigners to buy real estate in the restricted zone by having a bank act on the investor's behalf. The Ministry of Foreign Affairs reports that the number of such trusts in 2000 rose from 1,970 to 6,611 in 2006, an average annual growth of 22%.
It is important to mention that there are services that allow foreigners to acquire residential mortgages in their own country. For this purpose, there is a partnership between the associations of real estate brokers in Mexico and the United States, the NAR and the Mexican Association of Real Estate Professionals (AMPI). Thus, out of 10 mortgage loans that are granted to foreign consumers to buy a property in Mexico, 8 are given by foreign financial institutions.
In 2008 the real estate industry lies in a process of adjustment, where it will be important to anticipate market trends to exploit opportunities with greater potential. Factors such as the slowdown in the economic cycle, inflationary pressures and a slower recovery for the U.S. economy than expected originally, have forced to rethink the expectations of the real estate market toward lower rates of growth, but still significant.
We kindly invite you to learn about our solutions so you can make the most of this opportunity.