Puerto Vallarta, Jalisco – The glittering shorelines of Cancún, Tulum, Los Cabos, and Puerto Vallarta have long been magnets for foreign investors looking to own a piece of Mexico’s postcard-perfect coast. But while demand from international buyers remains strong in theory, the market’s pace is slowing under the weight of record-breaking prices and broader economic uncertainty.
According to the consulting firm 4S Real Estate, sales data for the first quarter of 2025 show a striking shift. In Cancún, just 140 homes changed hands between January and March — a 50% drop compared to the same period in 2024. Tulum saw a nearly identical decline, from 319 units sold to 140.
“2024 saw a decline in sales in beach regions. The reality is that inflation and prices have skyrocketed. Many buyers only find products they don’t have access to,” said Luis Delgadillo, Mexico/Northwest regional partner at 4S Real Estate.
Political and Market Headwinds
Industry analysts say the slowdown didn’t happen overnight. Political changes in Mexico and the United States — as well as shifts in municipal policy — had already begun cooling the market in 2024. While experts remain cautiously optimistic for a stronger close to 2025, they warn that re-energizing coastal property sales will be no easy task.
“We’re coming off historic sales years in these areas, with record-breaking sales. It’s undoubtedly a stabilizing real estate cycle, but it’s not a real estate bubble,” said Arturo Garcidueñas, Mexico/Southeast regional partner at 4S Real Estate.
In Puerto Vallarta, Delgadillo noted that the price per square meter of oceanfront real estate has been climbing 30–40% annually. In Los Cabos, now the most expensive coastal market in Mexico, prices average 153,165 pesos per m² — meaning a 60 m² apartment could cost up to 9 million pesos. Tulum follows closely at 152,310 pesos per m².
A Sea of Similar Projects
One challenge facing developers is market saturation with similar-looking projects. Garcidueñas said there’s little differentiation in design, amenities, or branding among luxury complexes in tourist zones. This can turn off buyers, who see an abundance of nearly identical offerings — all priced at the premium tier — while hotels compete for the same clientele.
The imbalance is clear: most of the new housing supply is concentrated in premium and premium-plus segments. Residential, mid-range, and affordable housing projects are rare, leaving a large share of the local workforce priced out.
“More affordable products are needed, but unfortunately, conditions such as interest rates, land values, and construction costs do not allow for the creation of this type of housing,” Garcidueñas said.
Smaller Units, Bigger Profits
With affordability slipping, developers are increasingly opting to sell smaller houses and apartments in a bid to keep final prices within reach of some buyers — although “within reach” still means far beyond the average local wage.
In Los Cabos, Delgadillo said 70% of available homes are premium properties aimed at foreign buyers, especially Americans. The social impact is clear: tourism industry workers — from hotel managers to restaurant staff — often cannot find adequate housing in the same cities where they work.
Despite the slowdown, analysts stress this is not a bursting bubble but rather a market correction after years of unprecedented growth. Developers and investors may need to adapt by diversifying offerings, investing in differentiated projects, and considering housing needs beyond the ultra-wealthy segment.
Still, until land and construction costs ease — or policy incentives make affordable housing viable — Mexico’s prime coastal markets will likely remain luxury-first, leaving both domestic buyers and lower-income expatriates looking inland.
