Land, Luxury, Leisure…Mexico

What to do when you have a network of real-estate brokers selling new condominiums, but few new condos to sell?

Edgardo Defortuna, who has made millions selling South Florida condos, hopes one answer is found on the Pacific shores of Mexico.

Defortuna, who heads Fortune International, last year agreed to start selling condo units built by Miami’s Related Group in Puerto Vallarta. It’s part of a plan that he and Related CEO Jorge Perez hope will ultimately include more than a half dozen projects across Latin America and the Caribbean — and provide a fruitful market until South Florida’s formerly hot housing industry recovers from its cold snap.

At a time when starts for residential projects are slowing to a trickle from West Palm Beach to Homestead, those who sell new housing like DeFortuna’s Brickell Avenue company are having to strike out for new markets.

They are following different trails. International Sales Group in Aventura started marketing a project in New Orleans last year, attempting to take advantage of a lack of housing after Katrina. Prodigy Network in Miami moved its headquarters to New York City to better focus on its projects there, while also pushing units in places like Mexico and Panama.

Latin America has emerged as a place of opportunity during the U.S. downturn. A recent report by consultancy Ernst & Young cited the region for its steady economic growth yet relative affordability when compared to the United States and Europe.

”The overall fundamentals are positive,” said Rogerio Basso, an E&Y analyst covering real estate and hospitality in Latin America. “Those investors who have the appetite to take moderate risks and identify joint venture partnerships with local players should be able to observe higher yields than in the U.S. today.”

For Defortuna and Perez, both of whom spent their childhoods in Latin America, the push into the region is being done with a distinctly Miami flavor.

THE MIAMI CONNECTION

Take the Vallarta project. Its name, Icon Vallarta, echoes the Icon South Beach condo and the Icon Brickell hotel and condo project under construction. Its architect is Bernardo Fort-Brescia of Miami’s Arquitectonica. Not only are the developer and the brokerage company from Miami, but so are many of the salespeople in Mexico.

Already, Defortuna said, he has sent eight Miami real estate brokers south of the border. He expects that number could eventually be between 40 and 50, depending on the number of projects launched by Related Group.

”I expect the brokers will eventually be back here in Miami,” said Defortuna, whose company at one point during the boom was selling units at 28 South Florida condo projects.

“But the reality is that some brokers got used to an income level that would be hard to maintain in this sort of market. There won’t be much for them to do in the next couple years.”

Michelle Minagorri, who has a home in Coconut Grove, picked up and moved to Puerto Vallarta to start selling condos last fall. During the South Florida housing boom she sold units at Jade Ocean and Jade Beach in Sunny Isles Beach, and Mint and Ivy along the Miami River. But then things went quiet, and Mexico came calling.

”The market in Miami the past couple years has been unbelievable, an unsurpassed market,” said Minagorri, who grew up in South Florida. “But Miami’s market is taking a breather and I thought this was a good opportunity.”

The transition has been smooth, she said. ”Someone from the Midwest moving to Mexico might feel a little more culture shock, but not coming from Miami,” she said.

SELLING OUT

The market, too, has proved good so far. The first 133-unit tower at Icon Vallarta is sold out and nearly all of the units are sold in the second 133-unit tower, she said. Sales are underway for the 75-unit third tower.

Half the buyers are coming from Mexico. The biggest U.S. feeder state is California. Canadians, particularly from western cities like Vancouver, and Europeans are also drawn to lower prices for beachfront property than in the United States, she said. A large one-bedroom beachfront condo — say, 1,300 square feet — can be had from the high $200,000s to low $300,000s.

Mexico also hasn’t experienced a giant dose of new construction like South Florida or Southern California. It’s that pent-up demand coupled with competitive pricing that Defortuna and Perez hope to capitalize on. Defortuna said direct access by airplane to the Latin American and Caribbean destinations is a key factor as well.

In Mexico alone, projects are also planned in Zihuatanejo, Acapulco and Cabo Riviera. Other sites include Cartagena, Colombia; Buenos Aires; Punta del Este, Uruguay; the Bahamas; and Panama City, Panama.

To be sure, some places like Panama City have seen vast new development in recent years - and already been inundated with South Florida builders and brokers. Defortuna acknowledged a discomfort with that Central American city, questioning the depths of its market. But he said Related Group’s Perez has secured a well-located site to build on there and thinks it can work.

Yet such questions are not stopping brokers thirsting for new product to sell as South Florida’s latest housing boom winds down. Indeed, Defortuna also operates as a developer and is himself finishing several South Florida projects and two in Argentina where he grew up.

”I have someone coming into my office daily saying, don’t forget me for the next project [in Latin America and Caribbean],” he said. “For the young and aggressive, it’s a great opportunity. It’s a good place to be for the moment.”

They say that paradise is a state of mind. When the ingredients are all of the highest quality, it can also be a place. Puerto Vallarta, Mexico qualifies for this distinction and the flamboyant tourist city, situated on the Pacific Ocean’s Bahia de Banderas, is set to host a major international beach soccer event for the first time in its history.

In a three-day, round-robin event beginning on 17 April, Costa Rica, El Salvador, Mexico and USA will compete for CONCACAF’s two berths at the FIFA Beach Soccer World Cup Marseille 2008.

Mexico and USA were the finalists at the last year’s continental event and the Aztecas went on to cause a sensation at Rio de Janeiro 2007, eliminating beach soccer heavyweights Spain and Uruguay to reach the final in their first-ever FIFA Beach Soccer World Cup participation.

“It was a wonderful experience for us as a team and a huge step forward for Mexican beach soccer,” said coach Ramon Raya. “Now it’s important to keep on working hard and play a good tournament in Puerto Vallarta, to show the world that last year’s performance wasn’t a coincidence.”

USA have been present at every edition of the FIFA Beach Soccer World Cup, although they have never managed to navigate their way beyond the first phase. The Americans will be keen to rewrite this statistic in Marseille.

This year’s CONCACAF qualification tournament will be capped by an exhibition match on 20 April between Mexico and an All-Star selection, which will be comprised of the event’s top players and some stars from Europe and South America.

Foreign investment in Mexican real estate is on the rise, and many favorable factors conspire to keep this trend moving forward.
 
Investors and developers are increasingly looking to Mexico as a land of opportunity. While Mexico’s economy is closely tied to that of the United States and is expected to be impacted in some measure by the current slowdown, the financial crisis in the U.S. has not yet had any significant repercussions on Mexico’s economic activity or international trade. Over the past 15 years, as Mexico has increasingly drawn foreign investment, the appeal of real estate as an asset class has continuously grown.

Secure prospects and government incentives Developers and investors have a tendency to take a longer-term perspective with regard to their activities in Mexico. This is due in part to several key trend lines that support investment in Mexico’s real estate sector and, more specifically, in lodging and tourism. Mexico is host to the development of numerous master-planned projects offering legal certainty, quality infrastructure, ample amenities, and development platforms for hotel and residential developers. Like those in the U.S., urban and resort markets in Mexico have witnessed a marked increase in projects combining hotel and residential components. In addition, the Pacific and Caribbean coastlines of Mexico are increasingly viewed as prime destinations for upscale developments. Tourism and resort residential development are a national priority for Mexico. The country’s regulatory framework fully backs foreign ownership in the majority of ventures, including real estate, allowing 100% participation in shared capital. Mexican laws governing foreign investment provide legal guarantees and offer investment security. The legal mechanism also simplifies the paperwork involved in registering foreign investments, as well as the unrestricted repatriation of profits, bonuses, dividends, and interest payments. In addition, title insurance similar to that offered in the U.S. is now widely available for purchasers of large sites and individual housing units alike.More industry, more demand

According to the Secretaría de Turismo, Mexico received approximately $3.5 billion USD in private tourism investment in 2007, an increase of 11.12% over 2006. Foreign investment, particularly from Spain and the U.S., accounted for 43.76% of the total. Mexico has consistently been one of the largest recipients of foreign direct investment in all economic sectors among emerging markets. As industry expands in several cities in northern and central Mexico, so does the demand for lodging, particularly in the limited- and focused-service segments that cater to business travelers. Relatively few hotels outside of the resort destinations are branded, offering an excellent opportunity for both domestic and international brands to obtain growing market share. In urban areas, the development of mixed-use projects that combine hotel and residential uses with office and/or retail components present another opportunity for growth.

For the second consecutive year, condominium construction has outpaced that of hotels. According to the housing consulting firm Softec Mexico, sales of tourist housing in 2007 totaled 18,000 units, an increase of 52.5% as compared to the previous year. Puerto Vallarta occupied the lead position in sales; other areas that demonstrated dynamic activity included Los Cabos, Puerto Peñasco, Acapulco, Cancún, Riviera Nayarit, and Playa del Carmen. Approximately 80% of the beachfront housing was purchased by foreigners, principally from the U.S. and Canada. Mixed-use developments including hotel and residential components are expected to multiply with Mexico’s flourishing status as a second-home and retirement market for U.S. and Canadian baby boomers. In fact, Mexico ranked at the pinnacle of the 2007 Global Retirement Index, published by International Living. Consumer confidence in buying residential property in Mexico is bolstered by the increasing availability of title insurance policies issued by U.S.-based companies.

Outlook

Some challenges do impose on Mexico’s attractive investment climate. The biggest obstacle to ongoing activity will likely be the tightening of credit markets in the U.S. and Mexico. Loan-to-value ratios are expected to be reduced, and loans will be made on a more selective basis, factors that are bound to stifle development to some extent. However, investment and development platforms take a longer-term view, and in this light are somewhat less focused on and less vulnerable to the possible impact of a slowdown in the very short term. The outlook for real estate development and investment in Mexico is, therefore, relatively sunny and streaked with the colors of a variety of prospects, from hotels to residences in urban to resort locales. Moreover, based on current trends and the government’s inviting stance, foreign investments stand on solid ground.

From the sunny Costa Careyes on the Mexican Pacific coast, south of Puerto Vallarta, we wish you the best for year 2008.

Our 20th polo season started great with Thanksgiving in November 2007, having 2nd Ladies Tournament Copa Giuliana and mens cup, Copa Sombras.

Recently finished Christmas and New years season was also very special, having guests from USA, Mexico d.f., Colombia, England, Portugal, Germany and even Russia with a very special former 10 goal, best Mexican polo player, Carlos Gracida.

We expect to have the same spirit in our next polo events, starting :

In February (8th to 17th) we will repeat the great experience of last years
Masters Tournament playing 14-16 goals games with patrons and pros who want to share great polo and a beautiful vacation. Olavo Novaes, Tano Vial, Oscar Garibay, Chino Li, Valerio Aguilar.
Ladies Tournament “Queens of Careyes” with the Chinese New Year Cup (Year of the Rat – 7th Feb.) will be played February 7th, 8th and 9th followed by a great celebration.

In March (15th to 22nd) we will repeat the great experience of last years
Copa Agua Alta sponsored by Kary and Alberto Ardissone will be played from March 15th to April 22nd with a maximum of 8 teams (6-8 goals) featuring a competitive tournament with great Mexican events (charreadas, escaramusas, horse ballets and rodeos) and parties, followed by
Easter Tournament (March 25th to 30th).

Mexico has been selected for the Fip world championship to be held in Mexico City. Practice Games will also be held in Careyes during the event, from April 19th to May 4th 2008.

Please request Accommodation and Polo Packages for Individuals and Teams.
Special discount on accommodation for polo players are also available.

These are the highlights of the season but between those dates, individual players or teams are welcome and unless there is a tournament, we play practice games 4 times a week. We can also organize an event with your needs and fantasies!

How to get to Careyes:

Our closest airport is Manzanillo (1.10 hour drive to Careyes), then Puerto Vallarta (2.20 hours drive).
There are direct flights to and from Manzanillo with Alaska Airlines from L.A, Continental Airlines from Houston, Magnicharter directly from Mexico and American West from Phoenix. Make your flight reservations with time.

Please let us know and pass this information to a special friend and polo lovers, who you wish to introduce to the Careyes Magic!

It’s not easy for a movie star, basketball player, or corporate chief to buy a house without attracting a bit of attention.

It requires ingenuity—and help from pricey lawyers—to keep the paparazzi, celebrity bloggers, and stalkers guessing. Last year movie star couple Brad Pitt and Angelina Jolie failed to hide their $3.5 million purchase of a 19th century house in New Orleans’ French Quarter. News got out despite real estate records that listed the buyer as the “Mondo Bongo Trust,” a reference to the Joe Strummer song, Mondo Bongo, which Brangelina danced to in the 2005 movie Mr. and Mrs. Smith.

Other stars have hidden behind trusts with such clever names as “Ingodwe Trust,” “I before E Trust,” “Poopie Trust,” “Senior Moments Trust,” and “Thank You For the Trust Trust” (used by the late actor Heath Ledger), according to Bob Goldsborough, the blogger for bigtimelistings.com who has become an expert at unmasking celebrity home transactions.

“They don’t want people to be able to find them,” Goldsborough says. “It drives them nuts when we put the name of their trust on a blog.”

Hidden Identity

The super-rich also use holding companies to hide their identities and, in some cases, shelter themselves from taxes. But for many elite buyers, who live behind gates or hedges far from the street, privacy is the primary concern. They require real estate agents to sign confidentiality agreements and arrange for private showings during which the owners and all household staff are absent.

Some wealthy buyers do their research on the Internet. They can view photos, videos, and floor plans, and decide without even visiting the home, says Laurie Moore-Moore, founder and CEO of the Dallas-based Institute for Luxury Home Marketing. According to her, a house listed for $100 million kept the most sensitive information such as floor plans and specific inside views hidden on a password-protected site. The passwords were given only to pre-qualified billionaires.

Moore-Moore also reveals that a property of this type often has a three-tiered marketing program. A casual inquirer would get a two-sided brochure with exterior photographs and a little more information on a Web site. A luxury agent with a top client would get a 16-page brochure with exterior views and a few carefully chosen interior shots (with haiku poetry alongside each photograph). Only a fully qualified client would have access to the password-protected Web site with floor plans, information about the heating and air-conditioning systems, and interior photos and videos, she says.

Discretion Advised

Regardless of the house, the buyer might be invisible throughout most of the transaction process. “Screeners” sometimes visit an estate and conduct negotiations on behalf of celebrities or high-income buyers who don’t want their fame to influence the sales price. “If Madonna suddenly expresses interest in buying your house, you might say, ‘Well she can afford it, I’m not going to be negotiable,’” Moore-Moore says.

Some wealthy sellers also like discretion, especially if they’re going through a divorce, illness, bankruptcy, or some other personal crisis that they’d rather not draw attention to. In some cases, the agent is told not to place the home on the multiple listing service or even to advertise it. The agent might suggest selling the house without a traditional marketing campaign.

A well-connected agent can find a buyer by calling another luxury agent or wealthy client interested in a great off-market listing with unique characteristics.

“Lots of really good stuff, you don’t even need to put on the market,” says Christopher Hain, real estate agent with Hollywood Hills (Calif.)-based Ramsey-Shilling. “Agents facilitate the deal because it allows them to do both ends of the deal.”

Marketing Plan

But most clients selling expensive homes are happy to have a strong marketing campaign. Their agents might set up a booth with brochures at an air show or boat show and put an advertisement on the Internet, in The Wall Street Journal, The New York Times, European publications, and niche magazines such as Unique Homes, Moore-Moore says.

“The more expensive a house is, the smaller the pool of potential buyers in the area,” says Rick Goodwin, publisher of Unique Homes, a magazine and Internet site devoted to the luxury market. “As the price goes up so does the need to expose it outside the marketplace and outside the country.”

But the advertisements frequently provide limited details. Goodwin says it’s common for ads for expensive properties to say “price upon request.” The owner of a house on the market in Beverly Hills asked that the name of the property be digitally removed from a photograph appearing in the magazine; the name was displayed on the welcome mat in front of the house, Goodwin says.

“Some people may not want to make a big deal about it,” Goodwin says. “They might think, ‘I don’t want the fact that I’m selling my house to be a big item in the newspaper.’”