High net-worth con­sumers rated Christie’s Great Estates the most pres­ti­gious real estate com­pany in the 2008 Lux­ury Brand Sta­tus Index (LBSI) sur­vey from the inde­pen­dent New York City-based Lux­ury Institute.  Respondents who would rec­om­mend Christie’s Great Estates  say they have “high-end prop­er­ties,” “exclu­sive list­ings,” “great cus­tomer ser­vice,” and an “excel­lent reputation.” Sotheby’s Inter­na­tional Realty was rated a very close sec­ond and Cor­co­ran group was rated third.

“This year, even lux­ury real estate is fac­ing major chal­lenges,” said Mil­ton Pedraza, CEO, the Lux­ury Insti­tute. “In these crit­i­cal moments, wealthy con­sumers are look­ing for the most expert and trust­wor­thy real-estate brands and agents to han­dle their trans­ac­tions. Our sur­veys are con­ducted with inde­pen­dent pan­els of wealthy con­sumers, tab­u­lated by third party ana­lysts, and are the purest expres­sion of the voice of high net-worth consumers.”

Fol­low­ing are the 10 real-estate com­pa­nies rated by wealthy con­sumers (alpha­bet­i­cal order)

 1. Cen­tury 21 Fine Homes and Estates

 2. Christie’s Great Estates

 3. Cold­well Banker Pre­views International

 4. Cor­co­ran Group

 5. ERA Inter­na­tional Collection

 6. GMAC Ele­gant Homes

 7. Pru­den­tial Real Estate

 8. RE/MAX

 9. Sotheby’s Inter­na­tional Realty

10. Weichert Cap­i­tal Prop­er­ties and Estates

The pro­pri­etary Lux­ury Brand Sta­tus Index (LBSI) sur­vey is the only mea­sure of the pres­tige of lead­ing brands among wealthy Amer­i­cans. A national sam­ple of 1,666 wealthy Amer­i­can con­sumers was sur­veyed online. The aver­age income was $348K and aver­age net-worth was $3.7 mil­lion. The LBSI asks respon­dents to rate brands along four “pil­lars” of brand stature:

–  Con­sis­tently supe­rior quality

–  Unique and exclusive

–  Social sta­tus as a prod­uct con­sumed by peo­ple who are admired and

    respected

–  Self enhance­ment, in that the brand makes the con­sumer “feel special”

    across all aspects of the cus­tomer experience

In addi­tion, the sur­vey also mea­sures three key “out­come” met­rics, which are com­pared to the cat­e­gory LBSI:

–  Wor­thi­ness of a sig­nif­i­cant price premium

–  Will­ing­ness to rec­om­mend the brands to peo­ple they care about and why,

       or why not

–  Brand pref­er­ence as the brand most likely to be con­sid­ered the next

      time a pur­chase is made

A new fea­ture is the ques­tion, “What is the one thing you would change about each brand, besides price, if you could?”

Sur­vey results are weighted to match demo­graphic and net-worth pro­files accord­ing to the lat­est Sur­vey of Con­sumer Finances from The Fed­eral Reserve.

Mex­i­can mega-magnate Car­los Slim is the owner of the Telé­fonos de Méx­ico (Telmex)/Tel­cel/América Movil tele­coms empire, and many other busi­nesses under the umbrella of his Grupo Carso.

Is Car­los Slim also the rich­est man in the world?

That’s what For­tune mag­a­zine reported this past August – based on the value of Slim’s hold­ings as of July.  For­tune esti­mated Slim’s for­tune at US$68 bil­lion, thus sur­pass­ing Bill Gates’ for­tune of US$58 billion.

Forbes mag­a­zine, on the other hand, releases its bil­lion­aire list every March. Last March Bill Gates was still listed as the rich­est. So in 3 months we can see what Forbes has to say.  (The 2007 Forbes list reported 946 bil­lion­aires in the world.)

Com­par­ing the wealth of bil­lion­aires is dif­fi­cult, because exchange rates and stock val­u­a­tions are con­stantly changing.  Thus, proper account­ing pro­ce­dures require the com­par­i­son to be based on the rank­ings of all the bil­lion­aires on one sin­gle day, which is what For­tune does each year.

Then again, when you’re talk­ing about this kind of money – what’s a bil­lion here or there? – it’s unde­ni­able that Car­los Slim is one of the wealth­i­est men in the world.

To look at Slim’s wealth in another way, it equals 7% of Mexico’s annual eco­nomic out­put.  The assets of John D. Rock­e­feller, in his hey­day, equaled about 2.5% of the annual U.S. eco­nomic output.  

And Slim is not Mexico’s only bil­lion­aire, there are nine oth­ers. They are Alberto Bailleres (Peñoles, Pala­cio de Hierro), Ricardo Sali­nas (TV Azteca, Grupo Sali­nas), Jeron­imo Arango (Walmex), Emilio Azcar­raga (Tele­visa), Roberto Her­nan­dez (Banamex, now part of Cit­i­group ), Maria Asun­cion (Grupo Mod­elo), Isaac Saba (Casa Saba), Lorenzo Zam­brano (Cemex), and, at US$1.6 bil­lion the “poor­est” of the lot, Car­los Slim’s first cousin Alfredo Harp (Banamex, Avan­tel and the Dia­b­los Rojos base­ball team).

As for beer heiress Maria Asun­cion, not only is she Mexico’s rich­est woman, she’s the 31st rich­est woman in the world.  She recently mar­ried none other than Tony Garza, U.S. ambas­sador to Mex­ico (and George W. Bush crony).

So Mex­ico has ten bil­lion­aires, plus plenty of millionaires.

There’s a lot of money at the top, and it pro­vides a def­i­nite con­trast with Mex­i­can poverty.

Not that Mex­ico is excep­tion­ally poor by world stan­dards. Mex­i­can GDP is higher than world GDP.  And the coun­try ranks a rather respectable #53 on the UN’s Human Devel­op­ment Index (HDI), even beat­ing out some east­ern Euro­pean countries.

On the other hand, Mex­i­can income inequal­ity is quite pro­nounced, which bears with it poten­tial for social unrest.

Mexico’s over­whelm­ing expo­sure to the United States encour­ages Mex­i­cans to con­stantly com­pare their econ­omy with that of the United States. Most coun­tries in the world are poorer than Mex­ico, yet it’s rare for a Mex­i­can to point that out.  The fact that Mex­ico is more pros­per­ous than Guatemala is true, but irrel­e­vant to most Mexicans.

Is it bad that Car­los Slim is one of the world’s rich­est men, and that Mex­ico has nine bil­lion­aires and many mil­lion­aires?  Should their wealth be con­fis­cated and every­body made equal?

Well, how well does that sort of scheme work? Even com­mu­nist coun­tries were never able to forge com­pletely egal­i­tar­ian soci­eties – for one thing, the party appa­ratchiks were bet­ter off than the masses.

In the real world, dif­fer­ent peo­ple pos­sess dif­fer­ent abil­i­ties and inter­ests and per­form dif­fer­ent func­tions in society.

Nev­er­the­less, you don’t have to be a com­mu­nist to see that vast chasms between the rich and poor can be dan­ger­ous, espe­cially if its econ­omy can’t cre­ate enough good jobs.

The riches of Car­los Slim (and other Mex­i­can plu­to­crats), if uti­lized prop­erly, could be real assets for Mex­ico – if they were cre­at­ing lots of jobs for the Mex­i­can people.

How­ever, despite all Car­los Slim’s wealth, polit­i­cal con­nec­tions and near-monopolies, the man they call “King Midas” is not too effi­cient at cre­at­ing jobs for his fel­low Mex­i­cans.  All of Car­los Slim’s enter­prises com­bined only employ a quar­ter of a mil­lion [250,000] Mex­i­cans. That’s rather pathetic, when you think about it.

On the other hand, Wal-Mart de Méx­ico mostly put together by Jeron­imo Arango (who only has US$4 bil­lion plus) employs 1.7 mil­lion Mex­i­cans in Mex­ico, mak­ing it the nation’s largest pri­vate sec­tor employer.

Clearly, Car­los Slim could do a lot more to gen­er­ate employ­ment in Mex­ico. That would be much more impor­tant than going up or down a few notches on the annual Forbes bil­lion­aire list.

Forbes mag­a­zine recently pub­lished its annual list of bil­lion­aires. The 2008 list is based on the bil­lion­aires’ net worth on Feb­ru­ary 11^th, 2008.

Accord­ing to Forbes, the world’s wealth­i­est man is Berk­shire Hath­away investor War­ren Buf­fet, at US$62 bil­lion. In sec­ond place is Mex­i­can tele­coms tycoon Car­los Slim, at US$60 bil­lion. In third place is Bill Gates, with US$58 billion.

In cal­cu­lat­ing such wealth, a lot depends on how much each man’s stock is cur­rently worth.  In August of 2007, For­tune mag­a­zine had actu­ally named Slim as the world’s rich­est man.

Still, when you’re talk­ing about this kind of money what’s a bil­lion here or there?  Accord­ing to Forbes, only a measly US$2 bil­lion sep­a­rates Buf­fet and Slim, and Slim and Gates.

In Mex­ico, a coun­try in which about half the pop­u­la­tion lives under the poverty line, where the per capita income is less than US$7,000.00, Forbes lists ten bil­lion­aires. Let’s take a brief look at each.

At US$60 bil­lion, Car­los Slim is by far the rich­est Mex­i­can.  The man known as “King Midas,” or “The Engi­neer,” really made it into the big leagues back in 1990 when he bought Telmex (Telé­fonos de Méx­ico) dur­ing Pres­i­dent Car­los Sali­nas’ pri­va­ti­za­tions (though many would call them crony cap­i­tal­iza­tions).  Telmex con­trols over 90% of Mexico’s land­lines.  Slim also has Tel­cel (which con­trols almost 80% of the Mex­i­can cel­lu­lar phone mar­ket) and América Móvil, Latin America’s biggest wire­less provider.

But Car­los Slim is not lim­ited to telecom­mu­ni­ca­tions and related indus­tries. This guy sells every­thing, and it’s doubt­ful that any res­i­dent of Mex­ico can escape putting more money in his already volu­mi­nous pock­ets.  Slim has a bank, an air­line, depart­ment stores, restau­rants and music out­lets.  Slim sells insur­ance, auto parts, and ceramic tile.  The Mex­i­can gov­ern­ment pays Slim to con­struct roads, water treat­ment plants, petro­leum plat­forms, etc.

All of Slim’s hold­ings put together equal 6.3 per­cent of Mexico’s entire annual eco­nomic output.

The second-richest Mex­i­can (and the world’s 85^th rich­est man) is Alberto Bailleres, chair­man of Indus­trias Peñoles, the huge met­al­lur­gi­cal com­pany that refines gold, lead and zinc.  Bailleres also has stock in the lux­ury depart­ment store El Pala­cio de Hierro, and in insurance.

At US$7.3 bil­lion, the third-wealthiest Mex­i­can is lum­ber and min­ing mag­nate Ger­man Lar­rea Mota-Velasco of Grupo Méx­ico. This com­pany mines zinc, sil­ver and lead, and has been helped by the ris­ing price of cop­per.  This gen­tle­man also con­trols Mexico’s biggest railroad.

Ricardo Sali­nas Pliego is worth US$6.3 bil­lion.  Sali­nas Pliego runs the Grupo Elek­tra retailer and the TV Azteca net­work. Sali­nas Pliego is tak­ing on Slim head to head with his mobile car­rier Une­fon, and he has opened his own bank as part of the Elek­tra chain which mostly serves low-income clients.  Elek­traalso sells Chi­nese cars.  

Jeron­imo Arango is the fifth-richest Mex­i­can, worth US$4.3 bil­lion.  Arango’s fam­ily busi­ness was the Bodega Aur­rerasuper­mar­ket chain, part of Grupo Cifra, which sold out to Wal-mart and became Wal-mart de Méx­ico (Walmex). Arango also owns real estate.

Isaac Saba Raf­foul, worth US$2.1 bil­lion, runs Grupo Casa Sabawhich mar­kets health, phar­ma­ceu­ti­cal and beauty prod­ucts. Saba also part­ners with Tele­mu­ndo to pro­duce telen­ov­e­las.

Roberto Her­nan­dez is the seventh-wealthiest Mex­i­can, and he is worth US$1.7 bil­lion.  Her­nan­dez was CEO of Banamex when that bank sold out to Cit­i­group, for which he serves as a direc­tor. Her­nan­dez also owns resorts on the Yucatan Peninsula.

Emilio Azcar­raga Jean is worth US$1.6 bil­lion, and runs media giant Grupo Tele­visa, famous for, among other things, its telen­ov­e­las that the com­pany is now mak­ing ver­sions of in Chinese.

Worth US$1.6 bil­lion, Alfredo Harp Helu is Car­los Slim’s cousin. Like Her­nan­dez, Harp made big bucks off the Cit­i­group sell-out, and also owns the Mex­ico City Red Dev­ils base­ball team.

Mexico’s tenth-richest man, Lorenzo Zam­brano, is head of cement giant Cemex, which is, by the way, the biggest cement com­pany oper­at­ing in the U.S.A., and one of the world’s biggest.

There may well be other Mex­i­can bil­lion­aires who don’t report all their earn­ings, or hide assets in hold­ing com­pa­nies.  But these are the ten Mex­i­can bil­lion­aires rec­og­nized by Forbes mag­a­zine in March of 2008.

Is it bad that Mex­ico has bil­lion­aires?  Not nec­es­sar­ily.  Their wealth, after all, is an asset that can be uti­lized in pro­vid­ing more jobs.  With this said how­ever, I think all ten of these bil­lion­aires could do much bet­ter at gen­er­at­ing employ­ment for their fel­low Mexicans.

The Mex­i­can proverb “when Uncle Sam sneezes, Mex­ico catches a cold” is still a tru­ism despite ini­tial sug­ges­tions to the con­trary in the August 2006 LA Times arti­cle titled “Mex­i­can Resorts Show No Sign of Catch­ing U.S. Housing’s Cold.” Cer­tainly the US real estate econ­omy has greatly affected the per­spec­tive of US buy­ers when they con­sider coastal prop­erty in Baja Cal­i­for­nia, Mex­ico. The fact is that for many the recent with­er­ing of their home equity and other financ­ing options means that coastal prop­erty south of the bor­der is no longer some­thing that they can consider.

Yet there is still a large group of Baby Boomers who do have the resources to take action, but mar­ket uncer­tain­ties have most of them in a hold­ing pattern.

I am fre­quently asked by those with the resources to make a pur­chase, “Don’t you think that they are over build­ing real estate inven­tory in Baja?” My answer is always a qual­i­fied “No, there is not a prob­lem of excess inven­tory in Baja.” That is because Baja Cal­i­for­nia sim­ply is not close to being over­built but there are impor­tant con­sid­er­a­tions that the casual vis­i­tor does not see.

My answer that Baja Cal­i­for­nia is not over­built is usu­ally counter intu­itive to the thought process of inter­ested buy­ers who have the liq­uid assets to pur­chase. When they review the web, when they open the local tourist news­pa­per, and as they drive all along the coast­line they see signs offer­ing noth­ing but inven­tory, inven­tory, and more inventory.

In the sur­face level analy­sis of poten­tial buy­ers, well-heeled devel­op­ers came down to take advan­tage of the boom a few years ago only to find them­selves hit by the drop in the US econ­omy. That sim­ple analy­sis of theirs is only par­tially cor­rect. This wave of upstart devel­op­ers has been called the phe­nom­e­non of “two guys with a cell phone.” Devel­op­ers and investors did come down to take advan­tage of the boom and the US econ­omy is hav­ing a big impact on their busi­ness plans.

How­ever, the secret beyond the view of casual observers is that the local devel­op­ers are sim­ply not well-heeled. Most are not com­ing to build with tens of mil­lions of dol­lars in their pock­ets. The vast major­ity are highly depen­dent upon buyer deposits to com­plete. So, no, we don’t risk being over­built with excess inven­tory. Our area runs the high risk of over com­mit­ting. In other words, most of our Baja Cal­i­for­nia real estate inven­tory isn’t real, it’s vir­tual. It’s ethe­real. It’s air! (Or a few steel gird­ers in the air.)

This is a major con­trast to the Miami, Florida condo mar­ket where some devel­op­ers are drop­ping prices over 20% to move units in large tow­ers that are already com­plete. The Baja sit­u­a­tion is beyond the solu­tion of a fur­ni­ture or upgrade incen­tive worth $50,000 to encour­age some­one to move in next month. The fact is that most of our Baja Cal­i­for­nia inven­tory does not exist! The devel­op­ers are wait­ing for buyer deposits, credit is harder to come by than ever for them, and so there the land and sales offices sit. This vir­tual inven­tory has lit­tle rela­tion­ship to the prices of real, exist­ing inventory.

The impor­tance of under­stand­ing this phe­nom­e­non is that it helps poten­tial buy­ers dis­tin­guish illu­sion from real­ity and focus their hard-earned dol­lars on moti­vated devel­op­ers and sell­ers of exist­ing real estate made of brick, block, steel, and stone. When we elim­i­nate the vir­tual inven­tory, we are left with the much sim­pler choice of find­ing those sell­ers that have real life events that require that they sell. Moti­vated sell­ers are sell­ing their prop­er­ties at prices sim­i­lar to one-and-a-half to two years ago.

These are the deals going on in Baja Cal­i­for­nia. Real, moti­vated sell­ers with liv­able homes and real buy­ers who rec­og­nize a deal when they see one. Elim­i­nat­ing the vir­tual inven­tory and unre­al­is­tic sell­ers clears the mar­ket for the busi­ness to con­tinue at a much mod­er­ated rate and keeps real prices in check. It also keeps buy­ers focused on options that bet­ter pro­tect their invest­ment by deliv­er­ing title imme­di­ately instead of wait­ing years with deposits in play.

With hous­ing val­ues falling all over Amer­ica, many savvy investors have turned their atten­tion to real estate south of the bor­der. There are already approx­i­mately one mil­lion Amer­i­cans liv­ing abroad in Mex­ico who have tapped into the poten­tial for appre­ci­a­tion in this young mar­ket. Many trends sug­gest con­tin­ued growth in the mar­ket, includ­ing 70+ mil­lion retir­ing baby boomers, an attrac­tive cli­mate and a grow­ing econ­omy. Before you jump head-first into Mex­ico real estate, there are some impor­tant things you need to know. This arti­cle will go over some of the required steps you will need to take to safely pur­chase prop­erty in Mexico.

Try Before You Buy

If you plan to make the prop­erty your first or sec­ond res­i­dence, you should spend time expe­ri­enc­ing life in that area. You may deter­mine that the com­mu­nity, loca­tion and infra­struc­ture lack what you need to live com­fort­ably. If it is an older prop­erty, have a third-party inspec­tor exam­ine it for issues that could jeop­ar­dize your investment.

Set up a Fideicomiso

The Mex­i­can con­sti­tu­tion restricts for­eign­ers from own­ing land 50 km from the coast or 100 km from inter­na­tional bor­ders. How­ever the gov­ern­ment recently amended the con­sti­tu­tion to encour­age for­eign invest­ment by allow­ing for­eign­ers to own restricted land through a 50-year bank trust called a fide­icomiso. Sev­eral major Mex­i­can banks can set up a fide­icomiso for you for a rel­a­tively low set-up and annual main­te­nance fee. A fide­icomiso will legally grant you the same own­er­ship rights of a Mex­i­can cit­i­zen, except that the bank tech­ni­cally holds the title. This means you are free to inhabit, sell, lease, ren­o­vate or bequeath the property.

Use a Third Party Escrow

Never give earnest money to an agent or seller, unless you don’t expect to get it back. Instead hire a major U.S. title com­pany that pro­vides escrow ser­vices to hold your money and trans­fer it to the seller only when they have met their obligations.

Buy Title Insurance

A title search will be per­formed by the notario pub­lico, a gov­ern­ment lawyer who is required to review doc­u­men­ta­tion of a real estate trans­ac­tion. How­ever, this pro­vides no guar­an­tee that the seller can legally sell the prop­erty to you. Title insur­ance com­pa­nies can pro­vide you insur­ance in the form of a con­tract of indem­nity, mean­ing the title com­pany will take on the lia­bil­ity if the title turns out to be invalid or if there are legal claims on the prop­erty by creditors.

Hire an Inde­pen­dent Attor­ney to Rep­re­sent You

It is highly rec­om­mended to hire an English-speaking Mex­i­can attor­ney who will work with the seller’s agent to draft the legal doc­u­men­ta­tion to include the agree­ment of sale. Real estate agents in Mex­ico are not required to be licensed to sell real estate and because con­tracts are drafted in Span­ish you may unknow­ingly sign some­thing you don’t under­stand. It would be wise to have an attor­ney to rep­re­sent your inter­ests and guide you through the proper legal processes.

New num­bers from the U.S. State Depart­ment reveal that close to one mil­lion Amer­i­cans are cur­rently liv­ing in Mex­ico, most of them retirees. With the low cost of Man­zanillo, Nuevo Val­larta and Puerto Val­larta homes, more and more US cit­i­zens are see­ing the ben­e­fits of retire­ment in Mex­ico. The afford­able cost of liv­ing cou­pled with new laws that make it eas­ier for Amer­i­cans to pur­chase real estate has made Mex­ico the greener pas­ture many retirees are look­ing for.

This new data on the num­ber of Amer­i­cans liv­ing in Mex­ico is quite star­tling. Nearly nine per­cent of all Social Secu­rity recip­i­ents in the United States are spend­ing their ben­e­fits on retire­ment in Mex­ico. Pop­u­lar pur­chases include Man­zanillo real estate, Nuevo Val­larta con­dos and Puerto Val­larta homes. Since these are com­mon vaca­tion spots, many Amer­i­cans are already famil­iar with the areas and there are more stores and con­ve­nient ser­vices geared towards Amer­i­can tourists.

The team at Latin Amer­i­can Home Invest­ment par­tially attrib­utes this shift towards retire­ment in Mex­ico to the recent revi­sions of Mex­i­can law which make it eas­ier for for­eign­ers to pur­chase real estate. Now it’s pos­si­ble for Amer­i­cans to pur­chase beau­ti­ful Puerto Val­larta homes right on the beach, as long as they use a “fide­comiso,” or bank trust. It has also become eas­ier for Amer­i­can cit­i­zens to obtain home loans in Mex­ico. An increas­ing num­ber of mort­gage com­pa­nies based in the United States now lend money to Amer­i­cans buy­ing real estate south of the border.

Amer­i­cans liv­ing in Mex­ico have been most suc­cess­ful when they’ve done their research about the city they’re plan­ning on liv­ing in and enlisted the help of a real estate pro­fes­sional who under­stands the area, accord­ing to Latin Amer­ica Real Estate. Real estate agents who are bilin­gual and famil­iar with Mex­i­can trans­ac­tions are the best choice. There are also some good mar­ket­ing com­pa­nies that can help buy­ers to learn more about var­i­ous resort com­mu­ni­ties that are per­fect for retire­ment in Mexico.

About Latin Amer­i­can Home Investment:

Liv­ing in Latin Amer­ica is becom­ing more pop­u­lar than ever before. An array of choices between com­mu­ni­ties, cities and land devel­op­ers has come with that pop­u­lar­ity. Latin Amer­i­can Home Invest­ment has built a home for com­mu­ni­ca­tion, input and sug­ges­tions for the best and worst Latin Amer­i­can Real Estate Oppor­tu­ni­ties. Their goal is to assist those seek­ing to retire, invest and relo­cate to Latin America. 

Latin Amer­i­can Home Invest­ment pro­vides access to basic relo­ca­tion and pur­chas­ing infor­ma­tion for:

• Aca­pulco — Mexico
• Argentina
• Baja Cal­i­for­nia — Mexico
• Belize
• Cabo San Lucas — Mexico
• Can­cun — Mexico
• Cen­tral Mexico
• Costa Rica
• Guatemala
• Man­zanillo — Mexico
• Mayan Riv­iera — Mexico
• Mex­i­can Riviera
• Nicaragua
• Panama
• Puerto Val­larta — Mexico.

Star­wood Capital’s lat­est oppor­tunis­tic fund, Star­wood Global Oppor­tu­nity Fund VIII, has received $100 mil­lion (€63 mil­lion) in com­mit­ments from two US pen­sion funds.

The $15.8 bil­lion Teach­ers’ Retire­ment Sys­tem of Louisiana (TRSL) approved a $75 mil­lion com­mit­ment to Fund VIII at its July invest­ment com­mit­tee meet­ing last week, deputy chief invest­ment offi­cer Phil Grif­fith told PERE. A spokesman for the New Mex­ico Pub­lic Employ­ees Retire­ment Asso­ci­a­tion con­firmed the pen­sion had also approved a $25 mil­lion com­mit­ment to the Star­wood vehicle.

Last year, the Star­wood fund also received a $50 mil­lion com­mit­ment from Penn­syl­va­nia State Employ­ees’ Retire­ment Sys­tem in a follow-on invest­ment. Star­wood closed its pre­vi­ous global oppor­tu­nity fund, Fund VII, on $1.5 bil­lion in 2005.

The invest­ment by New Mex­ico was one of a trio of pri­vate equity and real estate funds to get com­mit­ments from the $13 bil­lion pub­lic pen­sion plan. The Santa Fe-based pen­sion also com­mit­ted $35 mil­lion to Quan­tum Energy Part­ners V and $30 mil­lion to Selene Part­ners Res­i­den­tial Mort­gage Oppor­tu­nity Fund. Quan­tum V is a pri­vate equity fund that invests in energy explo­ration and pro­duc­tion, while Selene Part­ners is a dis­tressed whole loan mort­gage pri­vate equity fund.

Feb­ru­ary 5^th is Mex­i­can Con­sti­tu­tion Day, com­mem­o­rat­ing the day it was signed – Feb­ru­ary 5^th, 1917.

Nowa­days, the offi­cial obser­vance is on the first Mon­day in Feb­ru­ary, which in 2008 is Feb­ru­ary 4^th – today!  That means my school is closed today.

Both the Mex­i­can and the U.S. Con­sti­tu­tions are prod­ucts of the cul­tures which pro­duced them and the times in which they were drafted.

The U.S. Con­sti­tu­tion was drafted in 1787, with the Bill of Rights added in 1791.  It was a prod­uct of the Anglo-American polit­i­cal tra­di­tion, incor­po­rat­ing prin­ci­ples which had been devel­op­ing in Eng­land since medieval times, the polit­i­cal expe­ri­ences of the colo­nial and inde­pen­dence peri­ods in the U.S., and other influ­ences the drafters incor­po­rated.  It was designed for a repub­lic with a lim­ited government. 

The Mex­i­can Con­sti­tu­tion was drafted in the early 20^th cen­tury, as a result of the Mex­i­can Rev­o­lu­tion.  The gov­ern­ment envis­aged in the Mex­i­can Con­sti­tu­tion is an activist state, ded­i­cated to bring­ing about social jus­tice among its citizens. 

The Mex­i­can Con­sti­tu­tion is longer than ours, for which there are sev­eral reasons.                 

The Mex­i­can Con­sti­tu­tion spells out in detail many legal prin­ci­ples, includ­ing the respon­si­bil­i­ties of local gov­ern­ments.  For exam­ple, it stip­u­lates that the gov­ern­ment of a munici­pio (more or less equiv­a­lent to a county) has to oper­ate a slaugh­ter­house for livestock.

Mex­ico has a Euro­pean civil law sys­tem, with the greater need to spell out legal prin­ci­ples in the Con­sti­tu­tion. The U.S. has an Eng­lish com­mon law sys­tem, in which legal prin­ci­ples are dealt with in judi­cial precedents.

Legal guar­an­tees in the U.S. Con­sti­tu­tion are much more lim­ited – basi­cally they are the rights to expres­sion (press, reli­gion, speech, and peti­tion), the right to bear arms, and basic legal rights of the Anglo-American legal system.

The Mex­i­can Con­sti­tu­tion stip­u­lates sim­i­lar rights, but also guar­an­tees that Mex­i­cans have the right to a good job and decent housing.

How­ever, as sub­se­quent Mex­i­can his­tory has shown, just decree­ing rights doesn’t make them a real­ity!  But since they are in the Mex­i­can Con­sti­tu­tion, the demand for them does exist.

The right to bear arms is part of the U.S. Bill of Rights, and it is also guar­an­teed in the Mex­i­can con­sti­tu­tion (Arti­cle 18). Nev­er­the­less, over the years gun rights have been severely restricted. Need­less to say, this hasn’t pre­vented crim­i­nals from bear­ing arms, includ­ing rocket launch­ers and grenades, as recent car­tel vio­lence shows so well.

The Mex­i­can Con­sti­tu­tion rec­og­nizes free­dom of reli­gion, but puts more restric­tions on churches and the clergy than does the U.S. Con­sti­tu­tion.  Until recently, cler­gy­men weren’t allowed to vote and they still can­not run for office. 

The Mex­i­can Con­sti­tu­tion spells out the rights and duties of Mex­i­can cit­i­zens, and non-Mexicans resid­ing in Mex­ico. This was a result of the var­i­ous for­eign inter­ven­tions in Mex­i­can his­tory. For­eign­ers are for­bid­den from get­ting mixed up in Mex­i­can pol­i­tics. Arti­cle 33 stip­u­lates that for­eign­ers who vio­late this prin­ci­ple can be expelled from Mex­ico, and this hap­pens from time to time.  As a for­eigner resid­ing in Mex­ico myself, I honor this prin­ci­ple and don’t get mixed up in Mex­i­can politics.

Arti­cle 25 of the Mex­i­can Con­sti­tu­tion des­ig­nates the Mex­i­can gov­ern­ment as the “rec­tor” of national devel­op­ment. That means the gov­ern­ment is respon­si­ble for the econ­omy.  Arti­cle 26 stip­u­lates that the gov­ern­ment plan the econ­omy.  Thus, the more social­ist ori­en­ta­tion of the Mex­i­can econ­omy is spelled out in its Constitution.

Arti­cle 27 stip­u­lates that all nat­ural resources are the prop­erty of the Mex­i­can nation, and Arti­cle 28 for­bids monop­o­lies with the excep­tion of gov­ern­ment monop­o­lies.  This is the con­sti­tu­tional basis of PEMEX, the state oil monopoly.

Mex­i­can agri­cul­tural law has its basis in Arti­cle 27, which spells out the max­i­mum sizes for farms.

Both con­sti­tu­tions have been amended, though it’s much eas­ier and faster to do so in Mex­ico. In the Mex­i­can Con­sti­tu­tion, amend­ments are made by chang­ing the sec­tion that is to be mod­i­fied.  Amend­ments to the U.S. Con­sti­tu­tion are added in a sep­a­rate sec­tion that fol­lows the orig­i­nal document.

The Mex­i­can Con­sti­tu­tion has been amended nearly 500 times since 1917, whereas the U.S. Con­sti­tu­tion only has 27 amend­ments, and 10 of them, called col­lec­tively the Bill of Rights, were added at the same time.

To under­stand either the U.S. or Mex­ico, one must take into account its con­sti­tu­tion. Not that either coun­try com­pletely fol­lows its respec­tive con­sti­tu­tion, but it’s the nec­es­sary ref­er­ence point in under­stand­ing its polit­i­cal sys­tem and a great deal more.  

When pur­chas­ing real estate in any part of Mex­ico, it is impor­tant for buy­ers to know their “Bill of Rights.” Most grin­gos ven­ture into the coun­try in search of a lit­tle piece of par­adise with­out fully under­stand­ing the rights that they have as for­eign­ers. They hope for processes that will give them real estate pro­tec­tions that they are used to at home, but they often find some­thing quite different.

In an effort to stan­dard­ize buyer rep­re­sen­ta­tion and dis­clo­sure by real estate agents, a new reg­istry of real estate agents has been cre­ated in Baja Cal­i­for­nia, Mex­ico, called Baja Fair Trade. The pur­pose of the reg­istry is to bet­ter serve buy­ers and to pro­mote real prop­erty rights by increas­ing trans­parency through a stan­dard­ized dis­clo­sure database.

Baja Fair Trade agents rec­og­nize the spe­cial con­cerns that buy­ers have once they visit Baja Cal­i­for­nia, with its unique processes, laws, and cul­ture. The Registry’s focus is to help them obtain the real prop­erty rights that the buy­ers came to buy in the first place. The agents com­mit to pro­mote prop­er­ties that allow com­plete funds escrow and that are con­trac­tu­ally con­tin­gent upon a clean title. They also dis­close sig­nif­i­cant, known issues that may affect prop­erty val­ues using the first such data­base in Baja Cal­i­for­nia. Reg­istry par­tic­i­pants may be mem­bers of any asso­ci­a­tion and must make spe­cific dis­clo­sures to their clients in the cur­rent absence of objec­tive fed­eral, state, local, or asso­ci­a­tion dis­clo­sure requirements.

Notably, Baja Fair Trade is the only reg­istry of real estate agents that opens itself to pub­lic and media scrutiny. As well, buy­ers who feel that one of the agents on the Reg­istry has not met the stan­dards of the pro­gram can notify the com­mit­tee via the Praise and Com­plaints tab on the home page.

Reg­istry par­tic­i­pa­tion is open to bro­kers and all of the agents under­neath them, or to indi­vid­ual agents who do not have a bro­ker spon­sor. The Reg­istry is inde­pen­dent of real estate agency or asso­ci­a­tion and pro­motes escrow, title insur­ance, debts that are man­aged as mort­gages, prop­erty inspec­tions, and pro­fes­sional clos­ing services.

Any real prop­erty shown by a Baja Fair Trade agent should meet cer­tain stan­dards. The Baja Fair Trade agent dis­closes fac­tors that may affect a buyer’s pur­chase deci­sion, such as the risks asso­ci­ated with skip­ping steps, envi­ron­men­tal haz­ards, prop­erty inva­sions, law­suits and dis­putes, and other known fac­tors that may impact prop­erty val­ues to the buyer.

Baja Fair Trade stan­dards pro­hibit cer­tain refer­rals for com­pen­sa­tion. An agent may not receive com­pen­sa­tion for refer­ring cus­tomers to an escrow agent, struc­tural pest con­trol firm, home pro­tec­tion com­pany, title insurer, escrow com­pany, or title com­pany. The rela­tion­ship of the buyer’s agent to the seller (if any) must be dis­closed along with the method and amounts of the agent’s commissions.

Sev­eral tools have been estab­lished that will allow Baja Fair Trade agents to share and exchange infor­ma­tion. Using Google Earth and Google Groups, a down­load­able dis­clo­sure form will be made avail­able to par­tic­i­pat­ing agents regard­less of their other affil­i­a­tions and will serve as a cen­tral data­base. The access to this infor­ma­tion is an invalu­able tool to the per­for­mance of proper dis­clo­sures to buyers.

Work­ing with a Baja Fair Trade agent will help pro­tect buy­ers and open doors to crit­i­cal infor­ma­tion once held in private.

The Mex­i­can coast­line from Baja Cal­i­for­nia to Can­cun is dot­ted with beau­ti­ful devel­op­ments and spec­tac­u­lar devel­op­ment pro­pos­als that offer in-house financ­ing to real estate buy­ers. This type of financ­ing can be attrac­tive for buy­ers when they are deal­ing with rep­utable devel­op­ers who are finan­cially sound. Yet in the some­times shaky world of Mex­ico real estate there are risks involved to some in-house financ­ing, but those risks can be managed.

Finan­cially strong sell­ers usu­ally offer in-house financ­ing for three basic rea­sons. First, it can be an effec­tive mar­ket­ing tool to reach poten­tial buy­ers that might not oth­er­wise qual­ify for a loan through US sources, or who don’t want to affect their credit the USA. Also, it allows the seller to offer flex­i­ble, cus­tomized loan terms that com­mer­cial lenders can’t match. Finally, it can dif­fer­en­ti­ate a finan­cially sound seller from a smaller com­peti­tor who does not have ade­quate cash to do their own financing.

Amer­i­can buy­ers using their cul­tural assump­tions may believe that opt­ing for in-house financ­ing is just a sim­ple cost/convenience deci­sion. The in-house loans are eas­ier to set up than any of the com­mer­cial loans. Some in-house rates are now only slightly above the com­mer­cial loan rates and up-front clos­ing costs tend to be lower. Yet there is a down­side to some in-house financ­ing offered in Mex­ico that should cause buy­ers to stop and think carefully.

There is no prob­lem with in-house financ­ing pro­vided that the seller is finan­cially sound, with money to cover expenses and cash flow. The chal­lenge is that the buyer doesn’t really know the seller’s finan­cial con­di­tion. In fact, most buy­ers are not aware of the true con­di­tion of the property’s title. There are cases where devel­op­ments offer in-house financ­ing because they know that the prop­erty can­not actu­ally qual­ify for a loan from a com­mer­cial lender. There­fore, buy­ers must ensure that the financ­ing doc­u­ments pro­tect their interests.

I rec­om­mend that buy­ers do the following:

1. Deter­mine whether the prop­erty still qual­i­fies for a reg­u­lar com­mer­cial loan, even if the buyer actu­ally intends to use in-house financ­ing. The deal should be made con­tin­gent on the prop­erty qual­i­fy­ing for a com­mer­cial loan at clos­ing. Include a con­tract clause that allows the buyer to receive a com­plete refund, and be freed from fur­ther oblig­a­tions, if the prop­erty doesn’t qual­ify. If the prop­erty can’t qual­ity for a com­mer­cial loan because of title prob­lems or per­mit­ting issues, this is a major red flag.

2. Con­trac­tu­ally treat the in-house financ­ing just like a nor­mal Mex­ico mort­gage (hipoteca) at clos­ing, instead of a sim­ple promis­sory note. This will require a full clos­ing before a Mex­i­can notary in order to ensure that the buyer’s loan pay­ments reduce the loan prin­ci­pal and increase the buyer’s equity in the prop­erty. This is crit­i­cally impor­tant. All com­mer­cial loans are han­dled as mort­gages against the prop­erty, whereas some in-house pro­grams don’t deliver title (i.e. rights to the prop­erty) until the buyer fully pays the note. This is a major difference.

3. Look for pre-qualified devel­op­ments that have already part­nered with com­mer­cial lenders. The fact that the seller is “pre-qualified” is not a guar­an­tee of future loans by the com­mer­cial lender, but is indica­tive of some pre­vi­ous research by the lender. Even if there is already a lender rela­tion­ship, it is still impor­tant that the con­tract terms require the seller to main­tain the property’s eli­gi­bil­ity for com­mer­cial lending.

4. Seek other signs of seller finan­cial strength, such as will­ing­ness to accom­mo­date full escrow of deposits until deliv­ery, per­for­mance bonds, or voucher control.

5. Be par­tic­u­larly care­ful of a doc­u­ment called a pagaré, which is a promis­sory note. If the buyer does not have pos­ses­sion of the unit, such as in the case of a pre­con­struc­tion con­tract, they have not received any­thing in exchange for the promise to pay. The buyer has no con­trol over when the prop­erty will be deliv­ered. But, they have just signed a sep­a­rate con­tract to make pay­ments, often on a pre­de­fined date. If the buyer reads the doc­u­ments care­fully they may even dis­cover that the promis­sory note con­tains no ref­er­ences to the sales con­tract or deliv­ery of the unit. In other words, if the seller never deliv­ers the unit or the title, the buyer could still be oblig­ated to pay.

Using these tips to ana­lyze in-house financ­ing options will help buy­ers in Mex­ico find the path to a reward­ing coastal investment.

Some Devel­op­ers Hold­ing Off Build­ing or Scal­ing Down

Although it is dif­fi­cult to estab­lish to what degree at this time, it is becom­ing appar­ent that some devel­op­ers are either putting their project(s) on hold, or releas­ing in phases, because of the slow­down in the mar­ket. In 2007 there were 50 new real estate devel­op­ments that were announced. Some of these projects didn’t actu­ally break ground, but “tested the waters” by mak­ing an announce­ment and then tak­ing pre­lim­i­nary orders or ini­tial deposits of small amounts. Some of these devel­op­ments that have not seen the response they were hop­ing for, can still hold off build­ing or even can­cel the project(s). Oth­ers have decided to re-evaluate the time­frame for the project, putting it out over a longer period of time, and/or releas­ing in phases. At the end of 2008 we will be con­tact­ing devel­op­ments to find out exactly what each project decided upon and what their plans are for 2009.

This can be seen as good news, as most likely the inven­tory for new real estate prod­uct is not as large as once estimated.

We’ve been writ­ing these arti­cles for the past five years — five excep­tional years, where the real estate mar­ket expe­ri­enced rapid growth, appre­ci­a­tion and demand. In last year’s arti­cle, We reported that a down­turn seemed to be approach­ing. Today, while updat­ing and writ­ing this report, there is no doubt that the mar­ket has slowed and the USA is most likely in reces­sion. 

Is there good news out there? I believe so. We feel that this is just a minor mar­ket down­turn for Val­larta, a switch from being a seller’s to a buyer’s mar­ket, and will be only tem­po­rary. Val­larta is fun­da­men­tally a strong mar­ket with a lot to offer second-home buy­ers. Although it’s been some­what of a roller coaster up to this time, a slow­down can be a wel­come trend, allow­ing infra­struc­ture to catch up with pri­vate growth, although most devel­op­ers would beg to differ!

Tran­si­tion from Seller’s to Buyer’s Market

Between 2002 and 2007, Puerto Val­larta expe­ri­enced an incred­i­bly active mar­ket, cer­tainly a seller’s mar­ket, as any­thing that came onto the mar­ket sold. The lat­ter half of 2007 was a time of tran­si­tion, as sales slowed down but inven­to­ries con­tin­ued to increase. The MLS inven­tory grew, and new devel­op­ment projects con­tin­ued to come online. At the halfway mark of 2008, the num­ber of prop­er­ties listed in MLS has sta­bi­lized over the past six months. And for the first time in five years, we are not see­ing the announce­ment of new devel­op­ments. Some have even scaled back their project, put it on hold if they haven’t bro­ken ground yet, or decided to release units in phases rather than all at once.

Dur­ing the past five years, there was a sense of urgency on the part of prospec­tive pur­chasers in many devel­op­ments. This is gone, for the most part. Buy­ers are tak­ing their time before mak­ing a deci­sion. In most cases, unless developers/owners start dis­count­ing, the unit will still be on the mar­ket next month, so they don’t have to make an imme­di­ate buy­ing decision. 

This, then, has com­pleted the tran­si­tion from a seller’s to a buyer’s mar­ket. How long will it last? It is my per­cep­tion that this is just a minor mar­ket adjust­ment. The US credit cri­sis will pass, and the US elec­tion will (finally) end, but in the mean­time, Cana­di­ans and Mex­i­cans will con­tinue to buy real estate. The fun­da­men­tals and the advan­tages of Vallarta’s real estate mar­ket are still there. That hasn’t changed. In some cases, as in the rise in the price of oil, these fun­da­men­tals actu­ally become stronger, as we men­tion in this article.

US Credit Melt­down, Shoul­der Year with US Election

The pri­mary rea­sons for this slow­down have been the eco­nomic credit melt­down in the United States that started over a year ago, as well as the fact that this is an elec­tion year. It seems that there is still some cor­rect­ing needed in the eco­nomic and credit mar­kets. Hope­fully, by the time the elec­tion is over at the end of the year, the worst of this credit cri­sis will also be over. 

This all began with the now infa­mous sub-prime mort­gage crash in the USA, some­thing Mex­ico missed because there is no exist­ing sub-prime mort­gage indus­try, since the mort­gage indus­try is rel­a­tively young. Nonethe­less, the US crash affected real estate tourism in Mex­ico indi­rectly. Although many peo­ple were pur­chas­ing in “cash,” they fre­quently were using funds obtained from the equity in their US homes, through re-mortgaging, sec­ond mort­gages or home equity loans. It still remains to be seen how this will play out in Mex­ico for Amer­i­cans who refi­nanced and then begin to expe­ri­ence neg­a­tive equity in their US homes. The way home prices have been falling, this will cer­tainly hap­pen to some recent pur­chasers, espe­cially in states such as Cal­i­for­nia, which has tra­di­tion­ally been a strong mar­ket for Val­larta homebuyers.

Cana­dian Pur­chases Increasing

The Cana­dian dol­lar has been on par with the US dol­lar for the bet­ter part of a year. The Cana­dian econ­omy is healthy. The province of Alberta, rich in oil sands, has expe­ri­enced strong growth, espe­cially with the rise in the price of oil. Many real­tors and devel­op­ers say they are sell­ing to Cana­di­ans much more today than they have in the past. Tra­di­tion­ally, Cana­di­ans have tended to pur­chase in the mid­dle to lower end of the mar­ket, but real­tors are report­ing sales at all price points. Cana­di­ans have money, and many of them are Baby Boomers look­ing for a warm place to have a sec­ond home. 

Val­larta looks attrac­tive, since this city has tra­di­tion­ally been a favorite with Cana­di­ans. Addi­tion­ally, other strong Mex­i­can mar­kets, such as Los Cabos and the Can­cun region, are viewed by many as mere exten­sions of Cal­i­for­nia or Miami Beach. Cana­dian pur­chasers tend to pre­fer a “more Mex­i­can” des­ti­na­tion. And as the slo­gan for this city goes, Puerto Val­larta is where “Mex­ico comes alive.” This is an advan­tage Val­larta has over other des­ti­na­tions, and it will cer­tainly help real estate sales in our area as the Amer­i­cans resolve their eco­nomic prob­lems and work through their election.

National Buy­ers

It is not just the Cana­dian econ­omy that has done well. Mexico’s econ­omy has also shown strong growth over the past few years and, along with Canada, has not expe­ri­enced the credit cri­sis that the USA has. The Mex­i­can mort­gage mar­ket is not overex­tended and is still in its infancy, mort­gages just recently becom­ing avail­able for Mex­i­cans to pur­chase real estate. 

Val­larta is a strong mar­ket for res­i­dents of Guadala­jara (sec­ond largest city in Mex­ico) and “El Bajio” (indus­trial heart­land of Mex­ico). Riv­iera Nayarit and Puerto Val­larta are the clos­est beach des­ti­na­tions for these two large urban regions. This is some­thing that the other two strong tourism real estate des­ti­na­tions, Los Cabos and Can­cun, lack. They don’t have a national mar­ket to draw from, since they are far from major Mex­i­can cities, and one needs to fly to get there, for the most part. 

An inter­est­ing national trend is that INFONAVIT, the Mex­i­can government’s hous­ing pro­gram, which offers financ­ing for national home­buy­ers, has recently become involved in the second-home mar­ket. Tra­di­tion­ally, they have only offered financ­ing for pri­mary home­buy­ers; how­ever, they are now tap­ping into the demand from middle-income Mex­i­cans who would like a sec­ond home at the beach. Homex, a very large home­builder in Mex­ico, whose stock is traded on the New York Stock Exchange, recently started offer­ing tourism real estate prod­ucts as well.

As the Amer­i­can pur­chaser has pulled back, Mex­i­can pur­chasers, along with Cana­di­ans, have con­tin­ued to be buy­ers for this region. This will cer­tainly help Val­larta weather this slow­down bet­ter than other des­ti­na­tions, as was the case in the slow­downs in 1995 and 2001. Puerto Val­larta is a more diver­si­fied mar­ket, draw­ing from national, Cana­dian and US buyers.

High End, Low End and Whole­sale Prop­er­ties Are Strong

Real­tors and devel­op­ers are report­ing that the upper side of the high end of the mar­ket is still rel­a­tively strong, as is the demand for lower-end prop­er­ties. It’s the “in-between range” from $250,000 to $2 mil­lion USD that has been most affected, obvi­ously a large part of the mar­ket. Devel­op­ers that saw this com­ing, and there were a few, made changes to their prod­uct offer­ings by deliv­er­ing a lower-priced prod­uct and are still sell­ing rel­a­tively well. At the higher end, over $2 mil­lion, sales have never been as active, and that is a high price point for Val­larta. Although sales activ­ity is still rel­a­tively strong, any sense of urgency is no longer applicable.

Real­tors who work with large, raw land tracts say they are busy and that there is strong demand for this prod­uct. Pur­chasers of land are think­ing more long term and con­sid­er­ing what will hap­pen once the cur­rent down­turn in the US econ­omy ends. When the mar­ket picks up again, they intend to be ready. This pos­i­tive trend con­tin­ues to take place, since very large investors are extremely bull­ish about Mex­ico and this region for the future.

Need for Admin­is­tra­tors and Prop­erty Managers

All the real estate that has come onto the mar­ket dur­ing the past five years has been a boon for the home dec­o­ra­tion indus­try, since all these homes and con­do­mini­ums come unfur­nished. The num­ber of fur­ni­ture out­lets has increased dra­mat­i­cally, as has the demand for inte­rior designers. 

Another growth sec­tor, often over­looked, has been the need for qual­ity, pro­fes­sional prop­erty man­agers and admin­is­tra­tors. The tra­di­tional con­do­minium build­ing in Val­larta was a rel­a­tively no-frills oper­a­tion, with rel­a­tively few ameni­ties and ser­vices offered, admin­is­tra­tors being basi­cally book­keep­ers with some main­te­nance expe­ri­ence. Today, many con­do­minium devel­op­ments are being sold with rental pro­grams, spas and busi­ness cen­ters, etc. Thus, the admin­is­tra­tion of these prop­er­ties has become much more com­plex and demand­ing than ever before. Just the sheer num­ber of new projects alone has cre­ated a strong demand for good administrators. 

This is an impor­tant and inte­gral part of the buy­ing process and affects the over­all sat­is­fac­tion and hap­pi­ness level of new home­buy­ers in Val­larta. Many will only be here part of the year, and they want to know their unit will be taken care of while they are gone and every­thing will be work­ing prop­erly when they return. And those who have cho­sen to rent out their unit need to be sure the units are ready for arriv­ing renters. 

Many devel­op­ments pre­fer to sep­a­rate com­mon area and pri­vate area demands and expenses. The admin­is­tra­tor of the HOA con­cen­trates on the com­mon areas. This has cre­ated a demand for prop­erty man­agers, who take care of the needs of the indi­vid­ual own­ers. Rather than being onsite, like the admin­is­tra­tor, they are off­site and often take care of units in mul­ti­ple projects. It is not uncom­mon to have four or five prop­erty man­agers work­ing in one par­tic­u­lar project, each attend­ing to the needs of indi­vid­ual own­ers. Their duties range from fun­da­men­tal ser­vices, such as mak­ing sure every­thing is func­tion­ing well when the owner arrives, to full rental ser­vice, which includes pick­ing up or meet­ing the renter, sup­ply­ing food pro­vi­sions, and orga­niz­ing ser­vices such as mas­sages, tours and activ­i­ties. The indus­try has had to learn to find a way for these two enti­ties to work together. Again, both are essen­tial for a healthy real estate mar­ket. 

Admin­is­tra­tors now need to be much more expe­ri­enced in all facets of prop­erty man­age­ment (com­mon areas), be bilin­gual and func­tion in many ways more like a hotel man­ager than a tra­di­tional con­do­minium admin­is­tra­tor. This has cre­ated a demand for highly qual­i­fied peo­ple in the industry.

Devel­op­ments: What’s Your Unique Sell­ing Feature?

This was men­tioned in last year’s trends arti­cle, but is even truer today. With so many new devel­op­ments under con­struc­tion, there have never been so many options and choices avail­able. This is going to make it more dif­fi­cult for devel­op­ers, since they need to have an edge on the com­pe­ti­tion or their units aren’t going to sell, or at least not as quickly as they would like. We have seen devel­op­ers offer­ing extended short-term financ­ing and spe­cial prop­erty ameni­ties, such as gyms and spas, club­houses, even a new vehi­cle with the pur­chase of a home or condo!

These ameni­ties can cer­tainly sweeten the deal, but it really comes down to who can best offer the style of life, the “lifestyle,” that prospec­tive pur­chasers are look­ing for. Peo­ple want more than a condo or home; they want spe­cial ser­vices that tra­di­tion­ally were only avail­able at a lux­ury hotel. In-project concierges are becom­ing pop­u­lar and very appeal­ing for home­own­ers who are only using their prop­er­ties for short peri­ods of time. The concierge can arrange restau­rant rec­om­men­da­tions and reser­va­tions, as well as tours and activ­i­ties. Per­son­al­ized ser­vice is becom­ing more and more impor­tant. It’s not just about the home or condo any­more; much more is taken into con­sid­er­a­tion. Some projects are offer­ing this type of ser­vice in-house or con­tract­ing it out.

High-end hotels noticed this trend early, and many are now offer­ing a real estate option on their prop­er­ties. The Four Sea­sons at Punta Mita has the Four Sea­sons Vil­las and frac­tional own­er­ship, and the new St. Regis also will have real estate avail­able. Smaller bou­tique devel­op­ers, such as El Banco, are offer­ing a sim­i­lar pack­age of a bou­tique hotel with upscale real estate and the option of hav­ing all the ser­vices the hotel has to offer. It’s a strong trend, and I sus­pect we will be see­ing a lot more of this going forward.

Oil Prices?

How does the price of oil affect real estate tourism? The price of this com­mod­ity is cer­tainly going to affect the cost of fly­ing. Peo­ple are going to be look­ing for places closer to home where the cost to visit fre­quently won’t affect them as much. That could be a place within the USA or, at least, close by, such as Puerto Val­larta. The increase in the price of oil will have a greater effect on recently emerg­ing real estate tourism mar­kets, such as Panama, Costa Rica and South Amer­i­can coun­tries. Thus, the rise in oil prices can actu­ally be seen as a pos­i­tive for Val­larta. Again, being so close to major US mar­kets, and being the clos­est alter­na­tive out­side of the USA for Cana­di­ans, is a great advan­tage for Mexico.

Infra­struc­ture Catch-up Time

Any­time you have the growth we have expe­ri­enced in Val­larta for a pro­longed period of time, infra­struc­ture will be strained and have a dif­fi­cult time keep­ing pace. Cur­rently, there is work being done to estab­lish a strate­gic town plan, one that has gone through many changes over the years as the region con­tin­ues to evolve but needs to be final­ized and put into action. 

There are plans cur­rently in place on a state and fed­eral level to improve the high­way sys­tem in Nayarit to the north lead­ing into Val­larta and to the south to Costale­gre. A per­iférico, or by-pass around the city, is also planned. This would elim­i­nate traf­fic that is just pass­ing through Val­larta and would also alle­vi­ate traf­fic con­ges­tion along the South Shore for neigh­bor­hoods such as Con­chas Chi­nas and fur­ther south to Mis­maloya, ulti­mately becom­ing a sec­ondary road, pri­mar­ily for peo­ple who live in this region. Improve­ments in high­ways to the north and south will also make access to devel­op­ing regions eas­ier. Sayulita, San Pan­cho and Lo de Mar­cos would all be within an hour’s drive, and Costale­gre will be ready for future devel­op­ment. There is already major work being done on the road from El Tuito to the coast. With the by-pass, high­way improve­ment and this road, the Costale­gre coast­line would be only an hour from the air­port. Unfor­tu­nately, this isn’t really a trend, as most of this, except for the road from El Tuito to the coast, is just in the plan­ning stage. Hope­fully, before the mar­ket picks up again, these much needed projects will be well underway.

Need for Indus­try Conciliation

At the Val­larta Lifestyles Real Estate Con­fer­ence in May, there was much dis­cus­sion regard­ing how the real estate indus­try needs to become more united, to work with all rel­e­vant mar­ket sec­tors. Devel­op­ers and real­tors need to work together and under­stand each other’s wants and needs, prob­lems and chal­lenges. As men­tioned, pro­fes­sional man­age­ment and admin­is­tra­tion is essen­tial for a healthy mar­ket. Pur­chas­ing real estate doesn’t end with a sale; in many respects, it just begins. Peo­ple want their invest­ments to be taken care of and at a higher level of man­age­ment than has been tra­di­tion­ally asked for. This is a demand that needs to be met, and real­tors and devel­op­ers need to work with this sec­tor to ensure their clients will be taken care of. 

Thus, there are three vital enti­ties in the equa­tion: devel­op­ers, real­tors and admin­is­tra­tors. Cur­rently, they are work­ing inde­pen­dently, for the most part. Although there is an asso­ci­a­tion of real­tors (AMPI) and one for admin­is­tra­tors, there is noth­ing for real estate devel­op­ers. And there def­i­nitely is not enough dia­logue between these three stake­hold­ers. For the indus­try to be healthy and suc­cess­ful, this needs to be addressed. Whether this will be accom­plished through AMPI (prob­a­bly the most log­i­cal solu­tion) or via a new entity remains to be seen. 

Per­haps with a slow­down in the mar­ket, real­tors, devel­op­ers and admin­is­tra­tors will have the time to address these issues. As a united indus­try, they could work on issues such as mar­ket­ing and pub­lic rela­tions for pro­mot­ing the indus­try and region as a whole, lob­by­ing local gov­ern­ments regard­ing devel­op­ment issues, and pro­vid­ing ongo­ing train­ing and edu­ca­tion for both real­tors and prop­erty administrators. 

Pri­mary Ben­e­fits and Advan­tages Still Strong

Although 2008 will cer­tainly be slower than 2007, the prospects for 2009 are good. The fun­da­men­tals for Puerto Val­larta and Nayarit’s real estate mar­ket are still there, and they offer strong advan­tages with excel­lent ben­e­fits. I think they are worth going over once again.

1. Val­larta is well posi­tioned geo­graph­i­cally for Amer­i­can, Cana­dian and Mex­i­can second-home buyer mar­kets. It’s easy to get here, with ser­vice from major air­lines in just a few hours.

2. Vallarta’s weather is excep­tion­ally good, offer­ing tem­per­ate waters, mild tem­per­a­tures and sun most of the year, with rain con­cen­trated pri­mar­ily in the off season.

3. Baby Boomers, their wealth and the trans­fer of their parent’s wealth to their bank accounts are still a real­ity, and look­ing for a sec­ond home some­where warm is a pri­or­ity high on their list.

4. The cost of liv­ing is still well below that of the USA or Canada, and prop­erty taxes are much less expensive.

5. Although prices have risen over the past five years, pro­vid­ing strong appre­ci­a­tion, local prices are still com­pet­i­tive with other beach des­ti­na­tions. And Val­larta offers a wide range of pric­ing and prod­uct avail­abil­ity, with every­thing from $100,000 USD con­do­mini­ums to $5 mil­lion USD homes. There are houses, con­dos, town­houses and frac­tion­als sit­u­ated on the beach, hill­side, golf course, marina, down­town or on an iso­lated stretch of coast­line. The vari­ety of pro­duc­tion, loca­tion and pric­ing can­not be matched.

One of Mexico’s hottest new vaca­tion des­ti­na­tions is quickly estab­lish­ing an out­stand­ing rep­u­ta­tion for excel­lence. The 2008 AAA Travel Guide has awarded its cov­eted Five-Diamond Award to two resorts in the area and the Four-Diamond Award to three other hotels. Three Nayarit restau­rants also earned the Four-Diamond designation.

“AAA’s Dia­mond Rat­ing Sys­tem is the most respected lodg­ing and restau­rant rat­ing sys­tem in the indus­try,” said Tony Per­rone, Regional Man­ager, AAA National. “The Four & Five Dia­mond Awards are only given to estab­lish­ments that are of supe­rior and excep­tional ser­vice and stan­dards oth­er­wise they would not have achieved a Four or Five Dia­mond rating”.

The 2008 AAA win­ners in the resort/hotel cat­e­gory in Riv­iera Nayarit include:

Four Sea­sons Resort Punta Mita – Five Dia­monds Grand Velas All Suites & Spa Resort – Five Dia­monds Grand Mayan – Four Dia­monds Val­larta Palace – Four Dia­monds Casa Las Brisas – Four Diamonds.

In addi­tion, three restau­rants made the 2008 Four Dia­mond list, Luca and Piaf, in the Grand Velas Resort, and Ara­mara at the Four Seasons.

An esti­mated 0.2 per­cent of the thou­sands of estab­lish­ments reviewed typ­i­cally receive AAA’s Five Dia­mond Award and only 3 per­cent achieve Four Dia­mond sta­tus. In Mex­ico, AAA rated 581 lodg­ings and 642 Restaurants.

More about the Nayarit winners:

Four Sea­sons Resort Punta Mita (Bahia de Banderas)

Four Sea­sons Resort Punta Mita offers an unpar­al­leled lux­ury within the 1,500-acre master-planned Punta Mita Resort devel­op­ment. Opened in Sep­tem­ber 1999, the prop­erty includes 141 guest rooms and 32 suites housed in quaint Mexican-style casitas. Ameni­ties include two exquis­ite pool areas, a Jack Nicklaus-designed cham­pi­onship golf course with eight ocean-side holes and the world’s only nat­ural island green, the full-service Apuane Spa, four out­stand­ing restau­rants, ten­nis courts, the com­pli­men­tary Kids For All Sea­sons pro­gram and a cul­tural cen­ter that cel­e­brates Riv­iera Nayarit’s rich her­itage and tra­di­tions. Its Ara­mara Restau­rant was also awarded a Four Diamond.

Grand Velas All Suites & Spa Resort (Nuevo Vallarta)

The beach­front Grand Velas All Suites & Spa Resort, located just 15 min­utes north of Puerto Val­larta on Ban­deras Bay, a mem­ber of The Lead­ing Hotels of the World, offers trav­el­ers a deluxe all-inclusive expe­ri­ence with its 267 ocean-view suites, many with plasma tele­vi­sions, Gilchrist & Soames toi­letries and orig­i­nal works of art. The newest addi­tions are six Ambas­sador Grand Class Spa Suites and the two-bedroom and three-bedroom Impe­r­ial Spa Suites with more than 3,285 square feet of liv­ing space includ­ing steam room, Jacuzzi and 50-minute in-suite mas­sage per per­son; an ocean­front ter­race with large Jacuzzi; din­ing and liv­ing areas; and per­sonal but­ler, maid and bar­tender. Grand Velas is proud of its two Four Dia­mond restau­rants, Luca and Piaf.

Grand Mayan (Nuevo Vallarta)

The Grand Mayan, a mem­ber of the Mayan Resort prop­erty, fea­tures 360 spa­cious rooms com­plete with its own pri­vate Jacuzzi, and offers suites in a vari­ety of sizes rang­ing from the 438 square foot, Grand Mas­ter Room to the 1,249 square foot, Grand Mas­ter Suite. Guests enjoy the 18 hole par 71 golf course as well as water sports and the Brio Spa and Fit­ness Cen­ter. The hotel offers two restau­rants and four bars, each dis­tinct in design and cuisine.

Val­larta Palace (Nuevo Vallarta)

The all-inclusive 348-room Val­larta Pal­lace offers deluxe guest rooms most with ocean views, dou­ble Jacuzzis, turn­down ser­vice and 24-hour room ser­vice. Rooms are also equipped with mar­ble baths, sep­a­rate shower and tub, Farouk® bath ameni­ties and dig­i­tal safes (lap­top size). The hotel offers four restau­rants includ­ing Bugam­bil­ias, spe­cial­iz­ing in Mex­i­can cui­sine, Mar Intimo offer­ing Ital­ian dishes, the Brazil­ian inspired La Fiesta and Asian dishes at ele­gant MoMoNo­Hana; and four bars. The resort also pro­vides two large out­door swim­ming pools, two out­door Jacuzzis, a children’s pool, a dive pool for scuba div­ing demon­stra­tions and lessons, beach vol­ley­ball court, ten­nis court, half-court bas­ket­ball, seven-hole pitch and putt golf, fit­ness cen­ter, sauna and steam bath and beauty salon.

Casa Las Brisas (Punta Mita)

Casa Las Brisas, offer­ing eight suites, is located on a small, lovely bay in the Punta Mita area of Riv­iera Nayarit. An inti­mate villa set­ting, it fea­tures a tra­di­tional ambiance of tile floors, patios and wooden bal­conies. The rooms are ele­gantly fur­nished, with large, bright bath­rooms and pri­vate bal­conies with ocean views, tile floors and patios, thatch and tile roofs and guayaba wood bal­cony detail­ing. Offer­ing a swim­ming pool, spa and gym ser­vices, and a com­mon room for enter­tain­ment, includ­ing TV, DVD’s and VCR, Casa Las Brisas is par­tic­u­larly noted for its out­stand­ing restaurant.

RIVIERA NAYARIT, Mex­ico — On its first anniver­sary as Mexico’s newest offi­cial travel and tourism des­ti­na­tion, Riv­iera Nayarit is cel­e­brat­ing a record of impres­sive achieve­ment in the devel­op­ment of new facil­i­ties, infra­struc­ture, travel pack­ages and tours, and world class hotels and resorts. Even as they look for­ward to con­tin­ued growth, Nayarit offi­cials expressed plea­sure and sat­is­fac­tion with recent public/private ini­tia­tives and accomplishments.

“In just a year, Riv­iera Nayarit has begun to estab­lish itself inter­na­tion­ally as one of Mexico’s newest and most in-demand des­ti­na­tions. We have become a pop­u­lar year-round tourism des­ti­na­tion demon­strated by the high aver­age occu­pan­cies our hotels and resorts enjoy,” said Marc Mur­phy, direc­tor of the Riv­iera Nayarit Con­ven­tion & Vis­i­tors Bureau. “This is the result of major invest­ment by gov­ern­ment but also because of a remark­able joint effort by the pub­lic and the pri­vate sec­tors, includ­ing world-class inter­na­tional brands, to com­mit to this excep­tion­ally beau­ti­ful and unspoiled region on the Pacific Coast. We are not going to rest on our lau­rels though and we look for­ward to improv­ing our prod­ucts and cre­at­ing new cre­ative pro­grams to attract trav­el­ers to Riv­iera Nayarit.”

Riv­iera Nayarit is the New “Hot” Spot — Achieve­ments & New Developments

Nayarit enters into its sec­ond year as the fourth high­est tourism des­ti­na­tion in Mex­ico in cap­tur­ing invest­ment, includ­ing a 12.5 per­cent increase in 2007. Over $350 mil­lion was com­mit­ted to 35 projects spread across sev­eral areas, includ­ing Bahia de Ban­deras, Nuevo Val­larta, Punta Mita, Litibu and Flamin­gos. Almost three-quarters of the invest­ment is from inter­ests in Mex­ico and 10 per­cent from Amer­i­can companies.

Since 2005, the Mex­i­can gov­ern­ment has invested $1.5 bil­lion in tourism facil­i­ties and infra­struc­ture in the des­ti­na­tion, includ­ing a major new high­way sys­tem under con­struc­tion. While the major­ity of hotel devel­op­ment in Nayarit is by Span­ish brands, high-level Amer­i­can brands cur­rently in the mar­ket or planned for the future include: St. Regis, Four Sea­sons, Hyatt and Capella.

New prop­er­ties and facil­i­ties that have opened since the brand was announced last year include:

* 400-slip lux­ury marina in La Cruz de Hua­nacax­tle
* Hotel des Artistes and Café des Artistes del Mar in Punta de Mita
* Villa La Estancia in Flamin­gos
* Hotel Riu Paci­fico in Nuevo Vallarta

Beyond invest­ment in new facil­i­ties and infra­struc­ture, Nayarit has enhanced the tourism expe­ri­ence with sev­eral new high-profile events. These include an Amer­i­cas Cup Sail­ing Tour, Riv­iera Nayarit fish­ing and surf­ing tour­na­ments, the 14th Inter­na­tional Gourmet Fes­ti­val: Puerto Val­larta & Riv­iera Nayarit (for­merly the Puerto Val­larta Gourmet Fes­ti­val but expanded to incor­po­rate Riv­iera Nayarit), inter­na­tional sail­ing events and a Fes­ti­val of Migra­tory Birds in the eco-region of San Blas.

Mean­while, the CVB has been busy edu­cat­ing the inter­na­tional travel indus­try and help­ing to develop new pack­ages and pro­grams. An exten­sive travel trade out­reach pro­gram fea­tured sem­i­nars, trade shows and famil­iar­iza­tion trips for travel agents and tour oper­a­tors. The Riv­iera Nayarit web­site has been sub­stan­tially updated and new brochures, a photo library, video col­lec­tion and des­ti­na­tion logo have been devel­oped. Accord­ing to Mur­phy, these efforts have been pos­i­tively received and are gen­er­at­ing results

Awards & Acco­lades for Riv­iera Nayarit

Clearly, Riv­iera Nayarit’s public/private part­ner­ship is work­ing. For the third year in a row, Nuevo Val­larta ranked num­ber one for hotel occu­pancy rates in Mex­ico, almost 15 per­cent­age points above the national aver­age. Rin­con de Guayabitos, one of the destination’s charm­ing vil­lages, ranked num­ber two nation­ally in terms of the rise in hotel occu­pancy rates.

The 2008 AAA Travel Guide awarded its cov­eted Five-Diamond Award to two resorts in the area — the Four Sea­sons Resort Punta Mita and the Grand Velas All Suites & Spa Resort — and the Four-Diamond Award to three oth­ers — the Grand Mayan, the Val­larta Palace, and Casa Las Brisas. Three Nayarit restau­rants also earned the Four-Diamond designation.

As fur­ther proof of Nayarit’s new­found pop­u­lar­ity, in the first quar­ter of 2008, inter­na­tional arrivals were soar­ing, based on nearby Puerto Val­larta Inter­na­tional Air­port fig­ures show­ing 900,000 arrivals, an increase of more than 30,000 pas­sen­gers on sched­uled ser­vice over the same period in 2007. Offi­cials attribute the growth to suc­cess in secur­ing air ser­vice from such U.S. cities as Chicago, Los Ange­les, Phoenix, Den­ver, Min­neapo­lis, Dal­las, Hous­ton, San Fran­cisco, Newark, Port­land and Salt Lake City as well as Cana­dian gate­ways. Char­ter flights have also increased, by 32 per week in Feb­ru­ary 2008 alone.

What the Future Holds for Riv­iera Nayarit

Look­ing ahead, momen­tum is ris­ing for the devel­op­ment and enhance­ment of Riv­iera Nayarit’s tourism expe­ri­ence. As the new high­way sys­tem con­tin­ues to be built, there will be open­ings of the St. Regis Punta Mita, the Riu Palace Paci­fico, Dreams Villa Magna and the new Playa del Sol Spa within the next 12 months. A sec­ond Jack Nick­laus course in Punta Mita and a Greg Nor­man course in Litibu will enhance the world-class golf experience.

Fur­ther down the road, the Litibu resort devel­op­ment will fea­ture three Iberostar resorts, Secrets, La Tran­quila and Fiesta Amer­i­cana prop­er­ties as well as another golf course. Hig­era Blanca will be a bou­tique hotel just north of Litibu. By 2011, Punta Raza will offer three new lux­ury prop­er­ties — a Grand Hyatt, a Park Hyatt and the Elysian. New condo resorts will include Mari­val, Taheima and the sec­ond and third stages of the Marina Riv­iera Nayarit devel­op­ment. In addi­tion to a new lux­ury Capella resort in Des­tiladeras, the region’s next major resort devel­op­ment will be El Capomo.

About Riv­iera Nayarit

Riv­iera Nayarit is Mexico’s newest travel des­ti­na­tion stretch­ing along 100 miles of pris­tine Pacific coast framed by spec­tac­u­lar moun­tains to the north of renowned Puerto Val­larta. Mostly unde­vel­oped, the des­ti­na­tion extends from the resorts of Nuevo Val­larta to the his­toric, colo­nial town of San Blas, includ­ing exclu­sive Punta Mita and the spec­tac­u­lar Ban­deras Bay. The region fea­tures lux­ury resorts and eco-tourism bou­tique hotels, world-renowned surf­ing, four pro­fes­sional golf courses, rare native wildlife includ­ing sea tur­tles and trop­i­cal birds, moun­tain and island adven­tures, shop­ping for local art­work and tra­di­tional Hui­chol hand­i­crafts, charm­ing fish­ing towns and miles of serene beaches. 

Dur­ing a recent inter­na­tional event in Mex­ico, a hand­ful of light­weight ques­tions were asked about ille­gal immi­gra­tion and emi­gra­tion, with the basic response to the lat­ter by gov­ern­ment offi­cials boil­ing down to the often heard “Mex­i­cans have the con­sti­tu­tional right to travel when and where they chose.”  And the mil­que­toast ques­tion­ers let this answer slide with­out clar­i­fi­ca­tion, chal­lenge or follow-up.

The Mex­i­can Con­sti­tu­tion does in fact grant cit­i­zens free­dom to travel, includ­ing abroad, how­ever it also stip­u­lates that the right to cross bor­der migra­tion is autho­rized only if other applic­a­ble laws and require­ments are observed, and when cer­tain pre­req­ui­sites have been met.

The fol­low­ing arti­cles and excerpts are taken from the Polit­i­cal Con­sti­tu­tion of the United Mex­i­can States; the Gen­eral Pop­u­la­tion Law; and the Reg­u­la­tion of the Gen­eral Pop­u­la­tion Law, in order to give those inter­ested some com­par­a­tive insight into three doc­u­ments from Mexico’s body of laws regard­ing migra­tory mat­ters.  Extracts and items that are yes cherry-picked, how­ever all points that stand on their own while being inte­gral parts of the doc­u­ments, intent and enforce­ment respon­si­bil­i­ties they represent.

The Mex­i­can Con­sti­tu­tion, under the head­ing Indi­vid­ual Guar­an­tees in Title One, Chap­ter I, states in Arti­cle 11: “Every­one has the right to enter and leave the Repub­lic, to travel through its ter­ri­tory and to change res­i­dence with­out the need of a secu­rity let­ter, pass­port, safe-conduct or other sim­i­lar require­ments. The exer­cise of this right will be sub­or­di­nate to the pow­ers of judi­cial author­ity, in cases of civil or crim­i­nal lia­bil­ity, and to those of admin­is­tra­tive author­ity with respect to lim­i­ta­tions imposed by the laws on emi­gra­tion, immi­gra­tion and gen­eral pub­lic health of the Repub­lic, or with regard to per­ni­cious for­eign res­i­dents in the country.”

Arti­cle 33, after men­tion­ing guar­an­tees granted to for­eign­ers in cer­tain other con­sti­tu­tional arti­cles, still gives autho­rized fed­eral offi­cials the exclu­sive power to sum­mar­ily order depor­ta­tions. And its con­clud­ing sen­tence says: “For­eign­ers may not, in any way, med­dle in the polit­i­cal affairs of the country.”

The Gen­eral Pop­u­la­tion Law (and its Reg­u­la­tion) is basic to the top­ics being reviewed herein.  Fur­ther­more, the Law names the Sec­re­tariat of Gov­ern­ment (SG), or Inte­rior, as the pri­mary and respon­si­ble author­ity over many pop­u­lace related and most migra­tory matters.

As to emi­gra­tion, in agree­ment with the Con­sti­tu­tion (and in spite of what some peo­ple may claim or imply), while hav­ing the right to travel and migrate, Mex­i­can cit­i­zens are not enti­tled to cross inter­na­tional bor­ders – out­go­ing or incom­ing – with­out valid doc­u­ments.  Mean­ing offi­cial autho­riza­tions and travel doc­u­ments that must be obtained before­hand, once the require­ments and con­di­tions estab­lished by the Mex­i­can gov­ern­ment are met, approvals that are also in keep­ing with Mexico’s inter­na­tional accords.

Arti­cle 7, point II, of the 157 arti­cle Gen­eral Pop­u­la­tion Law, requires the SG “to super­vise the entry and depar­ture of nation­als and for­eign­ers, and to review their documentation.”

The exclu­sive respon­si­bil­ity to estab­lish marine, air and land ports of entry and/or exit is given to the SG in Arti­cle 10, this fol­low­ing talks with other min­istries and agen­cies that must pro­vide per­son­nel at the sites.  Arti­cle 11 spec­i­fies that inter­na­tional trav­el­ers and migrants enter­ing or leav­ing Mex­ico may do so only at des­ig­nated sites and dur­ing set hours.

In the Reg­u­la­tion of the Gen­eral Pop­u­la­tion Law, Arti­cle 100, point IV, requires the SG to exert what­ever vig­i­lance is nec­es­sary over loca­tions that are not autho­rized for inter­na­tional cross­ings, this through the deploy­ment of migra­tion offi­cers and Fed­eral Pre­ven­ta­tive Police.

Back to the Gen­eral Pop­u­la­tion Law, next Arti­cle 13 states: “Nation­als and for­eign­ers, in order to enter or leave the coun­try, will have to meet the require­ments oblig­ated by this Law, its reg­u­la­tions and other applic­a­ble requirements.”

Arti­cle 15 requires Mex­i­cans, on reen­ter­ing the coun­try, to prove their nation­al­ity and, if deemed nec­es­sary, to sub­mit to a health examination.

In Chap­ter III of the Law, titled Immi­gra­tion, Arti­cle 34 reads as fol­lows: “For for­eign­ers who may enter the coun­try, the SG will be able to estab­lish con­di­tions it deems suit­able with respect to activ­i­ties they will devote them­selves to, and the place or places of their res­i­dence.  As well, it will see to it that the immi­grants [are] use­ful ele­ments for the coun­try, and that they will receive the income needed for their sub­sis­tence and, as is the case, that of those per­sons who may be under their eco­nomic dependence.”

With respect to mar­riage and chil­dren, Arti­cle 39 allows the SG to autho­rize for­eign­ers who marry Mex­i­cans, or have chil­dren born in Mex­ico, admis­sion or a last­ing stay in the coun­try.  How­ever if the mar­riage is dis­solved, or if the for­eigner ends his or her sup­port, the SG will be able to can­cel their migra­tory sta­tus and order depor­ta­tion unless the per­son has per­ma­nent res­i­dent sta­tus or is granted new status.

Chap­ter IV deals with Emi­gra­tion, with Arti­cle 77 defin­ing emi­grants as “Mex­i­cans and for­eign­ers who may leave the coun­try with the intent to reside abroad.”

Arti­cle 78 requires: “Those per­sons who intend to emi­grate from the coun­try must sat­isfy, in addi­tion to the gen­eral migra­tion req­ui­sites, the fol­low­ing” – and there is a list of five obligations.

They must be iden­ti­fied and present cor­re­spond­ing per­sonal data to migra­tion offi­cials; and be of legal age [18] or accom­pa­nied by per­sons with pater­nal author­ity or guardian­ship, or with an approved autho­riza­tion from the par­ents, a legal guardian or qual­i­fied authority.

In the Reg­u­la­tion of the Law, the depar­ture rules regard­ing under­age Mex­i­cans or for­eign­ers are expanded.  Arti­cle 215, points I and II say that minors must be accom­pa­nied by per­sons with pater­nal author­ity or guardian­ship, or with a per­mit rat­i­fied by the par­ent, guardian or an autho­rized offi­cial.  Valid pass­ports, held by under­age Mex­i­cans leav­ing the coun­try unac­com­pa­nied by their par­ents or a guardian, will serve as proof of consent.

Regard­less of age how­ever, point III in Arti­cle 78 of the Law states: “If it is a ques­tion of Mex­i­cans, proof is required that they can meet all entry req­ui­sites that the laws of the des­ti­na­tion coun­try require.”

Point IV requires for­mal appli­ca­tions for doc­u­ments that once issued and obtained must be pre­sented to depar­ture point immi­gra­tion author­i­ties.  It also states that emi­grants can­not be on trial, out on bail or fugi­tives from jus­tice.  The con­clud­ing point notes that other applic­a­ble require­ments must be met.

Mex­i­can sea­sonal work­ers, “guest work­ers,” are cov­ered in Arti­cle 79, which requires proof that a worker has been sea­son­ally con­tracted with a salary suf­fi­cient to meet his or her needs.  Labor con­di­tions must be approved, in writ­ing, and Mex­i­can con­sular offi­cials will review work­places where ser­vices are to be ren­dered.  In the Law’s Reg­u­la­tion, Arti­cle 213, point II, calls for the SG to insure that con­tract processes for guest work­ers are car­ried out with due respect for the human rights of the workers.

Regard­ing the col­lec­tive trans­porta­tion of sea­sonal work­ers, Arti­cle 80 of the Law requires SG per­son­nel to over­see the trans­fer to make cer­tain rules and reg­u­la­tions are followed.

Chap­ter VIII defines sanc­tions for pub­lic offi­cials, migrants and oth­ers who com­mit transgressions.

Arti­cle 123 imposes a penalty of up to two years in prison, and a fine of $300.00 to $5,000.00 pesos [US$28.00 to US$467.00], on for­eign­ers who enter the coun­try illegally.

And Arti­cle 127 inflicts a penalty of up to five years in prison, plus a fine of up to $5,000.00 pesos [US$467.00], on Mex­i­cans who marry for­eign­ers for the sole pur­pose of allow­ing them to stay in the coun­try.  Fur­ther­more, the same sanc­tion will be applied to the for­eign bride or bridegroom.

Arti­cle 138, in its four para­graphs, sets sanc­tions for those who traf­fic in people.

It begins by say­ing that a penalty of six to 12 years in prison, and a fine cal­cu­lated at from 100 to 10,000 days mul­ti­plied by the gen­eral min­i­mum salary in effect in Mex­ico City [$52.59 pesos per day, or US$4.91, for 2008], will be imposed on those who them­selves, or through third par­ties, with the intent of traf­fick­ing, try to or do take Mex­i­cans or for­eign­ers into another coun­try with­out the cor­re­spond­ing documentation.

The sec­ond para­graph imposes the same penal­ties on traf­fick­ers who them­selves, or by using oth­ers, seek to bring undoc­u­mented for­eign­ers into Mex­ico, or trans­port or lodge them on national ter­ri­tory in order to hide them and thus avoid migra­tory inspection.

Next sanc­tions are imposed on those who know­ingly aid and abet that described in the two pre­ced­ing para­graphs.  And the fourth para­graph mul­ti­plies the penal­ties when undoc­u­mented migrants are under­age; if con­di­tions or means used place migrants health, integrity or life in dan­ger; or when­ever the per­pe­tra­tor of the crime is a pub­lic servant.

Roge­lio López-Velarde, a prin­ci­pal in his epony­mous law firm based in Mex­ico City, brings a schol­arly and pol­icy pas­sion to the study of the cur­rent struc­ture and his­tory of oil leg­is­la­tion in Mexico.

The top­ics con­sid­ered in the arti­cle are these:

1.   The Con­sti­tu­tion does not pro­hibit every­thing; [need­less] restric­tions come from the enabling legislation. 

2.   Many oil indus­try activ­i­ties should not be con­sid­ered “strate­gic” per the Con­sti­tu­tional Amend­ment of 1983. 

3.   Mak­ing the State respon­si­ble for all areas of the oil indus­try is coun­ter­pro­duc­tive and incorrect. 

4.   Many of the activ­i­ties monop­o­lized by Pemex, LPG imports, for exam­ple, are not included in the legal def­i­n­i­tion of the oil indus­try as given in the Petro­leum Law of 1958. 

5.   Sov­er­eignty does not reside in a monop­oly but in its reg­u­la­tory institutions. 

6.   Para­dox­i­cally, the resent legal struc­ture of the oil indus­try pro­motes eco­nomic denationalization. 

7.   Oil pol­icy is not set by the Energy Min­istry but by Pemex and, ulti­mately, by the Finance Ministry. 

8.   The “Board of Direc­tors” of Pemex is a legal fic­tion [and is nei­ther a board nor does it direct] 

9.   Only Pemex of all oil com­pa­nies can­not finance its oper­a­tions and needs with its own reserves. 

10.  Again para­dox­i­cally, Pemex can have strate­gic part­ners but only out­side of Mex­i­can territory.

The Same Word yet Two Coun­tries Apart

Trans­ac­tion secu­rity is essen­tial to a healthy real estate mar­ket. How­ever, many new buy­ers are sur­prised to learn processes that they take for granted in the United States are either optional or don’t have an exact equiv­a­lent in Mex­ico. This col­umn will explain the key dif­fer­ences per­tain­ing to the term escrow since it means some­thing quite dif­fer­ent here than in the US.

In the United States escrow nor­mally refers to the com­plete process of clos­ing a trans­ac­tion and securely han­dling money, for which the escrow com­pany receives a fee. These com­pa­nies tend to be title insur­ance com­pa­nies that also offer a title insur­ance pol­icy and pro­vide all clos­ing ser­vices. (See table below)

In Mex­ico escrow refers exclu­sively to the secure han­dling of money by a third party, usu­ally a title com­pany or notario público (Mex­i­can notary) for a fee of around $550. The remain­ing clos­ing ser­vices are com­monly han­dled sep­a­rately, for a sep­a­rate fee, by an inde­pen­dent clos­ing com­pany, the devel­oper, a lawyer, the notary, or a loan company.

      Escrow means dif­fer­ent things in the USA vis-à-vis Mexico.

When pur­chas­ing prop­erty one of the most impor­tant con­sid­er­a­tions for both a buyer and seller is whether, and under what con­di­tions, the trans­ac­tion funds will be safely held and dis­trib­uted by an inde­pen­dent party. In an inter­na­tional trans­ac­tion, this issue is even more impor­tant and often com­pli­cated, as either the pur­chaser or the seller may not be famil­iar with, or com­fort­able, hav­ing funds deposited in a for­eign juris­dic­tion or with an unfa­mil­iar attor­ney or bank. Uti­liz­ing escrow ser­vices from estab­lished title insur­ance com­pa­nies helps pro­vide a fair level of secu­rity to all par­ties in the real estate transaction.

Accord­ing to an inde­pen­dent clos­ing ser­vices com­pany that I ques­tioned on the sub­ject, “The hold­ing of funds (escrow) by a neu­tral third party … is one of the safest ways of con­duct­ing a real estate trans­ac­tion in Mex­ico.  One of the many ben­e­fits is that the buyer, the seller and the escrow com­pany must sign the escrow instruc­tions which explic­itly state the terms for the money to be held in escrow.  In addi­tion, in order for any funds to be released from the account, both the buyer and the seller must sign the dis­tri­b­u­tion instruc­tions so that all par­ties are aware of where, when, how much and to whom the money is going.”

I have per­son­ally observed that some agents tell their clients that “escrow doesn’t exist,” or that “escrow is not legal in Mex­ico.” My sin­cere hope is that this opin­ion is expressed sim­ply due to a lack of knowl­edge about the pur­pose of escrow in Mex­ico, and not a desire to receive com­mis­sions sooner and eas­ier. An unscrupu­lous agent may rally against escrow in order to hide com­mis­sions that exceed the cus­tom­ary fee, or to gain quicker access to buyer deposits. Buy­ers should be excep­tion­ally cau­tious about an agent that advises against the use of escrow with a trusted, third-party com­pany that is not involved oth­er­wise in the transaction.

I strongly encour­age buy­ers to use escrow for real estate trans­ac­tions in Mex­ico when­ever fea­si­ble. They should not under­es­ti­mate the value of their own peace-of-mind. Have a knowl­edge­able real estate agent or title ser­vices agent guide you on the method of nego­ti­at­ing bal­anced escrow terms that are fair to both parties.

Would-be expa­tri­ates look for home des­ti­na­tions that appeal to their indi­vid­ual def­i­n­i­tion of adven­ture and par­adise. For the first time, Inter­na­tional Liv­ing reported Mex­ico as the world’s top retire­ment haven because of its econ­omy, real estate, and qual­ity of life. That was great news for Mex­ico yet it missed some impor­tant details on cost-of-living from the expe­ri­ence of those who have already jumped at the dream of par­adise on a budget.

Real Estate

The main attrac­tion for those migrat­ing to Mex­ico has clearly been the real estate, as evi­denced by the phe­nom­e­nal growth of the home mar­ket here, espe­cially since 9/11. Not only are ocean­front and ocean view prop­er­ties still 50–80% less than their US coun­ter­parts (if there really is a direct com­par­i­son), prop­erty taxes are a tiny frac­tion of states within the United States. Coastal and inland water-view liv­ing is sim­ply a bar­gain in Mex­ico when com­pared to the United States.

Ser­vices

Salaries in Mex­ico are much lower than north of the bor­der and this shows itself in all kinds of ser­vices that expa­tri­ates need every day. Doc­tors, den­tists, con­struc­tions work­ers, handy­men, mechan­ics, house­keep­ers, and gar­den­ers all charge 50–75% less than their US coun­ter­parts. The net affect is that expa­tri­ates can extend their money and even improve their qual­ity of life. Other ser­vices such as enter­tain­ment are also much less in Mexico.

Gro­ceries

It is chal­leng­ing to com­pare the cost of food in Mex­ico to that in the United States. Mex­i­can cui­sine is sub­stan­tially dif­fer­ent than the nor­mal daily fare of Amer­i­cans, and it can be quite eco­nom­i­cal. How­ever, adding a vari­ety of dishes com­mon to the mul­ti­eth­nic menu of today’s Amer­i­can poses chal­lenges of sup­ply and a sub­stan­tial increase in food costs.

The sav­ing grace seems to be pro­duce, which is fresher and offers more trop­i­cal favorites such as papaya, man­gos, plan­tains, avo­ca­dos, and guavas at good prices through­out Mexico.

Energy

Energy is about two to three times the price in the United States, with the excep­tion of gaso­line which is cur­rently about 25% less than the going US price. This comes as some­what of a sur­prise to for­eign­ers who think noth­ing of leav­ing their PC and mon­i­tor burn­ing at all hours of the day, and who ignore the “vam­pire affect” of the many charg­ers and elec­tri­cal adapters scat­tered through­out their house.

Elec­tron­ics

Mexico’s stiff import tar­iffs on elec­tronic goods from Asian com­peti­tors mean that elec­tron­ics in Mex­ico are noto­ri­ously expen­sive. Adding the Mex­i­can value added tax (IVA) makes these prod­ucts cost about dou­ble the iden­ti­cal prod­uct in the United States. This is a seri­ous con­sid­er­a­tion when think­ing about adorn­ing a new, Mex­i­can home with a 55-inch plasma dis­play for the liv­ing room! Notable excep­tions are Mexican-made and Mexican-branded appli­ances that are on par or slightly less than their for­eign equivalents.

Cloth­ing

Most for­eign­ers don’t bother buy­ing cloth­ing in Mex­ico for the same rea­son that many Mex­i­cans along the bor­der with the United States avoid buy­ing clothes in Mex­ico. The qual­ity of com­mon cloth­ing is rel­a­tively poor, or the price of good qual­ity cloth­ing is 30–50% more than in the US. And say good­bye to well-advertised sales in your Sun­day paper. There is sim­ply no such anal­ogy in most of Mex­ico. Most expa­tri­ates con­tinue to pur­chase their cloth­ing on their trips to the United States – eas­ier for bor­der areas like north­ern Baja Cal­i­for­nia but more chal­leng­ing the fur­ther you go into Mexico’s interior.

Com­mu­ni­ca­tion

Tele­phony in Mex­ico sim­ply costs more. There is a good rea­son that one of the world’s two rich­est men is from Mexico!

The good news is that high-speed Inter­net is now ubiq­ui­tous together with basic local tele­phone pack­ages. Many for­eign­ers con­trol tele­phone costs by elim­i­nat­ing all the frills on their Mex­i­can tele­phone line, and by mak­ing use of voice over Inter­net prod­ucts such as Von­age and Skype. These ser­vices make calls back home eco­nom­i­cal and even save money on calls with­in­Mex­ico. For exam­ple, a one minute call using Von­age to Mex­ico City costs about a penny a minute with eight cents a minute being the norm. Com­pare this with 25 to 45 cents a minute for long dis­tance within Mex­ico on a Mex­i­can line.

Eco­nom­ics is one of the gen­er­ally pos­i­tive aspects of life in Mex­ico. A future col­umn will also cover the spec­trum of quality-of-life fac­tors from the per­spec­tive of cur­rent expa­tri­ates in Mexico.

  Buy­ers, Sell­ers, and Bro­kers Ben­e­fit from Inter­net Technology

The rapid growth in use of a new Inter­net tech­nol­ogy over the past two years by Mex­ico real estate bro­kers has resulted in a de facto Mex­i­can mul­ti­ple list­ing ser­vice (MLS). The new sys­tem bet­ter serves buy­ers and sell­ers of real estate through­out coastal and other regions of inter­est to for­eign buy­ers. This progress helps solve the key chal­lenge of shar­ing and mar­ket­ing list­ings between agents, a his­tor­i­cal chal­lenge in Mex­ico as it was in the early days of US real estate. Buy­ers and sell­ers would do well to make sure that their agent is part of this grow­ing MLS in order to ensure that they are receiv­ing the proper real estate ser­vice, par­tic­u­larly in regions of inter­est to for­eign buyers.

A com­mon mis­con­cep­tion amongst real estate buy­ers and sell­ers is that there is such a thing as the “one and only” mul­ti­ple list­ing ser­vice. This is erro­neous because there are lit­er­ally hun­dreds of mul­ti­ple list­ing ser­vices in the US and Canada, and the term is mor­ph­ing to become a descrip­tor of any quasi-public repos­i­tory of real estate list­ings (except in Canada where the term is a reg­is­tered trade­mark for real estate). Any­one may cre­ate a mul­ti­ple list­ing ser­vice with the value of the sys­tem being a func­tion of how widely and how respon­si­bly the sys­tem is used. Each mar­ket deter­mines the MLS sys­tem that best meets the need – with the occa­sional dis­rup­tion such as the law­suit by the US Depart­ment of Jus­tice with the National Asso­ci­a­tion of Realtors®.

Mex­i­can real estate has a his­tory of agents with­hold­ing list­ings from each other with the intent to get the com­mis­sion from both the sell­ing and buy­ing sides of the trans­ac­tion (i.e. “pocket list­ings”), sim­i­lar to the sit­u­a­tion in the US and Canada before the var­i­ous regional MLSs were cre­ated. This made it dif­fi­cult for a poten­tial buyer to know if they were see­ing the best prop­er­ties or get­ting a fair deal, and for sell­ers to know if their agent would give proper expo­sure to their prop­erty. (The appear­ance of orga­nized MLSs in the US in the early 1970s was a vast improve­ment over this inef­fi­cient system.)

The good news for con­sumers is that boom­ing Mex­ico mar­kets of inter­est to for­eign­ers plus the ubiq­uity of the Inter­net have dri­ven the demand for more open meth­ods of shar­ing list­ings to the ben­e­fit of buy­ers and sell­ers. No longer does the mar­ket have to sub­mit to anachro­nis­tic sales meth­ods in the Inter­net age.

One par­tic­u­lar mul­ti­ple list­ing ser­vice has grown organ­i­cally to gain a lead­ing spot for Mexico’s real estate inven­tory: Point2 NLS by Point2 Tech­nolo­gies. Mex­i­can agents from Tijuana to Rocky Point [Puerto Peñasco] to Puerto Val­larta to the Mayan Riv­iera have dis­cov­ered that this com­mer­cial plat­form is an effec­tive way of shar­ing and mar­ket­ing nearly 7,000 Mex­ico prop­erty list­ings amongst over 1,000 fel­low agents through­out Mex­ico. Quite sim­ply, it is the largest data­base of Mex­ico real estate list­ings shared between agents in the world – and it is grow­ing daily.

“Point2 is a vehi­cle to pro­vide, in Mex­ico, the tech­nol­ogy that a full-blown MLS pro­vides,” com­mented Saul Klein, CEO of Point2 Tech­nolo­gies in an inter­view. “Orga­ni­za­tions of real estate pro­fes­sion­als can add value around the plat­form. The key func­tion of shar­ing and mar­ket­ing list­ings between agents is intrin­sic to Point2. Indi­vid­ual agents con­trol their busi­ness rela­tion­ships in a way that best serves their clients.” Klein noted that Mex­ico real estate agents are Point2 Tech­nolo­gies’ third largest group of Point2 adopters in the 85 coun­tries that the com­pany ser­vices, pre­ceded only by the USA and Canada.

Why should real estate buy­ers and sell­ers in Mex­ico care about an Inter­net technology?

The answer is that if their agent uses Point2, that client’s agent has access to the most pro­lific MLS through­out Mex­i­can regions of inter­est to for­eign­ers. Buy­ers and sell­ers would be wise to ensure that their agent is using Point2. Sell­ers will want to seek out list­ing agents that gen­er­ously share the prop­er­ties with other agents’ Web sites in order to max­i­mize expo­sure of those list­ings. Buy­ers in turn will want to under­stand how their pre­ferred agent fil­ters list­ing results that appear on their agent’s website.

Until an improved shar­ing and mar­ket­ing solu­tion is offered nation­ally to Mex­ico, the Point2 sys­tem is lead­ing the way towards address­ing buyer and seller require­ments for an MLS in the United Mex­i­can States, one real estate list­ing and one real estate agent at a time.

North Amer­i­can rela­tion­ship brings ben­e­fits to all three coun­tries, says Deputy Sec­re­tary of State

Some­times suc­cess is too big to see and is reported by his­to­ri­ans, not the head­lines. But there’s a chance that the North Amer­i­can sum­mit meet­ing in New Orleans this week is dif­fer­ent because its focus is on all of us – Amer­i­cans, Cana­di­ans and Mex­i­cans – in three great coun­tries each mak­ing the oth­ers’ lives bet­ter every day.

Our nations’ lead­ers have been dis­cussing unprece­dented lev­els of coop­er­a­tion among our three gov­ern­ments, at every level, that are mak­ing us all safer and more com­pet­i­tive in the world. And they also have been dis­cussing the dynamic force and power of a tri­lat­eral rela­tion­ship that is dri­ven by mil­lions of deci­sions made by mil­lions of Amer­i­cans, Mex­i­cans and Cana­di­ans every sin­gle day – peo­ple in each of our coun­tries who decide it is in their inter­ests to travel, to pur­chase and to sell, to study, work, play and invest in their neigh­bor­ing countries.

We are con­nected by social, fam­ily, edu­ca­tional, com­mer­cial and cul­tural ties that are stag­ger­ing in their size and con­tin­u­ous growth.

Amer­i­cans, Cana­di­ans and Mex­i­cans have a trad­ing rela­tion­ship in goods and ser­vices that is fast approach­ing a tril­lion dol­lars a year. Canada and Mex­ico together are the United States’ largest source of imported oil. About 65 mil­lion cars, 7 mil­lion trucks, and 1.5 mil­lion rail­road cars crossed our land bor­ders last year. We invest close to $35 bil­lion of our own dol­lars in each oth­ers’ coun­tries. Thirty-two thou­sand Cana­di­ans and Mex­i­cans are cur­rently enrolled in U.S. uni­ver­si­ties, and over 11,000 Amer­i­cans are study­ing abroad in Canada and Mexico.

The big mes­sage here is that the North Amer­i­can rela­tion­ship brings enor­mous ben­e­fits, like jobs, energy secu­rity and lower prices, to the cit­i­zens of all three coun­tries on an his­toric scale. And it does so peace­fully, legally and coop­er­a­tively. This enables North America’s increas­ingly inte­grated man­u­fac­tur­ing sec­tors to com­pete more effec­tively in a quickly expand­ing global marketplace.

Today, the North Amer­i­can rela­tion­ship is undis­put­edly a dynamic plat­form for our long-term suc­cess in the world, just as it is a crit­i­cal plat­form for con­fronting – bet­ter, quicker and more coop­er­a­tively – the big chal­lenges of transna­tional crime and regional emer­gency pre­pared­ness that threaten that success.

It is the fourth meet­ing of our lead­ers since launch­ing the Secu­rity and Pros­per­ity Part­ner­ship. Pres­i­dent Bush, Mex­i­can Pres­i­dent Felipe Calderon and Cana­dian Prime Min­is­ter Stephen Harper are talk­ing about what our gov­ern­ments can do to bet­ter sup­port coop­er­a­tion between our three coun­tries. They will dis­cuss updat­ing bor­der infra­struc­ture that was put in place 40 years ago to han­dle bor­der cross­ings that were a quar­ter of their cur­rent vol­ume. They will dis­cuss strate­gies for coor­di­nat­ing our response to global health risks, to unsafe prod­ucts, to nat­ural dis­as­ters and to ter­ror­ist threats.

Of course, there is a pos­i­tive sym­bol­ism in the selec­tion of New Orleans as the site for this meet­ing. It is a trib­ute to the tremen­dous, spon­ta­neous sup­port that the peo­ple and gov­ern­ments of Canada and Mex­ico pro­vided to the cit­i­zens of that city and neigh­bor­ing com­mu­ni­ties in the wake of Hur­ri­cane Katrina.

There is no other exam­ple in the world of three coun­tries, with so much pride in their dis­tinct iden­ti­ties, tra­di­tions and val­ues, and yet so com­mit­ted to their com­mon success.

His­to­ri­ans will pon­der and doc­u­ment this con­ti­nen­tal trans­for­ma­tion for decades to come, and the head­line writ­ers will have their chance to cap­ture the essence of North Amer­i­can suc­cess as well: It lies in our cit­i­zens’ deter­mi­na­tion to trust and coop­er­ate with one another.

Canada and Mex­ico are two of the United States’ most impor­tant part­ners in the world. Some­times we take this fact for granted, or over­look it, but it’s true.

“A Field of Dreams” is what I call vine­yards in north­west­ern Mexico’s Baja Cal­i­for­nia wine coun­try. I think every per­son who plants grapes has dreams of cre­at­ing some­thing per­sonal, spe­cial and significant.

As a grape grower I main­tain an inti­mate rela­tion­ship with grapevines, my own pri­vate Ital­ian fam­ily of Neb­bi­olo grapes. I’m blessed with spoiled Ital­ian bam­bi­nos who demand organic food, water twice a week, and they won’t per­form well unless I play Johannes Brahms and Fred­eric Chopin for them dur­ing the cool evenings, just before sun­set! And every vine­yard man­ager, wine­maker and win­ery owner has a vision to pro­duce the best pos­si­ble prod­uct, express­ing the land, the grapes, the pas­sion and the likes of each individual.

Vine­yards and winer­ies con­tinue to sprout up in the Valle de Guadalupe, and the “Wine Route,” the “Ruta del Vino,” is the link that now joins them together. Gone are the days when wine tast­ing in the val­ley was a com­bi­na­tion of the TV series Sur­vivor, off-road rac­ing and demo­li­tion derby.

The Ruta del Vino has been expanded, and the old dirt road from Fran­cisco Zarco towards Monte Xanic and beyond to Bibay­off and Viñas Pijoan has been paved. In the next month or two (Mex­i­can time) the road will be paved all the way from the lit­tle vil­lage of Fran­cisco Zarco to the free road near El Tigre. This is a rev­e­la­tion and a rev­o­lu­tion in the sense that you’ll no longer need “dou­ble strength” Poli­dent to keep your den­tures locked-in as you fight the wash­board roads where some unlucky folks often encoun­tered pot­holes that could eas­ily con­sume an entire car. And now, (for bet­ter or worse) you’ll see motor coaches at back coun­try winer­ies that once were acces­si­ble only to Baja off-road vehi­cles, ATV’s, ATC’s, naive grin­gos or local adven­tur­ers.  As well, the new road tra­verses once hid­den olive groves, tree farms, “old vine” vine­yards, ran­chos and “secret arti­san” wineries.

Today there are about ten to twelve winer­ies that can be eas­ily accessed via the new Zarco-El Tigre wine route. In order of loca­tion from Fran­cisco Zarco, they are Vini­cola Sueños; Fuentes Broth­ers; Monte Xanic; Chateau Camou; Adobe Guadalupe; Baron Balch’e; JC Bravo; The Wine School; La Villa; Bibay­off; and Viñas Pijoan.

And there are a few more “hid­den trea­sures” along the route wait­ing for your dis­cov­ery, but I’m leav­ing that adven­ture to those who still want a place to hide, relax and avoid the crowds. For lovers of the won­der­ful wine of Monte Xanic, you might note that they are now open on Sat­ur­day and Sun­day from 10 am to 3 pm They do not take motor coach tours, no groups larger than twenty peo­ple and with prior approval only.

Fam­i­lies look­ing for qual­ity wine with super value pric­ing, and a place for kids to play while mom and dad taste wine, should explore Vinos Fuentes win­ery near Km 1.25 on the new Zarco-Tigre wine route. One of the newer mem­bers in our regional “wine boom” is the fam­ily of Hec­tor and Miguel Fuentes, along with broth­ers Mark and Hec­tor Fuentes Jr. These native Baja Cal­i­for­ni­ans have a long his­tory of farm­ing in Mex­i­cali and Valle de Guadalupe. Over the last sev­eral years they have been con­vert­ing their for­mer fruit orchard into a fam­ily ori­ented win­ery, recre­ation area, bou­tique gift shop, tra­di­tional Mex­i­can restau­rant and steak house.  

Accord­ing to Miguel Fuentes, “hos­pi­tal­ity is the key here and we plan to built a family-oriented project where there is some­thing to offer the entire fam­ily, from young chil­dren to grand­par­ents. We are a fam­ily that respects and appre­ci­ates the needs of every­one in a fam­ily and we plan to share that per­spec­tive with our guests. The chil­dren can play in the recre­ation area with super­vi­sion, while the par­ents enjoy wines in our tast­ing room. We’ll offer food in our family-style restau­rant, snacks on the patio, bar­be­cues, and even host spe­cial events to include birth­day par­ties and wed­dings. We’re cre­at­ing a venue where we can offer some­thing for every­one in an envi­ron­ment based on fun, edu­ca­tion and fam­ily entertainment.”

Vinos Fuentes has sev­enty hectares of nat­ural and sus­tain­able land on both sides of the Guadalupe riverbed. Twelve hectares are planted with Mer­lot, Caber­net Sauvi­gnon and Tem­pranillo, while sev­eral addi­tional plots are planted in table grapes that include Ruby Red, Globe, Supe­rior and Thomp­son seed­less grapes. The vines range in age from two years to twenty-five years. In 2008, Miguel will plant Neb­bi­olo, Syrah, French Colom­bard and Mus­cat vines to com­pli­ment his wine port­fo­lio. The win­ery facil­ity, bou­tique gift shop and restau­rant are located in an 8,250 square foot build­ing on a beau­ti­ful and nat­ural farm setting.

Miguel cur­rently cre­ates small quan­ti­ties of high qual­ity wine that include 2005 Caber­net Sauvi­gnon; 2005 Caber­net Sauvignon/Grenache blend; 2006 Caber­net Sauvi­gnon; and 2006 Caber­net Sauvignon/Grenache blend. Com­ing soon will be his 2007 Mer­lot and 2007 Caber­net Sauvi­gnon. Vinos Fuentes wines are a Baja Cal­i­for­nia “super value” at US$10 to US$15 per bot­tle, with addi­tional case dis­counts.  Hours of oper­a­tion will start with Thurs­day through Sun­day from 10 am until dusk. Tast­ing fees are US$3 per­son – refund­able towards wine pur­chase. The win­ery is located on the paved road (Calle Prin­ci­pal No. 290) that passes through the small vil­lage of Fran­cisco Zarco, almost directly across from the entrance to Monte Xanic winery.

The entry of US lenders into Mex­ico sev­eral years back resulted in a huge influx of real estate invest­ment in many areas. Yet for all the increased invest­ment activ­ity, rel­a­tively few of these mort­gage trans­ac­tions have actu­ally been closed. Instead, a host of middle-class buy­ers with home equity in their pri­mary homes took advan­tage of low inter­est rates and no-fee loans to lock in their piece of Mex­ico. At the same time, new mort­gage com­pa­nies in Mex­ico found them­selves fac­ing unfa­mil­iar real estate prac­tices, and they have con­tin­u­ally tried to adapt to ser­vice the market.

The recent US sub-prime mar­ket deba­cle, the drop in US home prices, and the result­ing exit of a cou­ple of key US lenders have changed the Mex­i­can real estate mar­ket. With much home equity evap­o­rat­ing in a declin­ing US home mar­ket, buy­ers are under­stand­ably more cau­tious and have more lim­ited pur­chas­ing options. Those who desire to buy in Mex­ico are left with two bor­row­ing options: com­mer­cial lend­ing from the remain­ing lenders or seller-backed financing.

Com­mer­cial Lending   

As with real estate agents, Mex­ico does not have licens­ing require­ments for mort­gage com­pa­nies and agents. There are many lenders and the land­scape is ever chang­ing with new lenders, lenders who take a pause in cer­tain regions, and oth­ers who quit lend­ing completely.

There are sev­eral fac­tors that can ulti­mately affect a buyer’s abil­ity to obtain a com­mer­cial loan in this environment.

Real estate agents may avoid impor­tant issues when obtain­ing a list­ing or at clos­ing time. For exam­ple, the seller might be encour­aged to close at a price lower than the actual price in order to avoid taxes. This com­mon prac­tice in Mex­ico will reduce avail­able credit that the buyer can obtain from US financ­ing because finance com­pa­nies will only lend based on the recorded sales price, regard­less of how much was actu­ally paid.

Real estate devel­op­ments and indi­vid­ual sell­ers are noto­ri­ously slow to deliver doc­u­men­ta­tion to lenders. This is some­what under­stand­able con­sid­er­ing the bureau­cracy of the Mex­i­can legal sys­tem, so this paper­work process should be built into sales plan­ning. These delays can also be due to the fact that the seller does not have the abil­ity to trans­fer a clean title.

Bor­row­ers need to take respon­si­bil­ity to put time lim­its on the process and to actively keep the lend­ing process mov­ing once started. Bor­row­ers would be wise to put a financ­ing con­tin­gency in their pur­chase con­tract such as “sub­ject to lend­ing approval at X% for Y years.” This can avoid unfor­tu­nate sit­u­a­tions where the buyer loses deposit money because they could not qual­ify for a loan.

Seller-backed Financ­ing

In areas of Mex­ico par­tic­u­larly affected by the US credit crunch, such as Baja Cal­i­for­nia, seller-backed financ­ing is becom­ing an impor­tant tool to enable sales. Through guar­an­teed bank trusts (Fide­icomiso en Garan­tía) – the same instru­ment uti­lized by com­mer­cial lenders – buy­ers can obtain the prop­erty that they want, and the sell­ers receive the cer­tainty of income by retain­ing pri­mary inter­est in the property.

Seller-backed financ­ing elim­i­nates cer­tain fees and can pro­vide more flex­i­ble terms. On the down side, sell­ers usu­ally require a higher down pay­ment, often 50%, whereas com­mer­cial lender pro­grams tend to be 25% to 30% down.

The fact remains that in a slow mar­ket with chang­ing lender prac­tices seller-backed financ­ing may be the only way to enable a spe­cific trans­ac­tion. Such sell­ers need to come to terms with the fact that they could have the unpleas­ant duty to fore­close on a non-compliant buyer. The good news is that the guar­an­teed bank trusts make this process as smooth as pos­si­ble and avoid lengthy court cases.

The long-term solu­tion is likely to be that US-backed lend­ing will fur­ther adapt to meet the mar­ket needs.

Accord­ing to Richard Mock­abee, loan con­sul­tant for Mex­Quest Mort­gage and a long-time prop­erty owner in Mex­ico, “One rea­son­able way to look into the future is to look at the past. Mort­gage financ­ing in Mex­ico is inevitable, and Mex­ico is see­ing the same cycle as the early years of US mort­gages. Mort­gages are the nat­ural evo­lu­tion since baby boomers have used credit all of their adult lives.”

The pro­ce­dure for a real estate clos­ing for for­eign­ers in Mex­ico is dif­fer­ent than the process north of the bor­der. This check­list helps demys­tify the process of buy­ing prop­erty and cre­at­ing a bank trust in Mex­ico through a cash sale, still the most com­mon type of transaction.

1.   Buyer and Seller agree to a pur­chase price and pur­chase terms for a given prop­erty. This may be done infor­mally as an “Offer to Pur­chase” or, option­ally, as a for­mal pur­chase con­tract cre­ated by an attor­ney of the par­ties. The appro­pri­ate­ness and need for a for­mal pur­chase con­tract is a deci­sion of the par­ties involved. For­mal con­tracts in Mex­ico, just as in the United States and other coun­tries, are enforce­able only through court action. Nei­ther a Buyer nor a Seller should take a con­tract as a guar­an­tee of any­thing; it is sim­ply a promise to ful­fill obligations.

2.   Buyer and Seller cre­ate and sign escrow instruc­tions and send them to an escrow com­pany for approval, along with a copy of the pur­chase agreement/contract. Once the escrow agree­ment is approved the escrow com­pany noti­fies all the parties.

3.   Buyer funds the escrow account with the ini­tial deposit (agreed upon by the par­ties) plus an escrow fee. Once this deposit has been made the escrow com­pany noti­fies the parties.

4.   Buyer com­pletes a bank trust appli­ca­tion packet and pays up-front fees to start the bank trust process. These fees cover gov­ern­ment per­mits and stan­dard fidu­ciary bank fees.

5.   (OPTIONAL BUT RECOMMENDED) Buyer applies for title insur­ance. This has its own forms and asso­ci­ated fees. The cost of the insur­ance pol­icy is approx­i­mately 0.55% of the pur­chase price plus attor­ney research fees. This esti­mate includes “gap” insur­ance that cov­ers the Buyer from the moment of sign­ing before a Mex­i­can Notary until the Notary reg­is­ters the bank trust with the city – a gap of up to 90 days.

6.   Buyer applies for an FM3 res­i­dent visa at the most con­ve­nient Mex­ico con­sulate office, or at a Mex­ico for­eign affairs office in a Mex­i­can state such as Baja Cal­i­for­nia. The pro­cess­ing of a visa appli­ca­tion usu­ally takes a few days to ten days, after the Buyer has pro­vided the Mex­i­can gov­ern­ment with the proper doc­u­men­ta­tion. Some Notaries allow the use of tourist visas (FMT) to prove legal sta­tus in the coun­try, but FM3 res­i­dent visas are rec­om­mended for tax purposes.

7.   The par­ties select a Mex­i­can Notary to draft their bank trust. All Mex­i­can Notaries have equal author­ity to do this yet fees can vary slightly in a given area. The Notary will require upfront fees to cover their work, sur­veyor fees, appraisals, var­i­ous cer­tifi­cates, etc. The par­ties may request a review of the bank trust doc­u­ment a few days before clos­ing but such a review is not auto­matic to the process; it nor­mally has to be explic­itly requested by the parties.

8.   A few days before clos­ing, the Buyer will nor­mally need to deposit the bal­ance of the pur­chase funds into the escrow account.

9.   On the clos­ing day, the Buyer will pay final clos­ings costs (trans­fer taxes, reg­is­tra­tion fees, etc.). The fidu­ciary bank will likely attend or will have already signed the doc­u­men­ta­tion. Proof of Buyer title insur­ance will be there if the Buyer has ordered and paid for it.

10.  At the clos­ing, the par­ties sign escrow dis­burse­ment instruc­tions that tell how the pur­chase funds will be dis­trib­uted by the escrow com­pany. Wire trans­fers are nor­mally exe­cuted by the escrow com­pany within one to two busi­ness days.

11.  The Buyer can nor­mally take phys­i­cal pos­ses­sion of the prop­erty imme­di­ately after the clos­ing. At this point any­where from 30 to 90 days – or even more – has tran­spired since the orig­i­nal offer agree­ment depend­ing on many fac­tors. (Clos­ing peri­ods in Mex­ico are noto­ri­ously longer than in the US.)

12.  The Buyer may request a copy of the bank trust from the Notary within a few weeks to three months, depend­ing on the Notary and their workload.

13.  Although the Notary takes care of reg­is­ter­ing the bank trust in the prop­erty reg­istry, the Buyer should sep­a­rately ensure that the prop­erty is also reg­is­tered in the city’s urban depart­ment (Cat­a­stro) so that the Buyer gets proper credit for prop­erty tax bills, and so that the pre­vi­ous owner’s name is removed from all city records relat­ing to the property.

Bank or seller-backed financed clos­ing pro­ce­dures are very sim­i­lar to a cash trans­ac­tion, yet they add their own set of forms and fees that vary accord­ing to the lender.

Lead­ing Mex­ico mort­gage bro­ker MEXLend today announced the first dol­lar loan clos­ing in Puerto Val­larta with bank­ing part­ner Sco­tia­bank. Already the prin­ci­pal mort­gage bro­ker for Mex­ico and the Puerto Val­larta area, MEXLend now offers addi­tional lend­ing pro­grams for investors look­ing to pur­chase res­i­den­tial prop­er­ties in Mexico.

“Our part­ner­ship with Sco­tia­bank is just one more way that we can help for­eign investors pur­chase homes in Mex­ico. Being the first or clos­ing the most loans is excit­ing for us, but it’s only one indi­ca­tor of our ded­i­ca­tion to bring­ing our clients the most options avail­able. We will con­tinue to add more lenders and more pro­grams to meet the needs of investors,” says Ter­ence L. Reilly, CEO of MEXLend.

With the real estate mar­kets founder­ing in the United States, many investors are turn­ing to Mex­ico to make invest­ments in pri­mary or sec­ondary homes. Through MEXLend, Sco­tia­bank is offer­ing US dol­lar loans on Mex­ico prop­er­ties for US and Cana­dian cit­i­zens. In addi­tion to the dol­lar loan pro­gram, MEXLend also offers peso lend­ing pro­grams for Mex­i­can nation­als and expatriates.

“By offer­ing dual pro­grams, both in dol­lars and pesos, we can help any qual­i­fied buyer with their pur­chase of prop­erty in Mex­ico. Mex­ico is a strong mar­ket now and pre­dic­tions say that it will con­tinue to be over the next fif­teen years,” says David Schwen­de­man, MEXLend Pres­i­dent. “Investors look­ing to diver­sify in Mex­ico real estate will find that we have a pro­gram for them, no mat­ter what their needs are.”

“Peso loans are par­tic­u­larly valu­able to expa­tri­ates and any­one who makes a liv­ing in Mex­ico,” adds Josh Rap­pa­port, Senior Loan Offi­cer and Direc­tor of MEXLend’s peso loan pro­grams. “Invest­ing in real estate now, before prices start ris­ing is an excel­lent way for res­i­dents to start build­ing wealth and pro­tect them­selves from eco­nomic downturns.

About MEXLend

MEXLend, Inc. is a Mex­i­can mort­gage bro­ker­age that cur­rently rep­re­sents 15 dif­fer­ent lenders offer­ing 200 dif­fer­ent loan options in Dol­lars and Pesos for buy­ers look­ing to pur­chase vaca­tion or invest­ment prop­erty through­out Mex­ico – includ­ing two new prod­ucts specif­i­cally for Cana­dian cit­i­zens. In recently announced results based upon post-closing client inter­views con­ducted by Mexico’s largest US lender, MEXLend won the #1 mark of dis­tinc­tion for both client sat­is­fac­tion and fastest clos­ings for the sec­ond straight cycle. 

Whether your retire­ment is fast approach­ing or just some­thing you find your­self often dream­ing about, you’ve prob­a­bly imag­ined spend­ing it in some far-flung trop­i­cal haven. But mov­ing to a coun­try that you know lit­tle about is a lot of has­sle, right? It’s prob­a­bly not worth the time and effort, you think. Besides, all your fam­ily and friends are here.

Take it from us: it’s worth it. If you look beyond your own shores you’ll find that many coun­tries around the world offer far greater ben­e­fits and advan­tages for retirees than those offered at home.

One of the sim­plest ways to improve your retire­ment lifestyle is to choose the retire­ment des­ti­na­tion offer­ing you more of what you want at the best price. It’s a ques­tion of pri­or­i­ties. What’s impor­tant to you? Is cost of liv­ing Num­ber One on your pri­or­ity list?

Maybe for you weather is the key con­sid­er­a­tion. Are your must-haves telecom­mu­ni­ca­tions and infra­struc­ture? Prox­im­ity to the States and Canada may also be a factor.

Maybe you aren’t any­where close to retire­ment. Nev­er­the­less, it’s impor­tant to think about and plan for your future. Like every phase in your life, you’ll be sur­prised how fast retire­ment creeps up on you.

That’s why, once a year, in our Global Retire­ment Index, we look closely, specif­i­cally, at the best oppor­tu­ni­ties world­wide for retire­ment liv­ing. Where will the pensioner’s dol­lars go fur­thest? Which coun­try is the safest? Where is the health care best? We give top pri­or­ity to those things that mat­ter most to any­one plan­ning for retire­ment, includ­ing pro­grams of spe­cial ben­e­fits for retirees (tax breaks, dis­counts, and free­bies, for exam­ple, that var­i­ous gov­ern­ments prof­fer to res­i­dents, some­times specif­i­cally to for­eign res­i­dents in an effort to attract invest­ment and retire­ment dollars).

We can show you the oppor­tu­ni­ties and pos­si­bil­i­ties, the win­ners of our top retire­ment coun­tries, but it’s up to you to decide what your main pri­or­i­ties are before you find your ideal retire­ment haven. The aim of our Index is to give you a good start­ing guide.

Mexico—Our New Winner

Mov­ing up four places to take our top spot as the world’s top retire­ment haven this year is Mex­ico. Mex­ico offers the per­fect mix of centuries-old tra­di­tions and con­tem­po­rary lifestyles. Mov­ing to Mex­ico means you can still have all of the ameni­ties you grew accus­tomed to north of the bor­der: cable TV, high-speed Inter­net, and mod­ern home appli­ances. And if you pre­fer, when you move to Mex­ico you can even bring all of your favorite things with you with­out pay­ing import taxes.

Goods and ser­vices cost less, so you can afford the kinds of lux­u­ries only the very wealthy enjoy up north: a maid, a cook, and a gar­dener for exam­ple. In your retire­ment here, you’ll have time to vol­un­teer at the local school, time to golf in the morn­ings, time to relax on the beach…time to savor life.

Whether your vision of the ideal retire­ment involves shop­ping, fish­ing, sun­bathing, div­ing, bik­ing, moun­tain climb­ing, para­sail­ing, col­lect­ing crafts, vis­it­ing arche­o­log­i­cal sites, par­ty­ing, going to con­certs, attend­ing the the­ater, or fine din­ing, in Mex­ico you can engage in all of these activ­i­ties, and many more.

If health care is a con­cern, you should know that in much of Mex­ico the health care is first rate. Pri­vate clin­ics and hos­pi­tals are staffed by expert physi­cians (many of whom trained in the U.S., Europe, or in Mexico’s own world-renowned teach­ing hos­pi­tals), and med­ical care and pre­scrip­tion drugs will cost you only a frac­tion of what you would pay in the States. In our Index, Mex­ico scores 79 out of a pos­si­ble 100 points in this category.

Mex­ico is such a diverse nation that every­body can find exactly what they want. You don’t have to choose between water or moun­tains; here you can have both. And because of geo­graphic diver­sity, you can also choose the cli­mate to enjoy dur­ing your Mex­i­can retire­ment: from hot and dry in the north, to hot and humid in the south, to spring-like tem­per­a­tures all year round in the Colo­nial Highlands.

You can also own the home of your dreams in Mexico—for much less than it would cost you most any­where in the U.S. or Canada. The real estate mar­ket offers end­less pos­si­bil­i­ties for your retire­ment. Mex­ico receives a high score of 84 in our Real Estate cat­e­gory. Despite what you may have heard, it’s not too late to buy real estate here.

You can own beachfront—not just ocean-view property—in Mex­ico for less than $100,000.

Once you decide to move to Mex­ico, it’s dif­fi­cult to know where to go—it’s a big coun­try. Below are the 10 places we think make the most sense for expa­tri­ate liv­ing in this coun­try, based on cri­te­ria such as health care, cli­mate, infra­struc­ture, and hous­ing costs. These are places our husband-and-wife team in Mex­ico, Dan Prescher and Suzan Hask­ins, have per­son­ally scouted and per­son­ally rec­om­mend above other options in this great big coun­try. They are: Rosar­ito Beach, Puerto Val­larta, Queré­taro, Mazat­lan, Mérida, La Paz, Campeche, Playa del Carmen/Riviera Maya, Ajijic/Chapala, and Sayulita/San Pan­cho (San Fran­cisco). Of course, we’re not for­get­ting San Miguel de Allende, one of Dan and Suzan’s favorite places in Mex­ico. Suzan recently reported of this town: “San Miguel is one of the pret­ti­est towns in all of Mex­ico. Step­ping into San Miguel’s Cen­tro is like step­ping back in time…but with all of today’s mod­ern conveniences.”

Cook­ing with­out hav­ing to do the dishes or even not cook­ing at all! A beau­ti­ful gar­den with­out the weed­ing! The avail­abil­ity of rea­son­able domes­tic help makes all this pos­si­ble for most North Amer­i­cans liv­ing in Val­larta, but be aware that the casual arrange­ment you make with Maria to straighten up your condo three days a week is a bind­ing legal con­tract. Thus, after a 3 month pro­ba­tion­ary period, your gar­dener and maid, even though they may work for other peo­ple as well, become your responsibility.

Despite the fact that most domes­tic work­ers are a part of the “under­ground econ­omy”, a good labor lawyer work­ing on behalf of a dis­grun­tled employee can still cost the employer money, so it is best to take some sim­ple pre­cau­tions. First, write a con­tact between you and the employee. List the days and hours to be worked and include what you will be pay­ing per day and on which day you will pay. List their duties and make the con­tract for one year with a 3-month pro­ba­tion­ary period, renew­ing it yearly. Always have the employee sign a receipt for his or her pay or bonus.

Sec­ondly, after three months, dis­cuss whether the employee wants you to pay social secu­rity taxes for health and retire­ment ben­e­fits and if he declines, have him sign to that effect. It may be that another employer is pay­ing this or that he sim­ply doesn’t wish to pay his share of the cost. In the absence of social secu­rity health pro­tec­tion, an employer will still be respon­si­ble for a chronic dis­ease acquired on the job or any injuries sus­tained while working.

Mex­i­can law spec­i­fies that an employee can work only 40 hours a week and no more than 8 hours per day. Fur­ther­more, full-time employ­ees are enti­tled to have statu­tory hol­i­days off with pay, or be paid dou­ble time while part-time employ­ees are enti­tled to have a paid day off as well, as long as the hol­i­day falls on a day that the employee would nor­mally work. Dou­ble time is paid if the employee works the holiday.

Employ­ees are also enti­tled by law to a Christ­mas bonus and vaca­tion. Full-time employ­ment has set rules and Christ­mas bonus, payable by Decem­ber 20, is equiv­a­lent to 15 days pay. For part-time help these times and amounts are “vol­un­tary”, but a good guide­line for a Christ­mas bonus is the equiv­a­lent of 2 weeks pay. In addi­tion, an employee is enti­tled to six paid vaca­tion days for the first year, and two more days more per year for every extra year worked.

If, after a while you decide to sell your home, or you’re just dis­sat­is­fied, be aware that any employee who has been fired or laid off is due sev­er­ance. There are a num­ber of rea­sons employ­ees can be dis­missed for cause (includ­ing three unau­tho­rized absences in a 28-day period), but the laws gen­er­ally do a good job of pro­tect­ing the worker. The sev­er­ance owed would be the equiv­a­lent of 3 months salary plus 20 days for every year worked, pro­por­tional vaca­tion pay, and pro­por­tional Christ­mas bonus. Once this pay­ment is made, make sure to have the employee sign off in agree­ment. If the employee quits or retires, no sev­er­ance is due, but you should obtain a signed letter.

By now you’re prob­a­bly ready to hire your­self, but don’t! Most Mex­i­can gar­den­ers are artists and know which plants will thrive in this spe­cial cli­mate by the sea and house just looks and feels extra­or­di­nary after the maid leaves – just be a wise employer.

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.

PUERTO VALLARTA, Mex­ico – Stand­ing on our 10th-floor bal­cony at the Westin, my wife hands me her binoc­u­lars. “I think they added the ver­ti­cals for another three floors while we were hav­ing lunch.” She points to the frame­work for yet another sky­scraper along the Ban­deras Bay shoreline.

This is not the usual use of her binoc­u­lars. For much of the last week, she’s been watch­ing pel­i­cans and frigate birds that cruise the shore­line and the parade of sail and power yachts at Marina Vallarta.

But today she wants me to watch the steel­work­ers maneu­ver a girder into place. Beyond this build­ing are three recently com­pleted 20-story build­ings. Up the beach a few steps are more con­dos with mag­i­cal names – Shangri-La, Grand Venet­ian, Portofino and Bay Grand.

In fact, con­struc­tion goes far beyond the con­fines of Puerto Val­larta. It is every­where along this beau­ti­ful coast. In the places where it is not yet com­pleted, bill­boards – in Eng­lish – announce the immi­nent arrival of another oppor­tu­nity to live in unsur­passed lux­ury and ele­gance. Even dis­tant Sayulita, the charm­ing, funky surf­ing town cel­e­brated by Barry Gol­son in his book Grin­gos in Par­adise, is boom­ing with building.

In this part of Mex­ico, real estate is big business.

It’s good to know, of course, that if a short­age of con­dos devel­ops in Miami, there’s a backup sup­ply in Puerto Vallarta.

What that means for any­one who has con­tem­plated a sec­ond home in Mex­ico or retire­ment in Mex­ico is sim­ple: A buyer’s mar­ket is here or on its way. The sup­ply of con­dos and homes for sale exceeds demand.

But let’s put it another way. While the num­ber of mil­lion­aire house­holds in Amer­ica has shown stun­ning growth in the last few years, mil­lion­aires are still in short sup­ply rel­a­tive to the num­ber of lux­ury oppor­tu­ni­ties that have been created.

Does this mean a crash is com­ing to Puerto Val­larta? I wouldn’t bet on it. The mar­ket here isn’t likely to suf­fer the steep declines we’re see­ing in places like San Diego, Las Vegas and Miami. Here’s why.

Accord­ing to Val­larta Lifestyles, whose cur­rent 265-page issue is burst­ing with real estate ads, the aver­age condo resale price rose 79 per­cent from $196,000 to $351,000 between 2003 and 2007. That’s a hefty pre­mium over the 32 per­cent increase in the Office of Hous­ing Enter­prise Over­sight index for the United States over the same period. Sounds ripe for a fall, doesn’t it?

Not so fast.

The appre­ci­a­tion isn’t so stiff if you pay in euros. The euro has appre­ci­ated about 25 per­cent against the dol­lar over the same period. Mex­i­can ocean­front real estate priced in dol­lars looks a lot less expen­sive to Euro­peans than it does to us.

Another thing to remem­ber is that Mex­ico isn’t blessed with our cre­ative financ­ing. Indeed, home mort­gages barely exist. Most homes are pur­chased for cash. So if spec­u­la­tors have bought houses and con­dos in Mex­ico, they’re prob­a­bly well-financed com­pared with the folks who used liar loans to bor­row their way to bank­ruptcy in Amer­ica. Here, prop­erty own­ers are likely to hang tough, wait­ing for a bet­ter mar­ket. There will be fewer dis­tress sales.

Maybe.

But there’s a rea­son all those bill­boards are in Eng­lish. Amer­i­cans are the pri­mary buy­ers in Puerto Val­larta. And the major­ity are from Cal­i­for­nia. I would not be sur­prised if many of the con­dos sold in the last few years were pur­chased with cash from refi­nanc­ing a house in Cal­i­for­nia. As a result, the sup­ply of houses for sale in PV may increase sig­nif­i­cantly in the next year or so as Cal­i­for­ni­ans look for a source of cash and find it in Mexico.

Bot­tom line? It won’t have the stark drama of places like Fort Myers, Fla., or Stock­ton, Calif. But Puerto Val­larta looks like a long-term oppor­tu­nity for buy­ers and renters alike.