By Enrique Hernández
For Forbes México (Sp)
Mexico is the refuge of thousands of Americans, who avoid the stress of high inflation and interest rates experienced in the United States by buying cheap houses facing the sea and white sand beaches of Cancun, Tulum, Puerto Vallarta, Los Cabos and other cities.
This preference for Mexican land was seen in the real estate sector, which in two months of this year sold more than 300 apartments to Americans, especially residents living in California, who paid more than 5 million pesos for some property in Tijuana.
“High inflation and interest rates in the United States, the Covid-19 pandemic, digital nomads and the fact that a Netflix or several technology companies institutionalized the home office helped make the Mexican market increasingly attractive to the US and Canadian markets. ”, says Romain Benenatti, Director of Operations of Clikalia Mexico.
Each tourist destination in Mexico has its role within the US macroeconomy, since Los Cabos, Puerto Vallarta and San Miguel de Allende are cities for retirees and retirees, while Tijuana is becoming a corridor for health and dental tourism for Californians, adds the manager.
Tijuana, a city that is not strictly a vacation city, has registered a high sale of apartments for people who work in San Diego: “They have realized that living and buying an apartment in Tijuana costs a fifth of an apartment in San Diego” says Eugene Towle, managing partner of Softec.
Americans have also seen that living in any Mexican tourist destination costs a third of what it costs to live in New York, he tells Forbes Mexico.
At the beginning of the Covid-19 pandemic, Americans pondered whether to stay cooped up in a small, dark apartment in New York or travel and hire an Airbnb in Cancun, Tulum, Puerto Vallarta or Los Cabos, he says.
“At first the people who were arriving said: ‘Look, I’m going to come to Mexico for a month and see what’s up,'” says the director of the company specializing in real estate consulting and research. Later, he adds, they realized that from Mexico they can work by connecting through Zoom, Teams, Google Meet or any other video call application.
Today a 100-square-meter apartment is worth $200,000 USD in Tijuana, but that same apartment in San Diego costs between $1 million and $1.5 million USD, Towle emphasizes.
According to figures from Softec, the Covid-19 pandemic plummeted the sale of luxury apartments and houses in different tourist cities such as Los Cabos, Tulum, Cancun, Playa del Carmen, Puerto Vallarta, San Carlos, Puerto Peñasco, Mazatlán, Acapulco by 34%. , Huatulco, Ixtapa Zihuatanejo and Riviera Nayarit.
In 2020, Americans only bought 8,000 luxury homes in Mexico, when a year earlier they purchased more than 12,270 apartments a few meters from the beach, explains Softec.
After a massive vaccination in Mexico and the United States against the coronavirus that causes Covid-19, luxury home sales totaled more than 11,000 units in different tourist destinations in the Mexican Republic during 2021.
And by 2022, sales of luxury beachfront apartments in Mexico will increase by more than 32.08%, since more than 15,605 units are expected to be sold, adds Softec.
In 2020 and 2021, Mexico broke the inertia of attracting innovators, because now the early adapters have arrived: “it is a market 10 times larger than the innovators”, details the managing partner of Softec.
Most foreigners who buy houses and apartments in Mexico do so in cash, since there are no loans or mortgages for clients from the United States, Canada and other parts of the world, says Towle.
Suddenly, banks offer credit to foreigners, but it is a very messy process; there are a couple of companies that offer loans to foreigners to buy properties in Mexico, but they have limited access, he adds.
The Americans saw that they could acquire an apartment in Mexico that did not have a beach front, but with access to the sea and its white sand at a price between 100 thousand dollars and 200 thousand dollars, he explains.
Between 2004 and 2007, Mexico had a peak in home and apartment sales to Americans at a price of 400,000 dollars, but they buy homes between 200,000 dollars and 250,000 dollars, adds the managing partner of Softec.
The Covid-19 pandemic, the home office and high interest rates brought a demand for housing from Americans in Cabo San Lucas, Valle de Guadalupe, Puerto Peñasco, San Carlos, Puerto Vallarta, Riviera Nayarit, Puerto Vallarta, Tamarindos, Costa Alegre and San Miguel de Allende, says Phillip Hendrix, a member of the Real Estate Innovation and Transformation Cluster (CITI).
The capital markets turned to the luxury segment, because there comes a time when if you have to invest money at an interest rate of 0.25% “well, it doesn’t beat much,” he adds.
In the United States there were mortgage rates between 2 and 3%, but “today we are seeing mortgage rates of 7%, which for the United States market is an important issue and that in certain segments”
In Mexico, the luxury market is 7 million pesos the value of houses and apartments that for the local client sales are slow due to the uncertainty due to high interest rates, says Hendrix.
The Riviera Maya is the area that has registered the most in the sale of condominiums and apartments to Americans and Canadians, while several border cities have been boosted by inflation and interest rates in the United States, says Romain Benenatti, director of Clikalia Mexico operations.
In 2021, the Riviera Maya registered a boom in the purchase of homes and beach apartments because Americans bought at interest rates from United States banks, but the purchasing dynamics changed with high interest rates and inflation, highlights Benenatti.