Vacational real estate in Mexico registered a massive spike in 2007 by growing 46.6 percent and all indicators point to 2008 being an even better year for the sector.
According to an industry report commissioned by the vacational rental giant RCI, last year Mexico made up 69 percent of holiday homes that were built in the region which comprises of Mexico, Central America and the Carribean.
That figure included 44 master plan developments in diverse destinations all across the nation. Cancun and Los Cabos were the top two cities with the biggest tally of new vacational real estate registering 200 and 80 percent growth respectively, the report stated.
The report further went on to add that the vast majority of owners were Americans (82.5 percent), followed by Latin Americans (15 percent) and Europeans (2.5 percent).
This explains the large numbers of U.S. and European retirees who have been flocking to Mexico in recent years buoyed by a cheaper cost of living and a better climate compared to their native countries.
Taking this into account, projections for 2008 reflect continued growth within the sector and should beat last year's record figure, the report said.
An important factor behind the industry's recent success is attributed to better checks and balances, established construction firms entering the market - Donald Trump last year opened a development in Baja California - and the general high quality of services on offer to the foreign buyer.
The source of demand comes from around 75 million American Baby Boomers - people who were born between 1946 and the early 1960s - who stand on the cusp of retirement and realize that their dollars can buy them more comfort and luxury in Mexico than staying in the United States. According to the report, this age group is more inclined to spend money on real estate than status goods such as cars, planes or yachts.
Finally, the report concluded that despite the slowdown in the U.S. economy the vacational real estate market in Mexico would continue to flourish because of its relative cheapness compared to its counterpart north of the border.
This article was translated from Notimex