9 July 2008 One Comment

2007 was a banner year for real estate investment in the peninsula, especially in popular areas like Cancun and the Riviera Maya, a 120-kilometer (80 mile) stretch of coastline which only a few years ago was a land of fishermen and undiscovered beaches. Today it is an area of intense development for the resort and vacation industry.

The question might be, with such an off year (to say the least) in the U.S., would you expect for the effects to be felt in the sales of real property in our area in 2008? The answer, at least in our area, would be yes and no. According to Mexican Association of Real Estate Professionals (AMPI in Spanish), sales of property in the states of Quintana Roo, Campeche and Yucatan (the three states comprising the Yucatan Peninsula) are actually up 20% so far over last year.

A number of factors are given as reasons for the increase:

•Americans and Canadians who might normally invest in the U.S. are drawn by attractive deals in the area. The real estate slump, and price dumping in the U.S. notwithstanding, prices here per square foot are still often a bargain compared to properties in Florida, Texas and California. Many times they are half what they are in these areas.

•Mexican nationals are investing heavily in the area as well. According to AMPI, this year domestic investors have made up an astonishing 60% of this year’s sales demographic. American investment has dipped as much as 15% in some markets in the peninsula, but enough national investment has been present to offset the dip. A dollar that has weakened by as much as 10% has made dollar-priced properties attractive. This presence keeps the market moving, and diversification keeps building and planning efforts moving forward, allowing for the advancement of infrastructure for new development. This way, by the time the U.S. economy picks up, new services will be in place for American buyers to really take advantage of opportunities.

•The European market is growing. Another consequence of a weakened dollar internationally is that Europeans, who may have been wary of investing in dollar-denominated properties, are using their stronger euros and pounds to buy now. Whether for speculative purposes or for use as vacation properties, the Europeans are here. The surge in the amount of real estate professionals taking French, Italian and German language classes is one sign that the market is changing. The area’s ability to evolve to meet the needs of its market also ensures a healthy future.

And the outlook is strong for the next 5 to 10 years. The development in Cancun like Puerto Cancun, which is being billed as a “city within the city”, with thousands of condominium units being built as we speak, newer developments just north of Cancun like Isla Blanca, and areas along the beach in Campeche and Progreso in the state of Yucatan are all experiencing sales surges. Campeche has become especially popular with Mexican nationals looking for areas richer in local tradition, and that are close to cities like Villahermosa, Tabasco.

While other parts of the country that cater to an exclusively American demographic are feeling a bit of the pinch, the Yucatan continues to be an attractive area to invest your dollars, pesos, pounds and euros. The diversification of the client base in the area ensures that both the government and the private sector will continue to support the area, as it did incredibly after the hurricane season of 2005.

Image courtesy of Sean Dockery