The New Re-Emerging Markets
by Bruce D. Greenberg, MAI, SRA, ASA
Over the past five years, the traditionally and predominant fly-in markets for Americans visiting Mexico have been Los Cabos, Puerto Vallarta and Cancun; while, the traditionally and predominant drive-in markets have been Puerto Peñasco and Rosarito. Between the years 2000 and 2005, the above marketplaces in Mexico have built, sold and absorbed more residential units to Americans than the remaining residential US buyer marketplaces in Mexico.
Over the past 24 months, La Paz and both the East Cape and Pacific (Todos Santos) corridors have been capturing more Los Cabos clients, while Loreto, Mazatlan, Manzanillo have slowly – but surely been attracting more “fly-in” traffic. Simultaneously, San Felipe, El Golfo and San Carlos have increasingly captured more of the “drive-in” traffic.
A number of factors are “driving” these alternative re-emerging markets. I say re-emerging as most of the marketplaces have had “American colonies” for over 30 years. The leading cause of change is the lower pricing of product. Developers now can build, if they choose, a better product - - - yes on a lower priced site at these alternative locations. Construction cost is most likely slightly higher in these alternative locations; yet, the developers are paying one-third to one-half the price for waterfront parcels.
Both Nogales and San Diego have “RAPID” or Century Lanes to move vehicular traffic more quickly back into the United States – Time is Money!
The Mexican Federal and bordering state governments understand tourism and are improving their highway systems. You can drive on a 4-lane toll road into mainland Mexico; the RV community has gotten word if this. Again – Time is Money!
International flights are becoming profit centers for the airlines. Expanded flights from more airlines to and from more Mexican communities are in effect today as compared to five years ago.
The merger of America West and US Airways has benefited Mexico. Just think if Delta becomes part of this system. The number of US hubs keeps growing from these mergers, which will provide “quicker” trips to Mexico with less stops and layovers – Again, Time is Money!
The US real estate allied industries (title companies, lenders, insurance companies, real estate franchisees) have watched the initial pioneers (like myself) grow in Mexico and feel more confident and observed the reform/safety initiatives inserted during President Fox’s term. So here they come. This is good since - - - competition breeds profit. Consumers should only do business with experienced professionals who are registered with Mexican government officials to ensure and increase their own safety in a real estate transaction.
The principle of change is forever occurring in real estate. Over the past eight years, my firm has been recognized as one of the leading “appraisal” practices in Mexico; yet, with the data gathered, number of assignments completed and principles and practices put into place by my firm members, as the real estate market has matured in Mexico. We finally have been recognized as a feasibility/market study practice as well. This latter discipline is key during “re-adjusting” cycles like the one we just began in both the United States and Mexico. What happens in the U.S. real estate marketplace is a direct effect on the Mexican real estate industry. The more information, the more potential success for a projected project.