As the amendment of Article 27 looms large and seems ever more likely, real estate in Mexico is enjoying greater attention from worldwide investors who see it as a way to realize huge returns while also providing a financial hedge against more traditional investment vehicles. In fact, the reasons to invest in real estate are adding up faster than ever, since the amendment will enable foreigners to buy property directly along Mexico’s coastal and border areas, which has previously required the establishment of a trust known as a fideicomiso before the transaction could be completed.
Morgan Stanley recently recommended real estate in Mexico as an investment prospect, since the nation’s newly established REIT market continues to show great promise and there has been a continued rise in tourism, prompting a strong increase in new hotel development in the country’s most popular areas for expats and international travelers.
“Mexican real estate looks cheap and could re-price long term,” write Morgan Stanley analysts Nikolai Lippmann, Lillian Starke, Rafael C. Pinho and Jorel Guilloty.
In fact, homes and condos for sale in Mexico’s most popular destinations – including Cancun, Playa del Carmen, Tulum, Puerto Vallarta and Cabo San Lucas – offer an excellent global financial hedge for investors, as prices continue to skyrocket and the restrictions get closer to being lifted. Also, buyers who acquire property before the reforms take effect and change how real estate is purchased and sold by foreigners in Mexico may enjoy even greater returns and larger appreciation of property values. This means that the more than two million U.S. citizens who already live in Mexico either full or part time are poised to benefit in a VERY big way from much more than just the positive cost-of-living to lifestyle ratio that property ownership and living here brings.
“The country has one of the most stable growth outlooks in the region and an operating environment which is seeing tangible improvements and rising longer-term prospects,” writes Business Monitor International (BMI) in its latest Mexico Real Estate Report for Q3 2014. “We forecast an acceleration in growth in 2014 driven by an improvement in private consumption and investment in light of the government’s ongoing reform drive and stronger U.S. demand.”
On average, the monthly cost of living for couples who own a beach home in Mexico is somewhere between $2,500 and $4,300 while they are in the country, and Numbeo and International Living estimate that a single person can live here for as little as $1,800 per month.
“Stability has been the hallmark of Mexico’s housing market for many years,” writes Global Property Guide. “Low interest rates, salary and employment growth, longer payment terms and a recovery in consumer confidence are also expected to drive housing demand.”
The historic legislation that is expected to end the need for a fideicomiso and remove the special requirements for international buyers purchasing beachfront property in Mexico has already passed in the Chamber of Deputies, but still requires approval from the senate and majority of state legislatures in order to become law. Under the current system, ownership is possible indirectly – although very safely – by establishing a bank trust.
The bottom line? Buying property in Mexico’s popular coastal regions only costs a fraction of what you will find available in comparable regions of the U.S. and also outranks most areas globally in terms of quality; providing luxury, fabulous weather and all of the comforts of home.
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