By Joy Crutch­field
Spe­cial to the News-Capital

What will be the hottest spots for travel in 2007? Where’s the best nightlife? Where can I take Mom and Dad, me and my hus­band, our kids and grand­chil­dren? Where can I go to get away from the crowds? What’s the best value? Is it bet­ter to book early or wait for a last minute sale? What are the new pass­port regulations?

The hottest spots for travel this year, accord­ing to the experts, are Hawaii and Mexico.

Hawaii for two rea­sons:
1) no pass­port nec­es­sary, and 2) Waikiki has great val­ues which com­pare favor­ably to other budget-moderate vacations.

When you’re talk­ing travel, Mex­ico is huge. Puerto Val­larta is going to be even big­ger this year due to the new char­ter out of Okla­homa City begin­ning in May, and Nuevo Val­larta (nine miles of beach with new resorts for every budget).

Can­cun has re-invented itself since the hur­ri­canes and has added “lux­ury” des­ti­na­tion to its definition. There are many new four– and five-star lux­ury prop­er­ties and some are adults only. Palace resorts will be re-opening the Sun and Can­cun Palace (within days), and have built the brand new Le Blanc resort (adults only, lux­ury). Of course for nightlife, Can­cun is still the place to go. Los Cabos will place a close second.

The Riv­iera Maya has devel­oped into a highly desired des­ti­na­tion and for div­ing Cozumel is still the clos­est and the best.European River Cruises are in very high demand. They offer many dif­fer­ent itin­er­aries and you expe­ri­ence a vari­ety of des­ti­na­tions while unpack­ing once and trav­el­ing elegantly.

Cruises are still very favor­able for multi-generational travel. Every age group will be indulged and pam­pered, while vis­it­ing a vari­ety of inter­est­ing ports. And the price can be bud­get to lux­ury. Cruises offer some­thing for everyone.

There are many resorts within a short flight of our area which offer seclu­sion and reju­ve­na­tion. In fact, baby-boomers will be pleased to find many resorts now cater­ing to our need to escape from our fast paced lives. Gourmet restau­rants with healthy menus, spa treat­ments, exer­cise pro­grams. They want us to live longer, health­ier lives and return to spend our travel dol­lars again.

Value is based on your own expec­ta­tions. With the room short­ages of the past two years (due to the tsunami, hur­ri­canes, etc), the days of the $199 Can­cun deal are gone (unless you really want to stay in a hell hole). Hav­ing said that, con­struc­tion is boom­ing in many hot spots and we should see a sta­bi­liza­tion of pric­ing for the next few years.

It is always bet­ter to book early. Due to nat­ural dis­as­ters there sim­ply have not been many “good” last minute deals. And most major ven­dors (Worry-Free and Fun­jet) now offer low-price guar­an­tees. If you wait until the last minute and demand is high, you can pay thou­sands more for your trip. And spring break is never on sale — book it now.

Begin­ning Jan. 23 all air trav­el­ers enter­ing or return­ing to the United States from Canada, Mex­ico, Bermuda, points in the Caribbean or any­where else in the West­ern Hemi­sphere must present pass­ports. The excep­tions are U.S. cit­i­zens return­ing from Puerto Rico or the U.S. Vir­gin Islands, both U.S. Territories.

Trav­el­ers return­ing via cruise ship or by land have been given until June 2009, although there is talk of mov­ing it up to Jan 1, 2008. And what if you are on a cruise, have a fam­ily emer­gency, and have to fly home?

Go to www.travel.state.gov/passport_services.html and down­load the appli­ca­tion. It costs an adult $97 and is good for 10 years, and $82 for a child 15 and younger, good for five years. A new mega cen­ter for pro­cess­ing pass­ports will be open­ing in Arkansas this spring. Right now the gov­ern­ment is officially say­ing it takes six to eight weeks turn around time.There are so many won­der­ful places to expe­ri­ence in 2007, and our area is for­tu­nate to have sev­eral air­ports within a close drive. Get start­ing plan­ning your 2007 dream vaca­tion today.

The pri­mary trend for the Val­larta real estate mar­ket over the past three years has been strong, con­tin­ual growth that has been dif­fi­cult for devel­op­ers, real­tors or buy­ers to keep up with.

It has been dif­fi­cult for devel­op­ers, real­tors or buy­ers to keep up with. It seems that as fast as real estate can be put on the mar­ket it is sold, whether it’s new or resale prod­uct. Demand con­tin­ues to far exceed sup­ply for nearly all home types and regions. This demand has fueled devel­op­ment and con­struc­tion up and down the coast­line. And a very strong trend from last year con­tin­ues: projects are sell­ing a sig­nif­i­cant por­tion of their inven­tory dur­ing pre-construction.

New devel­op­ment is now such a major part of the mar­ket that it has made it increas­ingly dif­fi­cult to estab­lish exactly what the value of the over­all mar­ket place is. Sta­tis­ti­cal infor­ma­tion is avail­able from the local MLS; how­ever, its sales now are esti­mated to encom­pass only 15% of the entire mar­ket. Over the past four years, the num­ber of prop­er­ties in the MLS has failed to increase (and would actu­ally have decreased) if it weren’t for the large num­ber of devel­op­ment prop­er­ties com­ing online. This new prod­uct, how­ever, is not part of the MLS and is cur­rently not being tracked by any asso­ci­a­tion or agency. The only way to know what is actu­ally hap­pen­ing is by talk­ing with devel­op­ers indi­vid­u­ally to get an idea of what their sales have been and adding that to MLS sales. Doing so ear­lier this year for the Puerto Val­larta Real Estate Con­fer­ence showed that over­all sales for the Val­larta region, or Ban­deras Bay, seem to be close to $550 mil­lion USD for 2005, up from nearly $400 mil­lion USD in 2004.

What really shows how the mar­ket­place is per­form­ing is that the first three top real estate offices we vis­ited in May all stated that they had already sur­passed their total sales vol­ume for 2005, and they all had con­sid­ered 2005 to be an excep­tional year. And they did that will less sales, mean­ing the aver­age sales prices had increased significantly.

Why the strong demand for Val­larta real estate?There are many rea­sons for the strong demand, but here’s an inter­est­ing one, expressed by Sil­via Elias of PV Realty: For what a per­son pays in prop­erty taxes alone in Cal­i­for­nia, you can pay the prop­erty taxes and nearly all the oper­at­ing expenses of the home in Vallarta!

We keep refer­ring back to 9/11 as a piv­otal point for our mar­ket. It was a wake-up call for many who, up to that point, had been work­ing very hard. The shock of this event made many decide that they need to get out and enjoy life more, and hav­ing a sec­ond home in a warm place seems to fit well. It would also be inter­est­ing to check whether there was any increase in the num­ber of chil­dren born to afflu­ent cou­ples in there 30s and 40s. There sure seem to be a lot of chil­dren under the age of five at the beach club out at Punta Mita!

The Mex­i­can econ­omy con­tin­ues to do well. The bud­get deficit has been reduced each of the past five years, and they project a bal­anced bud­get for this year with infla­tion below 4%. Eco­nomic growth is strong, and the peso has held its own against the US dollar.

And lastly, the drive has been taken out of the real estate mar­ket to the north in many mar­kets, so investors are look­ing else­where. Mex­i­can real estate in resort des­ti­na­tions is prov­ing to be their new invest­ment grounds.

Trends

More Afflu­ent Buy­er­Many real­tors have reported that their typ­i­cal buyer pro­file is look­ing for a home invest­ment higher than in pre­vi­ous years, regard­less of what pric­ing may be at. A few years ago, the reg­u­lar buyer pro­file was look­ing for a home/condo around $350,000 USD. Today, it’s more like $500,000 USD, dri­ven up first by a buyer who can afford more and, sec­ondly, by increas­ing prices.

Enter “The Player” — The Seri­ous Real Estate Investor

A few years ago, a seri­ous real estate investor told Wayne Franklin of Trop­i­casa Realty that in order to have a seri­ous real estate mar­ket you first have to dou­ble your prices, and then dou­ble your prices again. When the prices get that high because of demand, you start attract­ing a dif­fer­ent type of buyer, a more afflu­ent buyer who doesn’t need financ­ing and is used to pay­ing high prices for their sec­ond or third homes. In Franklin’s esti­ma­tion, we have just passed the first dou­ble and are cer­tainly now attract­ing a more afflu­ent buyer. Along with these buy­ers, we are also attract­ing seri­ous investors and devel­op­ers. Real estate devel­op­ers from pri­mary mar­kets in the USA, such as Phoenix, Las Vegas, south­ern Cal­i­for­nia and Miami, are now seri­ously look­ing for real estate oppor­tu­ni­ties in Val­larta. From Miami, Related Group, the largest Latino devel­op­ers in the United States and respon­si­ble for much of the Miami sky­line, has announced they will be devel­op­ing in Val­larta shortly. As men­tioned ear­lier, these peo­ple arrive hav­ing done their home­work; they know what they want and they know how to develop.

This is cre­at­ing a much more sophis­ti­cated real estate mar­ket­place for Val­larta, which has for many years been built by small-time devel­op­ers. And on a national level, Val­larta is now attract­ing Mex­ico City devel­op­ers who pre­vi­ously have built in Aca­pulco for the Fed­eral Dis­trict com­mu­nity. Acapulco’s mar­ket is now con­sid­ered over­built and just not as attrac­tive a des­ti­na­tion as it has been in years past.

A com­mon phrase expressed by real­tors is that Puerto Val­larta is now “on the map” as far a seri­ous real estate invest­ment glob­ally. It is attract­ing investors from around the world who want to par­tic­i­pate in the strong growth and poten­tial of the marketplace.

Buy­ers are Younger

Although the Baby Boomer con­tin­ues to drive the mar­ket, for the first time we heard real­tors talk­ing about the entry of “Gen­er­a­tion X” buy­ers. A num­ber of these buy­ers are kids of par­ents who already own here and are now get­ting places of their own. They grew up in Val­larta on vaca­tions and are very famil­iar with the des­ti­na­tion, the lan­guage and the cul­ture. But they are also demand­ing. They are knowl­edge­able about the mar­ket­place and want not just a home but a good invest­ment. The prop­erty needs to make sense eco­nom­i­cally, whether that’s through con­tin­ued appre­ci­a­tion or rental income.

Financ­ing: Still a Small Player in the Over­all Market

Most real­tors reported that financ­ing is here but is not yet mak­ing a big impres­sion on the mar­ket, for a num­ber of rea­sons. One is that the process has still not been refined, so it can take a long time to put together. Mean­while, both the buyer and the seller can become very impa­tient. Mort­gage bro­kers, in most cases, are still rather green to the process and haven’t yet had time to set up effi­cient pro­ce­dures. Obtain­ing appraisals quickly is dif­fi­cult, and some real­tors men­tioned mort­gage com­pa­nies com­ing back numer­ous times for more doc­u­men­ta­tion, which they could have or should have asked for in the first place. It was also men­tioned that the mar­ket has been flooded with numer­ous mort­gage bro­kers try­ing to estab­lish them­selves, and not all have proven to be of the cal­iber that real­tors would like or expect. It’s assumed that, as the finan­cial mar­ket matures, the more pro­fes­sional bro­kers will per­se­vere and so will mar­ket effi­cien­cies. Sec­ondly, Val­larta is now attract­ing more afflu­ent buy­ers, who often can afford the home they want with­out hav­ing to look for financing.

Gringo Gulch/El Cerro is Trendy

The down­town area is hot and trendy. Peo­ple are buy­ing up older homes to ren­o­vate or what­ever lots are still avail­able to build. With traf­fic con­ges­tion get­ting worse for Val­larta, the down­town area has the advan­tage that you can park your car at home and walk to many restau­rants and shops. Part of this inter­est has been dri­ven by peo­ple who have been stay­ing at Vallarta’s only down­town bou­tique hotel, Hacienda San Angel. Peo­ple stay there and like the loca­tion, so they look for a home nearby.

South Shore Niche Market

There are fewer and fewer good build­ing lots avail­able in Las Ama­pas and Con­chas Chi­nas, as most have been picked up by devel­op­ers for small con­do­minium projects. The steep ter­rain and lack of large build­ing sites have held back larger con­do­minium devel­op­ers, adding to the unique­ness of this area. The real estate that is avail­able tends to be single-family homes or con­do­minium projects with less than 50 units. Prices have appre­ci­ated sub­stan­tially here, with aver­age con­do­minium prices near­ing $500,000 USD.

Price Appre­ci­a­tion Continues

Demand for High-End Condominiums

Con­do­mini­ums are def­i­nitely becom­ing styl­ish and high end, sought after by an increas­ingly larger por­tion of buy­ers. They want the lux­u­ries and space that usu­ally come only with a home, but they enjoy being able to just lock up their home and leave. This is dri­ving up demand and prices. The first condo sale over $1 mil­lion was just a cou­ple of years ago and, just like when the four-minute mile was bro­ken, now everyone’s doing it. Million-dollar con­dos are becom­ing more com­mon, with the $2 mil­lion bar­rier bro­ken as well for a con­do­minium this year. Three-bedroom con­dos with more than 3,000 square feet of liv­ing area (larger than many aver­age homes) con­tinue to gain in pop­u­lar­ity. And not just in one region, but through­out the bay. Con­dos at Punta Mita basi­cally start a $1 mil­lion USD.

A project in Con­chas Chi­nas, which involved demol­ish­ing an older ocean­front home and build­ing six con­do­mini­ums, saw the first ini­tial sales go for $1.5 and $2.5 mil­lion USD. This price, which works out to nearly $500 per square foot, also reflects recent sales prices for sim­i­lar prop­er­ties on the north shore of the bay. In Ama­pas, which has been the condo-king area for a few years and is expe­ri­enc­ing incred­i­ble devel­op­ment, con­dos that were sell­ing last year for $300,000 USD on aver­age have been pushed up to $450,000, with list­ing pric­ing reach­ing as high as $1.5 mil­lion. Con­dos are still avail­able for as low as $300,000, but this is becom­ing increas­ingly rare.

Price-Comparison Shop­ping

All real­tors spoke about work­ing with more sophis­ti­cated buy­ers, who ask intel­li­gent ques­tions and know ahead of time what they want. They also are com­par­ing pric­ing, not just locally but also with other national mar­kets, such San Miguel de Allende, Can­cun and, most com­monly, Los Cabos. With regard to Los Cabos, prices in many cases are dou­ble those of Val­larta. On a recent “check out the mar­ket” visit to Los Cabos with a few Val­larta real­tors, we saw first­hand the dif­fer­ence in pric­ing. At one high-end devel­op­ment we toured, an ocean-view (over­look­ing three rows of homes), three-bedroom pent­house con­do­minium with 3,400 square feet was priced at $2.5 mil­lion USD. Sim­i­lar con­do­mini­ums, but on the beach at a sim­i­lar devel­op­ment (Punta Mita), recently were sell­ing for around $1.5 mil­lion. That is a sub­stan­tial difference.

Over­whelm­ingly, when asked what their buy­ers were choos­ing, real­tors informed us that when they price com­pare to Cabo, PV wins nearly every time. And it’s not just because of price. Val­larta just has more real estate vari­ety, a larger com­mu­nity with more ser­vices, and the added value of being on the main­land and more acces­si­ble to the rest of Mexico.

US Real Estate Bub­ble Slowdown

There has been a notice­able slow­down in many real estate mar­kets in the USA, and con­cern for how this could effect our local mar­ket. For the most part, this is affect­ing first-time home buy­ers who are find­ing them­selves unable to afford a home now in their mar­ket­place, or first-time home buy­ers who have pur­chased, but now feel the pres­sure of increas­ing inter­est rates and, in some cases, decreas­ing home val­ues. The second-home buyer, how­ever, con­tin­ues to be a strong mar­ket in the USA, as Baby Boomers con­tinue to look for a sec­ond home for fam­ily or retire­ment use.

Vallarta’s mar­ket tra­di­tion­ally has been dri­ven by the sec­ond– or even third-time home buy­ers; there­fore, if there is a real estate bub­ble, it will most likely not be affected. This sen­ti­ment was shared by the major­ity of the real­tors we talked to. Baby Boomers are con­tin­u­ing to retire, they are look­ing for sec­ond homes, and they have the money to make the pur­chase, in many sit­u­a­tions, with­out financing.

One real­tor expressed that their down­turn has been our upturn. Seri­ous investors, dis­cour­aged by high prices and over­build­ing, have left US mar­kets to look else­where. And they aren’t look­ing just in Mex­ico; places such as Costa Rica, Belize and Hon­duras were also men­tioned as places they are look­ing to invest.

Vallarta’s mar­ket con­tin­ues to be pri­mar­ily a “cash” mar­ket, with financ­ing still play­ing a very minor role. Hav­ing peo­ple pay cash and not finance means they own their homes out­right, which fur­ther insu­lates us against any peo­ple “flip­ping” by putting very lit­tle down, hop­ing to sell for more down the line. Hav­ing to pay cash lim­its this type of activity.

Price Appre­ci­a­tion

Appre­ci­a­tion has been a strong trend for the past three years and quite con­sis­tent over the past 15. We are still below com­pet­i­tive mar­kets like Hawaii and Los Cabos, so this trend should con­tinue, espe­cially for beach­front prop­er­ties. The MLS shows that con­do­mini­ums have appre­ci­ated by 14% and homes by 11% annu­ally since 1999.

Local Busi­ness Peo­ple Investing

The increase in real estate devel­op­ment has brought a surge of cash into the com­mu­nity. Local busi­ness own­ers who are part of the ser­vice indus­try are find­ing them­selves with extra cash and, not want­ing to miss out on what’s hap­pen­ing in the real estate mar­ket, are build­ing homes them­selves in part­ner­ship with local con­trac­tors. This is most notice­able in Flu­vial Val­larta, a large residential/commercial devel­op­ment located in front of the Hol­i­day Inn and behind the Plaza Cara­col shop­ping cen­ter, which has seen very strong growth since it began sales last year.

Con­clu­sion

Vallarta’s real estate mar­ket is very active, and all signs seem to indi­cate that this level of activ­ity will con­tinue. Prices are still lower than com­pet­ing mar­kets; buy­ers are buy­ing as quickly as prod­uct comes on the mar­ket, so there’s no over­sup­ply; and the second-home mar­ket con­tin­ues to be one of the most active mar­kets in America.

“Val­larta Lifestyles” would like to thank the fol­low­ing real­tors for their par­tic­i­pa­tion with this arti­cle: Sil­via Elias and David Pullen of PV Realty, Wayne Franklin of Trop­i­casa Realty, Carl Tim­o­thy of Timothy/Fuller y Aso­ci­a­dos, Brock Squire of Punta Mita Prop­er­ties and Sherri Narro of Sherri Narro & Associates.

Sheryl Sal­loum, Spe­cial to the Sun
Pub­lished: Sat­ur­day, Jan­u­ary 13, 2007

Our hec­tic sched­ule allowed for only a 10-day get­away. We wanted to avoid tourist-jammed resorts, and we did not want to rough it. Our travel agent rec­om­mended Buce­rias, Mex­ico, as a safe, tran­quil sojourn. Not expect­ing much in the way of enter­tain­ment in a small town, and not being a sun tan­ner, I packed a thick novel and hoped for the best.

As it turned out, Buce­rias is a charm­ing place with numer­ous arts, cul­tural, and out­door activities.

The vil­lage is about 30 kilo­me­ters north of Puerto Val­larta. The 15-minute taxi drive from the air­port took us along a lack­lus­ter freeway.

But when we turned off and bumped along the uneven cob­bled streets, we dis­cov­ered what one part-time res­i­dent describes as “a mix of the mod­ern and the prim­i­tive.” Large, attrac­tive vil­las with lush veg­e­ta­tion and bril­liantly coloured bougainvil­lea spilling over high fences sit next to ram­shackle struc­tures in over­grown yards.

Dogs laze, out­stretched on the dusty roads. Bananas ready for pluck­ing hang from small palms grow­ing beside the side­walks. Hui­chol Indi­ans in tra­di­tional attire stroll through town, sell­ing their wares. A mag­nif­i­cent, sandy beach runs par­al­lel to Buce­rias and stretches for kilo­me­tres both north and south of the community.

Our small house, booked with Las Pal­mas Vaca­tions, was lux­u­ri­ous, with a pri­vate patio, air-conditioning, wire­less high-speed Inter­net ser­vice, Cable TV and a tele­phone. We also had maid ser­vice, vases of freshly-cut trop­i­cal flow­ers, and a mag­nif­i­cent pool in which sat numer­ous, large coconut palms. Geckos scut­tled across the walls and the occa­sional iguana eyed us.

Besides swim­ming in the pool or the warm waters of the Bay of Ban­deras, we found that Buce­rias is an epicurean’s delight. At The Cochina de Jorge, which is lit­tle more than some tables in a back yard, we had tasty huevos rancheros; at the second-storey Red Apple we watched breath­tak­ing sun­sets; din­ing at Los Hele­chos, the hum­ming­birds flit­ted about while Jesus, the pro­pri­etor, served us sam­ples of his deli­ciously smooth amber-coloured tequila; and at Karen’s we dined on the beach. There are numer­ous other fan­tas­tic restau­rants, such as the renowned Mark’s Bar & Grill, and no mat­ter where we ate, we feasted on seafood and thirst-quenching beer.

Near the zocalo (plaza) we shopped at lit­tle stalls sell­ing leather, pot­tery, jew­elry, woven bas­kets and other crafts. Every Sat­ur­day night the locals swim and then gather in the zocalo to eat from small, impromptu stands, drink beer, lis­ten to music, and visit. As tourists we were wel­comed and, like every­one else, enjoyed the fes­tive atmos­phere. Sun­day morn­ings a mar­ket is held above the busy high­way. There we bought juicy pineap­ples for one dol­lar each, and bags of fresh pro­duce and seafood.

There are also sev­eral pastele­rias, such as Pie in the Sky and Pan­dele­ria, sell­ing mouth-watering desserts and freshly baked breads. At the Cof­fee Cup we sat­is­fied our crav­ings for lattes and cap­puc­ci­nos. The rest of the time we brewed deli­cious full-bodied organic Mex­i­can cof­fee at our casa.

We were delighted to find many intrigu­ing gal­leries and tal­ented artists. Our favourite is The Gale­ria del Sol, run by a retired teacher from Chetwynd. Calum Cameron’s vividly coloured can­vases of Buce­rias sell world­wide. Oth­ers include A Bro­ken Art Mosaic Stu­dio, which fea­tures unique arti­cles made with tiles or bro­ken glass that can be pur­chased ready-made or crafted (in classes) by vis­i­tors like ourselves.

Uniquely designed sil­ver jew­elry can be found at Isabel’s and In Latino. The Cot­ton Shop sells hand­wo­ven bed and kitchen items that are cre­ated while you watch.

For the more adven­tur­ous, there are ATV and dune buggy tours, fish­ing, sail­ing trips, snorkelling and scuba div­ing, horse­back rides along the ocean or into the moun­tains, dol­phin and whale watch­ing, tree-top rides over river or jun­gle canopies, and parasailing.

After 10 days of play­ing in the surf, watch­ing pel­i­cans div­ing for fish, lis­ten­ing to exotic bird calls, eat­ing gourmet meals, con­vers­ing with friendly Mex­i­cans and other tourists, and explor­ing the cul­ture of this rus­tic yet con­tem­po­rary vil­lage, we were sad to leave. Back in the gloom of a Cana­dian win­ter, I am now read­ing my novel — but all my rever­ies are of Buce­rias and my next vaca­tion in that “sleepy lit­tle town.”

Sheryl Sal­loum is a Van­cou­ver writer.

Mon­day, Jan­u­ary 15, 2007

Latin Amer­ica Real Estate: Con­tin­ued Growth

US baby boomers and Euro­pean investors are help­ing spur the mar­ket. But growth and prices are slow­ing down.

BY CHRONICLE STAFF

Despite grow­ing polit­i­cal ten­sion in some coun­tries, the real estate sec­tor in Latin Amer­ica con­tin­ues to see strong growth.

“The fun­da­men­tals of the region con­tinue to be sound, despite some con­cern on the poten­tial col­lat­eral effect of the slow­down in the U.S. real estate mar­ket in other regions of the globe,” says Roge­rio Basso, an ana­lyst at Ernst & Young’s real estate advi­sory ser­vices. “The baby boomer gen­er­a­tion will con­tinue to retire in large num­bers in the next com­ing years and they will have a sub­stan­tial amount of dis­pos­able income avail­able to them. Many of these indi­vid­u­als are look­ing for oppor­tu­ni­ties to pur­chase sec­ond homes that they can use either for vaca­tion or retire­ment pur­poses, and as such Latin Amer­ica will con­tinue to be an attrac­tive proposition.”

Apart from the real estate bro­kers, title insur­ance com­pa­nies like First Amer­i­can are also see­ing strong growth. “We issued more than twice as many title insur­ance poli­cies in 2006 com­pared to 2005 and the insured amount tripled in value,” says Turalu Brady Mur­dock, vice pres­i­dent at U.S.-based First Amer­i­can Title Insur­ance Company.

BETTER THAN U.S.

Basso expects a reduced rate of appre­ci­a­tion in second-home prices in the year ahead rel­a­tive to 2006, but it should still be supe­rior to the United States, thereby attract­ing baby boomers wish­ing to make invest­ments in sec­ond homes in Latin Amer­ica. “Though we should also antic­i­pate a slow down in sales pace, this will be short lived, and will mostly impact the upper-end of the mar­ket,” he says.

In gen­eral, there will con­tinue to be a high level of inter­est for highly-amenitized, branded, beach-front devel­op­ments, accord­ing to Basso.

Mex­ico and Costa Rica are expected to be the main dri­vers behind the growth, due to its prox­im­ity to the United States, Basso says. “Given that a sub­stan­tial amount of demand in the second-home mar­ket is dri­ven by US buy­ers, there should be con­tin­ued inter­est in coastal loca­tions within prox­im­ity to the US,” he says. “Mex­ico and Costa Rica should con­tinue to be in the real estate fore­front, along with other mar­kets in the Caribbean such as Bahamas and the Turks and Caicos. South Amer­ica has yet to explode as a vibrant real estate mar­ket as a result of its dis­tance to the main source mar­ket, the US.” Mex­ico is the top Latin Amer­i­can mar­ket for First Amer­i­can, accord­ing to Murdock.

PANAMA AND NICARAGUA

In Cen­tral Amer­ica, Panama, Guatemala and Nicaragua are see­ing increased real estate activ­ity, Basso points out. “How­ever, the vol­umes are still rel­a­tively small to make them sig­nif­i­cant play­ers in the region,” he says. Nicaragua and Panama are the two fastest-growing mar­kets in Latin Amer­ica out­side of Mex­ico for First American.

In the Caribbean, the Domini­can Repub­lic is devel­op­ing sev­eral projects that are anchored by upscale lodg­ing brands (Westin Rokoki and Cap Cana), and is a place to watch, accord­ing to Basso. The north­east coast of Brazil (Bahia, Per­nam­buco), which fea­tures some of the most beau­ti­ful beaches in South Amer­ica, has seen an increased level of inter­est from Span­ish and Por­tuguese devel­op­ers to develop mixed-use projects, mainly focus­ing on a European-based buyer.Murdock expects Brazil, along with Nicaragua and Panama, to account for her company’s strongest growth in the region this year.

Des­ti­na­tions that do not offer con­ve­nient access to the United States, both in terms of avail­abil­ity of flights and flight length, will not expand their sec­ondary real estate mar­kets, he warns. Coun­tries that already lack a vibrant sec­ond home mar­ket to begin with — for exam­ple Ecuador and Bolivia — will be affected by the slow­down in the United States and increas­ing com­pe­ti­tion else­where, he adds.

DECREASED PRICE AND SALES GROWTH

Over­all, he doesn’t expect any declines in the top mar­kets, but a decrease in appre­ci­a­tion rate and sales pace. “Given the sig­nif­i­cant appre­ci­a­tion in land prices in the past three years, profit mar­gins are reduc­ing,” Basso says. “Buy­ing land now is sig­nif­i­cantly more expen­sive than before…As such, the same project that made sense five years ago may not pen­cil out today.”

Mean­while, the devel­op­ment qual­ity is also chang­ing. “Devel­op­ers are being forced to offer highly-amenitized branded projects to dif­fer­en­ti­ate them­selves from the com­pe­ti­tion,” Basso says. “Although there are sig­nif­i­cant ben­e­fits to this strat­egy (mar­ket­ing, qual­ity of fin­ishes, aware­ness, etc) it also increases devel­op­ment costs. Projects that do not fea­ture these char­ac­ter­is­tics will be at a disadvantage.”

Mort­gage secu­ri­ti­za­tion has helped spur a boom in real estate in Mexico.

BY RONALD BUCHANAN

MEXICO CITY — It may lack the fre­netic activ­ity of Panama or the bargain-basement prices of Argentina, but the Mex­i­can real-estate mar­ket is grow­ing as never before on the basis of the nation’s new-found eco­nomic stability.

The growth is evi­dent in all areas: com­mer­cial, indus­trial, vaca­tion and retire­ment prop­er­ties, and upscale hous­ing, but nowhere more than in low-cost homes. Hill­sides on the roads lead­ing out of the working-class north and east of Mexico’s huge cap­i­tal are pep­pered with hous­ing devel­op­ments. Though rem­i­nis­cent of Pete Seeger’s “lit­tle boxes”, there ends all resem­blance with those of the song. Seeger’s lit­tle boxes were inhab­ited by peo­ple who played golf and drank Mar­ti­nis; those who live in the new postage-stamped sized Mex­i­can houses are for­mer res­i­dents of hard­scrab­ble bar­rios who often face two-hour jour­neys on pub­lic trans­port to reach jobs in the city cen­ter where some earn as lit­tle as $4,000 a year.

They are ben­e­fi­cia­ries of a silent rev­o­lu­tion in Mexico’s cap­i­tal mar­kets — “like elec­tric­ity, you can’t see it, but the lights sure go on,” as one banker said — that led to the con­struc­tion of more than 3 mil­lion low-income homes dur­ing the six-year pres­i­dency of Vicente Fox that ended last Decem­ber. Fox failed in achiev­ing all the headline-grabbing reforms, in energy, labor and taxes, for which inter­na­tional investors were clam­or­ing, but he turned the drought in mortgage-lending that fol­lowed the nation’s 1994–95 eco­nomic col­lapse into a near flood.

A key has been the secu­ri­ti­za­tion of mort­gages, a devel­op­ment launched by spe­cial­ist lender Su Casita; high growth rates have attracted inter­na­tional banks to struc­ture the bonds, and last year Su Casita’s port­fo­lio grew to almost $700 mil­lion. Infon­avit, the gov­ern­ment hous­ing agency, has joined in, but there is still plenty of room for growth: mortgage-backed secu­ri­ties still account for only about 0.2 per­cent of GDP, com­pared with some 10 per­cent in devel­oped economies.

The growth achieved by Fox has inspired his suc­ces­sor, Felipe Calderón, to aim for the con­struc­tion of 1 mil­lion homes a year dur­ing his six-year pres­i­dency — a goal that mar­ket ana­lysts say is well within reach and will mark a huge step for­ward for a coun­try where the hous­ing deficit is reck­oned at 400,000 homes a year.

Mexico’s foreign-owned banks are pitch­ing in. BBVA Ban­comer, the local unit of the Spanish-owned bank, aims to make $6.4 bil­lion in mort­gages and house con­struc­tion loans this year, up from just under $5 bil­lion in 2006. “We want to finance the con­struc­tion of 110,000 homes this year,” Eduardo Osuna, the bank’s mort­gage bank­ing direc­tor, said last week.

Part of that $6.4 bil­lion will be lent by banks acquired by BBVA Ban­comer in Texas and Cal­i­for­nia in recent years. The recip­i­ents will be Mex­i­cans who live and work in the US, as well as the grow­ing gen­er­a­tion of US “baby boomers” seek­ing sec­ond or retire­ment homes — a sec­tor that is attract­ing lenders on both sides of the border.

Don­ald Trump’s $200 mil­lion Trump Ocean Resort Baja Mex­ico has high­lighted a slew of US-financed devel­op­ments in areas such as Baja Cal­i­for­nia and Puerto Peñasco, Sonora (bet­ter known to Ari­zo­nans as “Rocky Point”).

But Span­ish devel­op­ers are active too, par­tic­u­larly on the Riv­iera Maya, around Can­cun. Indeed, buoyed by the strength of the euro, Spain out­stripped the United States in invest­ment in resort areas last year, accord­ing to the gov­ern­ment tourism agency, Fonatur. And some of it landed up in places off the beaten tourist trail, such as the south­east­ern state of Campeche.
The Campeche Playa Golf, Marina and Spa Resort will fea­ture a Greg Norman-designed golf course and apart­ments begin­ning at $230,000. Span­ish devel­oper Grupo Mall is in talks with Euro­pean banks with the aim of secur­ing euro-denominated as well as dol­lar mort­gages for the project.

Mean­while, activ­ity in com­mer­cial and indus­trial real estate is pick­ing up fast as investors cash in on depressed prices that fol­lowed a glut caused by a build­ing boom. By some accounts, “triple A” office space in the Santa Fe sub­urb to the west of Mex­ico City — beset by trans­port prob­lems — is being let for as lit­tle as $15 per square meter a month, though rates in more cen­tral loca­tions range from $21 to $27.

But, while opti­mism remains high fol­low­ing Mexico’s longest period of finan­cial sta­bil­ity of mod­ern times, the hori­zon is not with­out a few storm clouds, not least the price of oil, on which the nation’s gov­ern­ment relies for more than a third of its income.

10 Mex­i­can des­ti­na­tions that are worth the trip

Sat Jan 13 2007
By David Agren
Cana­di­ans love jet­ting south to Mex­ico, but sadly, many stick to their all-inclusive resorts and thus miss the country’s best gems. Here are 10 places worth putting down your mar­garita to discover.

1. Col­ima: A charm­ing state cap­i­tal located less than 40 kilo­me­tres from an active vol­cano. Comala is home to bars on the main square dubbed botaneros where patrons receive a plate of botanas (snacks) with each drink order and mari­achis in gar­ish cos­tumes ser­e­nade the imbibers.

2. The Costa Ale­gre: A strip of Pacific Coast beach towns that offer ameni­ties, low prices, nice beaches and tran­quil­lity. (Costa Ale­gre means Happy Coast in Span­ish.) It’s a nice alter­na­tive to nearby grimy Man­zanillo. The St. Patrick’s week fes­tiv­i­ties in San Patricio-Melaque are one of a kind.

3. Min­eral del Monte: A colo­nial town 100 kilo­me­tres north­east of Mex­ico City once pop­u­lated by Cor­nish min­ers, who imported soc­cer, Cor­nish archi­tec­ture and pasties, which are still served through­out the region. The head­stones in the local Pan­teon de los Ingle­ses (Eng­lish Ceme­tery) read like an Eng­lish tele­phone directory.

4. Papantla: Indulge all things vanilla in the lush region of north­ern Ver­acruz where the fra­grant flavour­ing agent orig­i­nally came from. Be care­ful of buy­ing fake vanilla, though. Jaw-dropping low prices indi­cate a lack of authenticity.

5. Par­ras de la Fuente: Founded in 1597, local land­mark Casa Madero is the old­est win­ery in the Amer­i­cas. Set in an oasis that’s a five-hour drive from the Texas bor­der, the town is a pleas­ant respite from the oppres­sive heat of North­ern Mexico.

6. Patzcuaro: This unpre­ten­tious Michoa­can town is the site of impres­sive Day of the Dead fes­tiv­i­ties each Novem­ber — espe­cially on nearby Jan­i­tizo Island — and a hotbed of indige­nous Purepecha culture.

7. Puerto Escon­dido: Surfers have long descended on this once-remote Oax­aca beach town, which is famous for killer waves and a laid­back vibe. Now pop­u­lar with non-surfing Euro­pean back­pack­ers, since calmer beaches also dot the region.

8. Rio Nexpa: It’s noth­ing more than a few beach-front pala­pas and cabanas just off the thinly trav­elled road from Ixtapa to Man­zanillo. It’s pure, iso­lated bliss and is pop­u­lar in surf­ing cir­cles.
9. Tequila: Yes! There is an actual town called Tequila. And yes! It’s full of dis­til­leries. While not exactly Napa — which local boost­ers want it to become — sip­ping tequila in the town the drink made famous is always fun. A boozy train ride dubbed the Tequila Express runs on Sat­ur­days between Guadala­jara and the Casa Her­radura fac­tory in neigh­bour­ing Amatitan.

10. Zacate­cas: An ex-mining town full of mod­ern art muse­ums, remark­ably pre­served colo­nial archi­tec­ture, a baroque cathe­dral made from pink sand­stone and a lux­ury hotel set in the old bull ring. For enter­tain­ment after dark, dance the night away at a club inside the old Eden Mine or par­tic­i­pate in a calle­joneada (street party), which is usu­ally led by a don­key laden with jugs of mezcal.

David Agren is a free­lance jour­nal­ist based in Guadala­jara, Mex­ico. He’s vis­ited each of these des­ti­na­tions at least once over the past five years.

– Can­West News Service