Striking Pay Dirt in Mexico
 Kevin Brass - International Herald Tribune
| | The Campeche Playa resort being built by Grupo Mall of Spain. (Courtesy of Grupo Mall of Spain) |
Playa Del Carmen, Mexico - For its first large-scale residential and hotel development in Mexico, the Spanish conglomerate Obrascón Huarte Lain is building a sprawling complex around a series of man-made canals and lagoons along the Caribbean coast south of Cancún.
Small boats ferry residents and guests around Mayakoba, a 40-hectare, or almost 100- acre, project, the first phase of which opened last year. The site is planned to eventually include six luxury hotels and dozens of private villas for a total cost of $1.5 billion.
"There is no place to do this kind of development in Spain," said Juan Aguilar, director of Mayakoba. So Mexico has become the hot new territory for Spanish developers.
In addition to OHL, companies like Fadesa, Grupo Mall and Grupo Lar have moved aggressively into the Mexican market, many for the first time.
As a result, Spain is now the leading investor in a tourist-related hotel and housing development in Mexico, according to Fonatur, a government agency dedicated to developing the country's tourism sites.
"The Spanish developers coming in are well-capitalized, and they understand how to get things done in the Latin culture," said Jim Reilly, an investor and developer active in Mexico.
Eighteen months ago Reilly bought a 76- square-meter, or 817-square-foot, beachfront unit in the preconstruction phase of Mayakoba for $665,000. He recently sold the unfinished unit for $1.1 million.
"We've been seeing steady appreciation across the board of at least 15 to 30 percent a year," he said.
Even the recent turmoil in Mexico — including drug-related violence, political unrest in the south and a bitterly disputed presidential election — has done little to curb the enthusiasm of developers and buyers for Mexican property.
"From an economic standpoint it is quite stable," said José Larroque, coordinator of the Mexico and Latin America real estate group for Baker & McKenzie, a Chicago-based international law firm. "You don't have the ups and down that you used to have with currency devaluations."
Several factors have made developers and buyers more comfortable with doing business in Mexico, including the wide availability of title insurance, the accessibility of financing and new transparency in the development process.
"We now know that Mexico has this kind of security," said Miguel Rico, director of sales for Xcalacoco Beach Resort, a 265-unit development on the Caribbean coast near Mayakoba.
Xcalacoco, which is designed around an ecological park, is the first project outside Spain for the TM Real Estate Group.
The resort, which is right on the beach, will offer condominiums and villas ranging from $400,000 to $800,000.
TM, which also is developing a project near Cabo San Lucas, is targeting American and Canadian buyers, who are gobbling up property in Mexico.
Foreigners, mainly North Americans, are buying 10,000 homes a year in Mexico and that number is expected to double in the next five years, according to government statistics.
"There is tremendous demand for housing in general in Mexico," said Luis Pereda, chief executive of Grupo Lar, which moved into Mexico two years ago and is primarily targeting Mexican buyers.
Mexico was the company's second foreign market — Portugal was the first — but it now represents the company's biggest foreign investment. With 15 developments planned in five states, the company expects to pump about $390 million into Mexico in the next three years.
The company is focusing on new construction, like a 294-house development in Guadalajara, Mexico's second-largest city, but Pereda expects to eventually move more aggressively into the second-home market.
"The demand is very high" for second homes, Pereda said. "Not only Mexican and U.S. buyers, but we are seeing increased interest among Europeans to buy."
Pereda said the company had kept its eye been on Mexico because the rate of housing construction in Spain in recent years was "unsustainable."
Many real estate analysts echo his remarks, saying that housing in Spain was seriously overvalued, particularly along its coastlines.
Aided by the strength of the euro, which is valued at around 14.25 pesos, or $1.30, land prices in Mexico are a fraction of those in Spain, builders say. And while oceanfront land is scarce in Europe, it still is possible to find large tracts available in coastal areas like Baja California and along the Pacific.
Grupo Mall is developing 400 hectares on the little-traveled west coast of the Yucatan, about an hour's drive from the city of Campeche.
The Campeche Playa Golf, Marina and Spa Resort eventually will include 3,000 units, with condos priced at between $250,000 and $1 million.
Campeche Playa is one of several developments offering a form of hotel-condo ownership increasingly popular in Mexico. Although plans vary, most offer buyers full ownership of their properties, which then are used as part of the hotel's rental stock when the owner is away. Owners are offered access to the yacht owned by the resort and receive a 10-year membership in the golf club.
Although the Campeche project is still under construction, 600 of the 3,000 units have been sold, according to Danielle Carlson, president of World Star International Marketing Services, the U.S. sales agent for the project.
"Buyers are looking for something less crowded," Carlson said. "It's the alternative to Cancún."
Similarly, OHL is billing its Mayakoba project as a contrast to the Miami Beach-style row of high rises in Cancún.
To preserve the coastal ecosystem of mangrove trees, the hotels and most of the residential units are set back from the narrow strip of beach.
In the first phase of the project, hotel suites ranging from 900 square feet to 2,100 square feet are selling for $850,000 to $1.2 million, while a four-bedroom, 5,000-square-foot villa is priced at $3.5 million.
Sales should get a boost in February when the new Mayakoba golf course, designed by Greg Norman, plays host to a Professional Golfers Association tournament, the first major PGA tour event ever held in Mexico. |
Vallarta Weddings
Puerto Vallarta Real Estate | January 2007 
Tell a Friend
Site Map
Print this Page
Email Us