As Americans struggle with the rising cost of living and a suffering housing market, investing in Mexican real estate is beginning to look muy bueno. Property prices in Mexico are significantly more affordable than in the U.S., and the forthcoming retirement of the baby boomer population is likely to create huge demand for property markets offering the pleasant climate, glittering beaches and rich cultural traditions for which Mexico is famous.

Mexican real estate might seem like a surefire place for investment, but the process of obtaining ownership of property in Mexico can be risky and complicated. (For more general information about owning Mexican real estate, read our previous article, The Myth of Mexican Property Ownership). Because finding the right place for investment can be equally challenging, NuWire has selected five Mexican real estate markets that show potential for growth and appreciation.

Real estate markets were selected based on factors such as affordability, proximity to the U.S., strength of the local economy, natural and cultural attractions, development of regional infrastructure, tourism activity and overall appeal as a potential retirement and expatriate destination.

Growth in Loreto has been a Cinderella story of sorts, with Mexico’s National Fund for tourism development, FONATUR, playing the role of fairy godmother. As a result of the enormous amount of investment dedicated to Loreto’s development, the small fishing village—home to just 14,000—is now regarded as an up-and-coming tourist hotspot, following the lead of popular tourist destinations such as Cancun and Ixtapa.

Advances in Loreto’s infrastructure include an international airport, marina, utilities, wastewater treatment plant and improvement and expansion of its road system. Resort development includes two hotels, a tennis center and a golf course. In addition, Loreto is favored for selection as the capital of the Sea of Cortes Nautical Route, “FONATUR’s most ambitious project in the last 20 years,” according to the FONATUR website.
Furthermore, plans for development in Loreto are intended to promote ecological sustainability, which could potentially foster a strong industry in ecotourism.

Because the region around Loreto remains undeveloped compared to other markets, investors can take advantage of relatively affordable opportunities for investment in coastal properties, retirement or vacation homes and raw land.

For more information about Loreto, read our previous article, Loreto: Mexico’s Next Real Estate Hotspot.

Real estate in Merida, the capital city of the Mexican state of Yucatan, offers a unique blend of urban and coastal markets and features surprisingly affordable property prices. A colonial home in the downtown area, for instance, can be purchased for less than $100,000. A savvy investor could also buy a 20- to 25-meter tract of nearby beachfront for a similar amount of money, according to Brian Murphy, owner of real estate firm Mexira.

Moreover, prices for beachfront property are considerably lower than those of other markets on the Yucatan Peninsula, such as the region of Costa Maya. However, Merida’s beaches are situated along the Gulf of Mexico and don’t offer the beautiful turquoise waters of Mexico’s Caribbean coastal towns, such as Cancun or Riviera Maya, Murphy said.

Because cheap, undeveloped land surrounding the city is abundant, Merida should see considerable growth in the next 10 years, according to Murphy. FONATUR has not shown much interest in the area, but existing tourist and recreational attractions—such as port activity at nearby Progreso—is helping to drive the local economy.

“It’s slowly developing itself—and I think just market forces will allow that to develop without any...[need for an] infusion of money,” Murphy said.

For more information about real estate in Merida, read our previous article, Merida, Mexico Real Estate: Variety and Value.