by Amberlamb
Felipe Calderon’s inauguration took place on the 1st of December 2006 and he is expected to remain in office as Mexico’s president for a period of 6 years; it is expected by many that under his presidency Mexico will prosper economically, and as part of the nation’s prosperousness Mexico real estate will witness market expansion in 2007 and beyond.
One of the main expectations that analysts have of Calderon is that the availability of mortgage credit will continue to expand throughout his administration thus encouraging the housing market in general and allowing for greater local affordability of real estate. Looking forward to 2007 there are many factors to suggest that international interest in Mexico will continue to be strong, but the Mexican government has a lot to do to address certain fundamental issues that are still restricting its overall property market progress.
Buyers see property in Mexico as both an attractive investment commodity
and as an attractive asset in its own right
Donald Trump started an international property investor frenzy in Mexico in late 2006 with the release of his latest luxury project, Trump Ocean Resort Baja Mexico. Within hours of the release of the condominium development in Northern Mexico record property sales were registered – the majority of buyers were investors large and small hoping to cash in on a predicted price expansion period throughout the construction time and then flip units back to the market to an awaiting property hungry public in a few years time.
These facts are significant for two of reasons – firstly Donald Trump has made a massive personal statement about the likely positive prospects for Mexican real estate as an economic sector by moving into the Mexican market, and secondly the hunger with which buyers bought out the condominiums as they were released to the market suggests that there is great overall faith in Mexican property. Buyers see property in Mexico as both an attractive investment commodity and as an attractive asset in its own right and one that can be enjoyed in an increasingly safe and stable nation.
The type of investment activity as witnessed at the Trump Ocean Resort in Baja in terms of buyers purchasing off plan stock to flip in a couple of years time has never been so strong in Mexico, but it potentially suggests a new wave of interest in this part of the world from international investors keen to tap into a market developing in sophistication where they believe there is strong interest already and where we believe interest could increase.
In terms of interest that an investor has to work with at the moment - American interest in Mexican property as a weekend bolt hole, summer holiday retreat or a retirement home destination is strong and with more and more baby boomers coming to retirement at a time when pension incomes are not buying a lot in America, Mexico is continuing to witness inward flows of American migrants seeking a better quality of more affordable life. Some are concerned that the economic slow down in America which has resulted in stagnating house prices will create a market where real estate will not sell and those wishing to exit the US property market to enter the Mexican market will be held back if they cannot release their home based equity. While this is a concern for the short term it is unlikely to be a serious long term issue and anyway, there are an increasing number of Canadian and European retires looking at Mexico right now and so an investor has a broader scope of potential customer to focus on.
International interest in Mexico is increasing especially now that the new presidential administration seems committed to ending social inequality and reducing poverty in Mexico and therefore making the nation a better place to live.
Another benefit that Mexico offers over and above many other central and southern American locations such as Costa Rica or Nicaragua for example, is the fact that the Mexican government has said it is determined to improve home building and infrastructure development to boost the attraction of the nation. If it carries out its promises the government will thereby ensure continued economic progress in Mexico’s property sector.
Finally, as property taxes in most municipalities in Mexico are at a fraction of the cost of such tax across America this is another positive for prospective US based buyers even at a time when the US economy is not so favourable to those who want to leave it behind and take out their accrued equity. Add to this the low cost of living and affordable medical care in Mexico as well as a favourable climate and this makes the nation a perfect location for retirees and an investor can seek to target such a market through rental or resale stock - therefore there is a whole world of real estate market potential in Mexico going in to 2007 meaning that Mexico’s real estate market is heading for expansion in 2007 and beyond.
