Canadians are buying real estate in Mexico
Where Canadians are buying real estate in Mexico
It is no secret that Canadians love Mexico; for years, thousands of
Canadians have been fleeing the cold Canadian winters to the warm
beaches and colonial towns of Mexico. Over the past few years, more and
more Canadians looked to call Mexico their home away from home and over
the last year, annual internet search volume on Google has shown stable
Canadian interest in Mexico real estate.
As a part of our trip to Puerto Vallarta this year to the Mexico Real
Estate Forum, we spent some time with one of our partners, Element-360
(E360). E360 is a small real estate advisory firm using their extensive
track record to support real estate developers execute on responsible
development opportunities worldwide. Using proprietary systems, the
research team has been able to understand the Canadian market and use
technology to assist buyers in navigating Mexico real estate markets.
Their team has the pulse on where buyers are located and specifically
where Canadians are searching to buy.
E360 reports that over the last year, Canadians who have been
searching for Mexico real estate have primarily resided (in order of
search volume) in British Columbia, Alberta and Ontario. Leading the way
are BC and Alberta — with strong economies and increasingly cold
winters, there is a clear internet search pattern for West Coast
destinations. The results of their research showed Puerto Vallarta
as the top Mexico real estate search by destination. Of those Canadians
searching for Puerto Vallarta real estate, they were primarily from
British Columbia. No surprise to those shivering in BC winters, the
search peaked during January when average temperatures are at a 12-month
low.
Consistent with E360's internet analysis, a local MLS service, AMPI, shows the majority of buyers in the Puerto Vallarta real estate
market are from Canada. A local realtor in the Puerto Vallarta market
suggests that of the 50,000 North Americans living in Puerto Vallarta 30
to 40 percent are Canadian and that number continues to increase. In
fact, compared to the previous years, AMPI has reported an increased
amount of buyers from Canada in 2011 concluding that 35% of the Puerto
Vallarta buyers this year are from the area.
So why do Canadians love Puerto Vallarta? Well, there are always the
lifestyle reasons. Great food, spectacular beaches, amazing restaurants
and friendly locals. There are the Canadian-owned businesses that
provide some of the comforts of home as well as the strong Canadian
population providing friendships, like-minded conversations and of
course, live airings of Hockey Night in Canada. But E360 is quick to
point out that like anything in life, a good value at a great price is
always a strong motivator.
Generally speaking, the Puerto Vallarta real estate market reflects
discounted property pricing. According to AMPI, the property that is
selling right now has an average discount of 35 percent against 2008
pricing levels. As you work with a local realtor to define more about
your needs, you will start to see a strong opportunities when you review
specific residential products. For example, a condo with two bedrooms
and a den with a spectacular ocean view and beach access condo typically
ranged between $450,000 and $550,000 in 2007. We performed a search at
one of the local brokerages Pacific Boutique Properties and found that
you can get the same property between $350,000 and $450,000 today.
Another trend we saw during our time in Puerto Vallarta was the areas
commitment to infrastructure. The President of Mexico has recently
declared that 2011 be the Year of Tourism and funding is beginning to
move into these popular regions. The area is consistently receiving
government funding to improve infrastructure throughout the region and
areas like Nuevo Vallarta, Sayulita, Bucerias and Punta Mita are
becoming more desirable because of the improvements on the way. Most
recently, the Nuevo Vallarta highway was widened and extended to the
north. There are two highway improvements planned in the State 1)
highway to Mismaloya and 2) highway to Punta Mita. Other notable
infrastructure improvements include the phase 1 completion of the
Malecon, La Cruz Marina project completed and water treatment plant
completed in Litbu. Historically, Puerto Vallarta economy benefits
greatly from tourism.
The side streets off Paseo de Montejo are also lined with elegant old homes. © John McClelland, 2007
Another region that is seeing a significant amount of International and National attention is Merida,
the capital of the Yucatan. E360 reports that the fastest growing
internet search we discovered for Mexico real estate was in Merida,
Mexico. Merida continues to be a city that has been at the top of the
news. With recent recognition as the safest airport in the world as well
as its designation as the only state in Mexico without a drug or gang
related death in 2010, the Yucatan has seen strong interest from
Canadians. Searches for Merida Mexico real estate have increased by 70
percent over the last twelve months. A consistent trend with Canadian
internet searches is the regions in Canada most interested in Mexico
real estate. Again, the source market for Merida Mexico real estate was
primarily from British Columbia, Alberta and Ontario. We followed up on
this emerging trend with a local Merida real estate agent Bob McCain
from Carib Properties. Bob said three of the top motivations to purchase
in Merida have been the Spanish colonial design, low cost of living and
affordable health care.
With destinations like Chichen Itza and Cancun
hours away, Merida is often viewed as a home base for the activities in
the region. Merida's infrastructure, like Puerto Vallarta is seeing an
increase of government funding as a new road promises to connect Merida
with the newest ocean front hot-spot, Sisal. This commitment to
connecting Merida is keeping prices in the area stable with very little
decreases in pricing as displayed in the many more mature retirement
locations. However, as McCain points out, prices in Merida are a great
value and despite increases over the past few years in areas like
Progreso, there are still great ocean front opportunities for a fraction
of other locations in Mexico.
There is a renewed commitment to tourism and an increase in tourism
traffic, but those are not the only factors affecting the Mexico
economy. There are additional indicators of growth to be encouraged
about. During the fourth quarter of 2010, the Mexican economy grew at an
annualized rate of 4.4 percent. The Economist Intelligence Unit (EIU)
forecasts Mexico GDP to expand at an average annual rate of 3.7 percent
from 2011 through 2015. Mexico is the third largest trading partner of
the U.S. After losing significant market share to China during most of
the 2000s, Mexico captured a larger portion of the U.S. trade balance in
2010. This was the first time since China entered the World Trade
Organization in 2001 that Mexico posted a larger gain of the U.S. market
share than China. Mexico has continued to maintain its U.S. import
market share during the first months of 2011. The two drivers of
Mexico's increased market share are
- higher Chinese energy transportation costs and
- increasing labor costs in China due to the rise of the middle class.
As many Canadians search for their ultimate retirement destination or
for just a break from the cold winters, Puerto Vallarta and Merida
should remain at the top of the searches. The future of those
destinations as well as the overall Mexico real estate market will be
very exciting to follow.