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In a Slow Economy, Where are Investors Stashing Their Money? Tulum, Mexico

Thomas Lloyd

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2009 is promising to be the year of “shifting of capitals” and readjustments of investment portfolios for many people throughout North America. The traditional investments into assets such as stocks, mutual funds and real estate throughout various regions of North America have been going through a decline or stagnate growth period in the past several months. People are being forced to venture or think outside of the box for returns that they experienced at the beginning of this decade.

1) Mexico real estate changes …safer

2) Factors of promise for growth

3) Tulum Land and property investments in Mexico…. promise of growth

With these changes both in the North American traditional investment options and the improved Mexico real estate environment, there is a steady increase of demand brewing south of the border.

Real estate in Mexico as an investment option has changed drastically over the past decade. The risks of doing business in Mexico were quite strong versus the expected return. You have heard the stories though, in spite of these higher risks, various individual investors have invested into waterfront properties or projects and have made mind boggling returns within a few short years. There have also been those stories of people who mismanaged their risks, and these investors have lost money and or are still trying to recuperate. In the past various years, the Mexico real estate market has seen the introduction of various new tools which have helped tremendously the real estate investment environment. Title insurance companies have begun to offer tools that help investigate and manage property investments throughout various regions of Mexico. Escrow accounts have also become accessible to the security of both the buyers and sellers for their property transactions. Traditional methods in the management of deposits and earnest money involved transferring such funds into an agencies bank account or even more riskier, direct into the sellers account. With the recent introduction of third party escrow accounts, both buyers and sellers have more transparent visibility and management of the funds during the negotiation, drafting, and the reviewing of the contracts. The real estate market brokering services in Mexico has also seen considerable improvement in regards to the training and the regulation process. The AMPI organization has been working arduously on introducing a nationwide licensing process for realtors to obtain a professional license and degree to exercise activities in the industry. This program has seen great advancement on the federal level with the first exam being applied in the fall of 2008. Courses on the real estate operations and several focusing on transactions within the restricted zone are continuously being offered and applied throughout many cities in Mexico. All of which improves the overall knowledge, services offered, and safety to new buyers and investors into the Mexican market.

What are some of the factors that bring and attract seasoned real estate investors to a region, or even to a country to purchase properties? There are thousands of formulas or strategies involved in investing into real estate as many a reader knows. But due to the many factors of influence involved in determining value on a piece of property, a particular formula’s probability of success not only depends on the regional indicators, but also depends on maintaining a constant on the economical environment. In the past several years, it is obvious that the world economical data is fluctuating and adjusting in record quantities. So where do the experts advise to reinvest capital or where to buy real estate? When speaking or reading the notes of many of the successful real estate experts you will soon discover a few common factors that many always include into their calculations when acquiring or investing into properties. A couple of these include;

a) what is the projected population growth

b) what is the quality of life

c) what land is available and has building accessibility

These indicators or factors are not the only items that are reviewed by successful land investors, but these are normally part of the questions to be investigated before pulling a trigger.

The Mexico real estate market is identified as one of the countries with strongest potential of growth and returns. Several regions have been experiencing booms driven by the foreign buyers and other regions are driven by the increase in their own internal demand for housing. There are various pockets throughout the country whose regional factors project high future demand and very interesting returns. This month we have identified one area on the Mexican Caribbean coastline whose factors project a strong prospect for high growth. Tulum Mexico . A small Mexican Caribbean Village with a population of approximately 15,000 people has projected growth rates estimated to reach double digits and possibly surpass the extraordinary growth record of its neighboring sister city of Playa del Carmen. This is causing the land for sale in Tulum to increase in demand which has put a pressure on the city to create good urban planning for better protection of the environment and to improve the living atmosphere of the community. The city has responded well and has maintained density figures throughout the future city to some of the lowest restrictions of the entire Riviera Maya coastline. The main draw to the cities of Cancun, Playa del Carmen, Cozumel cities have been the Caribbean beachfront activities and life style. Tulum is not expected to differ from these past urban growth models and have based their predictions for future growth and urban plans for development by studying closely the history of their neighbors successes and failures. Protection of the environment and low density is the main message being communicated by the city planners which coincides with the request from the market. People are more “green urbanism” conscious and are looking to live and retire within communities that maintain a short term and long term plan of sustaining the environment areas in their living areas. Tulum has a unique beachfront urban community plan given that the present village growth has occurred along highway 307, which is approximately 2 kilometers from the beaches. The beachfront road leading to the north end of the village is national park land where the Tulum ruins exist. On the south part of the beach road various ecological friendly hotels dot the coastline as you drive south into the Sian Kaan Biosphere park. These small boutique hotels operate with solar, wind, and alternative generating sources for their energy consumption needs. The unique location of the national parks and Biospheres in relation to the beachfront areas has created an interesting situation on the supply of the land available for future housing. As the most sought out real estate properties include beachfront or ocean view residences, and these options are already protected by the government from development, new areas of demand as near to the beach have begun to emerge.

With the traditional investment markets and assets experiencing depressed returns in the past several years, many people are looking towards alternative areas to park their capital. Mexico has emerged as a very viable option that several years ago would have been too risky versus the expected returns. But in the past 10 years the business atmosphere, the progress and introduction of new regulations and real estate tools have made the risks much more administrable for investors. Various real estate experts have applied their knowledge and formulas in Mexico’s markets quite successfully but still, a close eye on ALL factors both regional and nationally in order to increase the probabilities of a successful investment is always recommended. There are various pockets throughout Mexico whose factors all point to strong favorable potential for future growth and one of these includes the small beachfront village of Tulum, Mexico. We suggest that if you are looking for a Mexico investment alternative, you include Tulum as one region for further investigation.


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