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Mexico Outlook 2006: Stewart International's Perspective
By Mitch Creekmore, Stewart International
“Mexico has something for everyone” has certainly been the resounding theme for real estate during
2005. Mexico’s resort residential sales for U.S. and Canadian buyers have been in a word, “unbelievable”
for 2005, with internal rates of return and property appreciation exceeding U.S. equivalents. So how
come? Why is Mexico so hot in so many areas of real estate activity? Quite simply, it’s because of
Mexico’s importance to North America since 9/11. Poised with incredible beaches, luxurious masterplanned
residential developments, golf courses, marinas and other real estate projects, tourism in general
is burgeoning and of very strategic importance to our neighbor south of the border. Mexico IS North
America’s safe haven and a wonderful venue of “open arms” hospitality and cultural charm.
Investment from foreign sources, principally the United States, will continue to drive Mexico’s tourist
destinations in 2006. The level of money flowing into the country, both in new development equity as
well as personal investment dollars is at an all time high. There do not seem to be any detrimental issues
on the horizon to slow down this unprecedented desire of investment opportunity. Americans, along with
Canadians and Europeans, have awakened to the splendor of what all Mexico has to offer. They finally
“get it” when it comes to foreign ownership of real property in Mexico’s restricted zone as well as in the
interior of Mexico. Foreign investment has realized that Mexico is committed to tourism and that as a
result, the country ranks eighth in the world as a tourist destination. Over 20 million arrivals each year
make Mexico a North American “hot spot.” Foreigners have seen a growing market of financing entities
emerge that will only increase investor participation in the real estate market. U.S.-based lenders will gain
in number during 2006 with the realization that there exists a pent-up demand for mortgage alternatives
for North Americans wishing to finance or refinance their real estate acquisitions.
The demand for real property in Mexico has become phenomenal. The traditional markets of Los Cabos,
Puerto Vallarta and San Miguel de Allende still have far-reaching appeal to many a second-home buyer
from the United States and Canada. Emerging destinations like La Paz, Loreto, Manzanillo, the Rosarito
corridor and Puerto Peñasco, have seen large amounts of new equity and infrastructure development
invested in these once-sleepy destinations over the past three years. North Americans have come to
Mexico’s dance and their sombreros are squarely in the center of the floor. Americans know that it’s
really only a choice of what one likes, where one wants to be in this beautiful country. The baby boomer
generation of the U.S. will inherit millions upon millions of dollars over the next decade. This new-found
wealth will need a venue of investment beyond what Wall Street and the NASDAQ have to offer. Owning
a second home has always been one such wonderful venue. Mexico wants and has made the acute
commitment to garner more of the foreign investment dollar. Mexico has continued its aggressive
initiative to offer North Americans more places to enjoy, better ways to get there, more opportunities for
personal investment, better security and comfort in the investment made. Mexico truly has something for
everyone!
While the phenomenal growth in Mexico’s real estate has been exciting, this growth cannot solely be
attributed to the improvement of the real estate product. The market has been undergoing a fundamental
change. The “trust me amigo, this is the way we do business here” environment, and the infamous frontpage
headlines of fraudulent purchases are now an ill-famed pastime. Today, real estate associations are
forming creating ethical guidelines, requirements and training for brokers. Title insurance paired with
independent escrow accounts and closing services provide a safe and secure setting for purchasers.
Companies like Stewart Title have pioneered the use of title insurance in the Mexican market. In 2002,
Stewart Title Guaranty de México S.A. de CV became the first and only title insurance company to gain
approval from Mexico’s National Commission of Bonds and Insurance as a licensed title insurance
underwriter. A subsidiary of the U.S. underwriter, Stewart Title Guaranty Company, Stewart Title
Guaranty de México offers title policies to buyers and lenders on either side of the border.
Stewart also has established offices throughout Mexico to service the growing demands of the market.
Real estate transactions depend on accurate information and transparent practices. Stewart’s new offices
offer a suite of closing coordination services guiding buyer’s through the transaction process, start to
finish. Stewart currently has offices in Tijuana, Los Cabos, Puerto Peñasco, México City, Guadalajara,
Puerto Vallarta and Playa del Carmen. By the end of 2006, Stewart plans to cover most of Mexico’s
major commercial markets. |