By Mauricio Umansky, CEO, The Agency
Destination markets across Mexico continue to heat up, especially as remote workers seek out year-round, resort-style living thanks to flexible, remote work policies. Buyers continue to snatch up vacation homes they can enjoy more often and then rent out as income properties for the rest of the year. Throughout the past two years, the global rental market has remained at an all-time high as demand continues to outpace supply.
Due to the relentless demand and transactional intricacies that may arise, high-profile real-estate firms have set up shop in Mexico’s resort markets to help buyers navigate the waters. One of those brokerages is the global billion-dollar real-estate brokerage The Agency, which has more than 60 offices in luxury markets across the United States, Canada, Mexico, Europe and the Caribbean. The Agency now has seven office locations in Mexico, including Los Cabos, Todos Santos, La Paz, Puerto Vallarta, Punta de Mita, Riviera Maya and San Miguel de Allende.
Mauricio Umansky, chief executive officer of The Agency and a leading expert on international real estate, shares his take on the hottest areas in which to invest and the top Mexican regions currently catching buyers’ attention.
Puerto Vallarta and Punta De Mita
“Why wait until tomorrow when you can enjoy paradise today?” That was the sentiment among buyers who flocked to Mexico’s scenic Pacific Coast, leading to a surge in transactions in 2021 compared to the previous year. Single-family-home transactions rose 30 percent, with the median price soaring 95 percent. Condos were the hottest commodities, with transactions rising 93 percent, followed by single-family homes and undeveloped land. US buyers hailed from California, Texas and Washington state, while more Mexican nationals from Mexico City and Guadalajara invested in the market, with the new road from Guadalajara to Puerto Vallarta set to cut down on travel time from the city.
“Sought-after architectural styles varied, with Mexican buyers seeking more sleek, modern designs in the hotel and marina zones,” shared Alejandro Aldrete of The Agency Punta Mita. “Buyers from the US were drawn to contemporary designs infused with authentic Mexican charm.”
On the hotlist of amenities: pools, elevators, pet-friendly options and expansive terraces. Buyers continue to invest in income properties to enjoy during vacations and rent out for the rest of the year. The demand for long-term rentals in the three- to six-month range continues to increase as people extend their stays to work from the coast.
Baja Sur
Los Cabos | ⓒ The Agency
2021 marked the hottest year ever for the Los Cabos real-estate market. For the first time, it was a seller’s market, with the number of single-family home transactions rising 126 percent with a median price gain of 49 percent year-over-year. Condo transactions soared 192 percent, with a median price gain of 19 percent. Any backlog in preconstruction and predevelopment inventory also flew off the shelves, while growth expanded further outside the Los Cabos area. The Baja Sur capital of La Paz and the artsy surf town of Todos Santos also saw significant growth in demand for residential offerings.
Los Cabos | ⓒ The Agency
“Due to the low amount of built inventory, the trend for the rest of the year goes to new development and pre-construction projects,” shared Bernardo Mucino Koenig, managing partner, The Agency Los Cabo & San Miguel. “Take properties such as Costarena Boutique Luxury Residences,1 which start at $400,000, feature ocean views, nearly 2,000 square feet of space and resort amenities. In Baja, you can live in luxury at a fraction of the price to the US,” he concluded.
Los Cabos | ⓒ The Agency
What was once primarily a residential destination for buyers from the US West Coast is now attracting more owners from all over the country, including New York and Chicago. They have been joined by Mexican buyers snapping up investment properties to capitalize on the vacation-rental industry, which was off the charts in 2021, squeezing out hopes of finding a long-term lease in the area. Buyers across the market were willing to pay a premium for turnkey offerings and leaned more toward contemporary designs that infused Mexican elements throughout.
Riviera Maya
Riviera Maya | ⓒ The Agency
Set along the Caribbean coastline on Mexico’s northeastern Yucatán Peninsula, the travel destination Riviera Maya was as hot as ever. Buyers filtered in from the US, Canada and Europe, looking to invest their money outside their own countries and take advantage of higher returns on investment with a sizzling rental market at their fingertips. Prices increased but remained stable overall, offering attractive and affordable opportunities.
Riviera Maya | ⓒ The Agency
Although condominiums remained the primary allure for investors, many sought more spacious villa-style living with outdoor spaces this year. Inland single-family residences ranged from $350,000 to $2.5 million, while oceanfront homes sold for as high as $10 million, demonstrating that buyers were willing to pay a mighty price for luxe locations.
Riviera Maya | ⓒ The Agency
“The luxury market has expanded far beyond Cancun and Playa del Carmen all the way down to Tulum. We’ve seen an increase in the building and construction of new buildings that offer luxurious units in addition to world-class amenities,” shared Sally Sudol, managing director, The Agency Riviera Maya. “We are seeing more requests for ocean view units, and developers are building in exclusive gated communities in Tulum with direct access to the ocean.”
San Miguel De Allende
San Miguel de Allende | ⓒ The Agency
Located 170 miles northwest of Mexico City, San Miguel de Allende is a designated UNESCO (United Nations Educational, Scientific and Cultural Organization) World Heritage Site known for its charming cobblestone streets, stunning boutique hotels, colourful art galleries, museums and vibrant culinary scene. The picturesque city, renowned for its old-world charm and first-world amenities, is one of the fastest-growing markets in Mexico. While the colonial architecture and culture continued to attract buyers from the US, in 2022, more young families chose this city to call home than ever before.
San Miguel de Allende | ⓒ The Agency
Additionally, the cost of living was a major driving factor for buyers relocating to this area. Buyers ranged from retirees purchasing luxury retirement homes to younger buyers investing in property to live in and rent out during the year. With numerous international flights daily, prestigious schools and an indoor-outdoor lifestyle, this region has endless appeal.
“San Miguel de Allende has broken every real estate record this past year. Where a sale above a million dollars was once a defining moment in the past, in 2022, it has become the norm with multiple sales above $3 million and a few in the $5-6 million range,” noted Juan Diaz Riviera, managing partner, Los Cabos & San Miguel. “An influx of new development, such as the Armani Casa, offering approximately 5,000 square feet and starting around $3 million, is ushering an entirely level of luxury to this sought-after enclave.”
San Miguel de Allende | ⓒ The Agency
No cooldown is expected through the remainder of 2022 and into 2023 as buyers priced out of the US market dip their toes in the waters south of the border. As these prime destinations continue to drive buyers, Mexico will continue to lead as one of the largest second-home markets in North America. The buyer pool will only expand as European visitors also begin to opt in as homeowners.
Reference
1 The Agency: Los Cabos, Costarena Boutique Luxury Residences