The Mexican Real Estate
As the Mexico real estate market continues to gain popularity among North Americans, one common theme exists and that is an increasing demand for insightful and relevant information among the entire Mexican real estate community, including developers, realtors, owners, resellers and potential buyers. The 2008 Mexico real estate Development Conference focused on the changing global economic landscape and its direct effect on Mexico's real estate developments and buyers. It was clear that the current global economic downturn would have several effects on the Mexico real estate market. To understand the downturn and its effects, one must first understand the upturn. Mexico was and continues to be an extremely attractive destination for second and retirement home ownership given its favorable attributes and proximity to the U.S. and Canada. As U.S. citizens continued to discover Mexico, they were able to purchase beachfront and ocean view Mexico condo properties at a fraction of the cost of similar real estate in the U.S., and they also enjoyed 40% to 100% returns on equity, as compared to 15% to 35% in the U.S. This, coupled with buoyed U.S. equity markets and cheap and available credit, made it relatively easy for developers to sell Mexico condominiums to U.S. buyers who purchased the majority of the real estate in Mexico's tourist corridors over this time period. The number of projects increased to meet the high demand, causing the Mexico condominium unit prices and rates of returns to rise as well as the number of investors financing such projects.
Due to the recession in the U.S, the number of U.S. buyers naturally decreased. A growing number of Mexican and Canadian buyers emerged; however, this was not enough to offset the decrease among U.S. buyers. Despite weakening demand, many developers continued to build Mexico condominium properties, creating higher inventory than seen in the past. While Mexico real estate markets have not experienced as severe of a downturn as the U.S. real estate market, nor does anyone expect them to reach such a level, it is clear that demand has slowed and will remain slower for the short term as compared to the booming years of 2000 to 2005. A slower market will translate into two things. First, it is evident that Mexico real estate market is now more than ever a buyer's market. Increased inventory in light of decreased demand puts buyers in the driver's seat more than ever before. Second, a buyer's market will force developers to work harder in order to differentiate themselves and create value added Mexico condominium projects that meet buyers demands even more.
Mexico is the world's top retirement destination. The current state of the market will bring positive change for the real estate market. While buyers continue to value strong amenities, the level and types of amenities have changed. Among the new level of amenities that buyers are trending towards are spa, fitness and wellness facilities, activities for children such as kids clubs, educational and cultural programming, retail villages, marina villages, shared open spaces, indigenous landscapes that include environmentally sensitive amenities and sustainable design with a stronger focus on authenticity. As all developments appear to sell some sort of differentiating lifestyle, developers now have a challenging task now more than ever to build a Mexico condominium with the right lifestyle for the right target market. In addition, the changing market has made every aspect of financing a more important part of the sale process. First, developers will no longer be able to count on presales to finance part of their construction, and therefore must take a more conservative route and line up traditional financing for the entire Mexico condominium project. Second, buyers are increasingly looking to finance their purchases through cross border Mexico mortgage providers which will help the market for both buyers and sellers by making Mexico real estate more affordable.
Mexico continued attractiveness among foreign home owners, due to its climate, amenities, close proximity to the U.S. and Canada, and safety, makes it clear that the U.S. and global economic downturn is just a shorter term hiccup in what will continue as Mexico long term boom as a second home and retirement destination among Americans, Canadians and Europeans. It is important that people not lose sight of this fact and realizes that a shorter-term crisis creates opportunity. Finding those opportunities is the new challenge. For developers, it means raising the bar to what are already excellent properties. For buyers, it means being able to obtain tremendous value wherever they choose to purchase in Mexico.
Source-http://www.caborealestatejoan.com/OTHER_NEWS/page_2137038.html
