Beach Property Developments in Mexico

In 2007, the market for beach property developments continues to be bouyant with estimated sales earmarked around 10,000 units.

"The boost in the industry is due to foreigners buying houses worth more than US$40,000 and midde- to upper-class Mexicans wanting to have their own weekend home," explains Alexander Georgelos, a realtor with ReMax del Mar.

Popular destinations with expats looking to buy into the Mexican market are Los Cabos, Rosarito, San Felipe, Puerto Peñasco, Cancún and Playa del Carmen. Meanwhile, the domestic market has seen a surge in areas such as Acapulco, Puerto Vallarta, Mazatlán and the Riviera Maya.

Diverse projects are in the works practically all across the nation's major tourist destinations.

For example, the Spanish firm Grupo Mall is targeting undeveloped coastal terrain to provide mega complexes and second holiday homes. Their first project will be a US$600-million resort in Campeche, which lies on the Mexican Gulf coast, and will boast 3,000 apartments, a 500-bedroom hotel and an ecologically-friendly golf course designed by the legendary Jack Nicklaus who has already lent his name to 14 courses in Mexico.

"Right now we're finalizing the details for a project in Tampico which is about 300 kilometers from the Texan border," says Grupo Mall's President Julio Noval. "We're also looking at Chiapas to develop eco-tourism ideas. We see the area as being extremely attractive for nature-lovers," he added.

The majority of interest in Grupo Mall's Campeche complex has unsurprisingly come from Europeans, Americans and Canadians who are willing to spend more than US$250,000 for a unit.

"Mexico has enormous potential when it comes to tourism. It has breathtaking coastlines, especially along the Gulf Coast, and in the near future it will rank along with any country in the world in terms of its touristic infrastructure," said Noval.

All of the interest by domestic and foreign developers has caused land prices to rise sharply. In Cancun and Playa del Carmen, the price for a square meter of land was between US$1,800 to US$2,100 in 2006. That has experienced a dramatic upswing in recent months with current prices ranging between US$2,600 to US$3,600 a square meter.

"Because of the scarcity of coastal territory for sale (in Cancun and Playa del Carmen) competing developers have inadvertently pushed the market price up," explains Jorge Kasab, director of Costa Realty in Cancun.

Puerto Vallarta, which leads the market in sales for property valued US$300,000 or under, has seen a 52-percent increase in its cost of land with prices standing between US$2,500 to US$3,800 a square meter. Equally, Acapulco, the resort which gave birth to Mexico's tourism industry, saw a price hike of 40 percent this year.

"Land for sale in Acapulco is each time getting scarcer especially land that is not co-owned by farmers (known as ejidos) hence the pressure on prices," says Dionisio Sanchez, director general of Sare which owns the development Marena.

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