Buying Mexico Property

Country:  Mexico

Mexico may not be the first thought that springs to mind when considering second home options, mostly because it's a lot further than mainland Europe, but also because of a lack of information. In fact, the country is already a fantastically popular place to own a holiday or retirement property, it's just that the majority of savvy property buyers are Americans and Canadians, who have so far had the monopoly on its choicest locations and developments. And they're laughing all the way to the Baja, which is all the more reason to consider the country as an attractive option for your own home from home.
 
The first thing to consider when contemplating buying Mexico property is its vast size and huge selection of regions either established or up and coming in which to start your search. These days most people on a package holiday to the country start off in Cancun, favourite spring break destination and famed for its nightlife. It's a very developed resort with a full range of amenities and ready rental market, or you can use it as a starting point to explore the Yucatan Peninsula, the south-eastern tip of the country that juts into the Gulf of Mexico.  
 
Cancun forms the northern edge of the Riviera Maya, a 112-kilometre strip of sand and beach stretching south to the Belize border and including the established resort of Playa del Carmen and the less developed and more restful Tulum. According to Cyndi Ader of Cancun Properties, Cancun property has been rising steadily in price over the last few years at "about 15 per cent annually and the rental markets remain strong. Pre-construction opportunities remain a popular choice for buyers, getting in early to enjoy a higher appreciation". But there is also burgeoning demand for condo-hotel properties, which can be enjoyed through the year but rented out easily when not in use.
 
Cancun Properties has a development of oceanfront condominiums for sale in Cancun's hotel zone with three-bedroom properties starting from $639,000 (£326,000). Alternatively an off-plan beachfront development with golf course just ten minutes from Playa del Carmen can include rental management for properties, which start from $583,000 (£298,000).
 
Travelling north along the Yucatan peninsula, Campeche is the latest region to feel the effects of the overseas property dollar allure. The town itself is a UNESCO World Heritage Site founded by the Spanish conquistadores in 1540 although it is the surrounding coastline that has been earmarked for tourism development. There are 11 golf courses planned within a 15-kilometre radius of the centre of the development boom at Campeche Playa Golf Marina and Spa resort, 45 minutes from the city, which will include its own Jack Nicklaus signature course and 3,000 properties - apartments, townhouses and penthouses. Property agency Future Properties points out that the developments will be designed to retain the environmental sensitivity of the area, and Campeche property start from just £139,000. The current infrastructure includes two international airports (with direct flights to the UK scheduled to start in 2008), and there are plans for a new highway which will reduce the journey time from airport to resort from 90 to 30 minutes.
 
On the Pacific side of Mexico's abundant coastline lies the famously exotic Acapulco, immortalised by Frank Sinatra and giving Cancun a cocktail umbrella-sized run for its money. A popular cruise stop along the Pacific routes, the resort lost some of its old school glamour in the 1970s, but the regeneration following the devastation of Hurricane Pauline in 1997 has reinstated much of its appeal, and it remains the granddaddy of Mexican holiday resorts. To exude some of your own glamour, Ron Lavender is selling a four-bedroom property in Las Brisas with two front terraces to enjoy the bay view as well as a pool, Jacuzzi, open-plan living area and even servants quarters for $2 million (£1 million).
 
Acapulco may be basking in the glory of its decades-long heyday, but much of Mexico's recent growth spurt has been orchestrated rather than organically grown. Mexico's tourism trust Fonatur was set up 30 years ago to promote tourism and development at key points along its coastline, with Cancun, Ixtapa, Los Cabos, Loreto and the Bays of Huatulco earmarked for new property and foreign investment developments. Purists will complain this has changed the nature of Mexico's pristine coastline, and certainly the unequivocal aim of Fonatur is to promote tourism, sometimes at the expense of unspoilt oceanfront. But these property developments represent a tiny portion of Mexico's some 9,000 kilometres of coast, and Fonatur has encouraged the infrastructure needed to maintain the resort developments, succeeding at its aim of attracting the all-important tourist dollar. And house-hunters can be thankful of the choice and quality of Mexico's thriving property market.
 
Of the two Fonatur-directed regions on the Pacific Coast, Ixtapa is the most successful (Huatulco attracts rather less tourism trade than Fonatur may have hoped). A little way up the coast from Acapulco, Ixtapa and its quieter neighbour Zihuatanejo are bearing the fruits of Fonatur's labour with a healthy increase in capital appreciation and promising property rental returns. Tim Sullivan of Ixtapa Real Estate says the region is about 1.5 years into the property boom with prices rising around 15 per cent last year. "The feeling is that this is the start of a six-year growth cycle," says Sullivan (based on Felipe Calderon's presidency, which started in December and will run for six years). "Demand is picking up, not only in Ixtapa but in the surrounding areas." He explains that five years ago beachfront property would have cost around $20 (£10) per square metre, now it's up to $250 (£125). But that's still less than in Cancun or Acapulco, where beachfront locations cost from $1,000 to $1,500 (£510 to £765) per square metre. And he also points out that the city only has 5,500 hotel rooms and around one million visitors per year, so a rental return of around ten per cent is quite a conservative estimate.
 
The Amara development in Ixtapa is located on the beachfront and will comprise three- and four-bedroom apartments in a condominium development with pools, gym and sports facilities. Four-bedroom condominiums cost $425,000 (£216,000) for 195 square metres, and a two-level four-bedroom penthouse is on sale for $764,000 (£390,000) through Ixtapa Real Estate. For a smaller more exclusive option, Preciosa is a ten-condominium development with panoramic views of Zihuatanejo Bay and harbour benefiting from an infinity-edge pool and tropical gardens, with the remaining two units on sale for $360,000 (£180,000) and $780,000 (£390,000) through Ixtapa Real Estate.
 
The pockets of property development along Mexico's gulf and Pacific coast may be making inroads in the race for overseas investment, but it's the Baja California peninsula coastline that has trumped the rest of the country (its currently being Trumped quite literally with a Trump Tower development going up just south of the border). This is to a large extent because of its proximity - many of the most popular resort towns are just across the border from Southern California, but even the Baja Sur resorts are well connected to the US. The peninsula extends around 1,250 kilometres from the north-west edge of Mexico, from Tijuana in the north to Cabo san Lucas in the south, taking in a multitude of pristine white beaches on both the pacific and gulf of California sides.
 
Pat Butler, president of Club Acquisition Company which is responsible for the El Dorado Ranch and Estrella del Mar developments on the Baja peninsula says the surge in interest along the coast is being fuelled by the baby-boomers out of the US and Canada. "We've seen double-digit appreciation of between ten and 15 per cent, and this trend is expected to continue." He admits some areas like Cabo san Lucas are more expensive than others, but the market in somewhere like San Felipe, only two hours drive from the border can be up to 30 per cent cheaper than California beachfront real estate and the cost of living is still very reasonable.
 
The El Dorado Ranch development is 11 kilometres north of San Felipe, around a two-hour drive across the border, and offers a choice of plots from $40,000 (£20,000) on which to build your perfect property. The development includes golf, sports and leisure facilities as does its sister resort of La Ventana del Mar. On the mainland coast of the California Gulf, Butler is also developing Estrella del Mar at Mazatlan where condominiums start from around $330,000 (£168,000).
 
For a truly commuter-belt property, the Waterfalls at Malibu development is 15 minutes from the US border, and will be built around a custom waterfall with trendy architect-designed properties starting from $239,000 (£118,000) through Bustamente.
Just north of Ensenada in the gated community of Cibola del Mar, Baja Relocation has a traditional three-bedroom Mexican hacienda for sale where all the rooms open onto the terraces at the back with space for a pool. The property is only half an hour from Baja's renowned Guadalupe Valley wine country and costs $525,000 (£268,000).
 
For the pleasure of part-time ownership, the Mision la Serena development at Los Cabos on the tip of the Baja Sur offers a fractional ownership scheme. Buyers will own the title to their fraction of the property and can choose ownership options from three to six weeks, either fixed or floating, or a quarter share of 12 consecutive weeks, with ownership starting from under $200,000 (£100,000).
 
 
Buying Costs and Processes
 
The Mexican constitution prohibits foreigners buying or owning property within 96 kilometres of an international border or within 48 kilometres of the Mexican coast but a new method of owning property through a fideicomiso or Mexican Property Trust gets around this restriction. This is a trust agreement which gives the buyer full rights of ownership. The Department of Foreign Affairs issues a permit to a Mexican bank of your choice who acts as trustee for the trust of which you are the beneficiary. You use and own the property or sell it by transferring the trust to another owner. The initial term of the trust is 50 years renewable for similar periods indefinitely.
 
Fees & taxes

The costs involved in buying property in Mexico include:

• Acquisition tax, of around 2% depending on which state you buy in
• Appraisal tax if your property in Mexico is reappraised after the sale and found to be worth more than 10% above the price you paid for it
• Registry fees of 1.3% to have the public records updated
• Public notary fees of around 1.5 %
• Costs of setting up a bank trust, which can range from $500 to $1,500 and an annual payment of around $300 to $500
• Legal fees and a foreign office permit fee of around $150
• All in all costs range between 5% and 10 % of the purchase price

First published in May 2007.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.

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	Ref 3113772, Quintana Roo, Cancun, Mexico
	Price: £56,663 Type: House Bedrooms: 4
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	Ref 3113773, Quintana Roo, Cancun, Mexico
	Price: £68,897 Type: House Bedrooms: 5
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	Ref 2222376, Quintana Roo, Playa del Carmen, Mexico
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	Ref 3113769, Quintana Roo, Cancun, Mexico
	Price: £515,120 Type: House Bedrooms: 3
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	Ref 3113770, Quintana Roo, Cancun, Mexico
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	Ref 3113771, Quintana Roo, Cancun, Mexico
	Price: £925,284 Type: House Bedrooms: 5
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