While the US real estate market is still somewhat sluggish, things are picking up fast in Mexico.
With wage increases in China and Vietnam (as well as escalating shipping costs), outsourcing to the Far East isn’t as economically feasible as it once was, a situation that is forcing many companies to look closer to home. At the same time, retirees looking to make the most of their savings are considering relocation south of the border.
Mexico rode out the worldwide economic downturn better than many other countries and its real estate market never suffered on a level seen in the U.S. And while there was certainly excess inventory, that’s quickly being snatched up by bargain hunters.
“2012 is a turning point,” says Gary Swedback, President of NAI Mexico. “I’m seeing new private equity funds in Mexico … And by the end of the year, we’re expecting to see build-to-suits for companies that can’t find a building. By the beginning of next year, we’re going to be seeing speculative construction in some markets.“
The hot markets vary depending on a company’s need. Several industries seem to be grouping themselves in particular areas, while others want to stay close to the U.S. border to make transportation easier.
“There’s no single answer about where to locate,” says JC Goldenstein, CEO of CREOPoint.
That said, here are 10 areas worth considering.
By Chris Morris, Special to CNBC.com
Sept. 18, 2012
The proximity to California has never hurt Tijuana, but as investment returns to Mexico, the city is seeing prices soar at an eye-popping rate. Swedback says demand for spaces of 100,000 square feet or more is higher than he has ever seen it in the city. And sales prices on select properties have gone up as much as 15 percent in the past two weeks.
There’s also an appeal for residential buyers, who can often cross the border and arrive at their downtown San Diego offices quicker than people who live on the other side of the city.
This central Mexico region, which includes the states of Guanajuato and Querétaro, could be the one of the biggest secrets in Mexican real estate. Swedback says automotive companies from around the world are investing heavily in the area — with Nissan and Honda setting up plants and Toyota and Nissan expanding their facilities.
“It’s so hot there now that I’ll go out with clients, who will come back in a month and all the pieces of land they were looking at have since sold,” he says. “They’re cannibalizing each other to be in prime positions.”
Yes, Cancun is already a heavily developed town, but it’s one of the busiest tourist destinations in the country, and that means it remains a prime spot for hospitality companies. While it’s not as red hot as some other areas of the country, demand is returning and prices are going up.
Cancun gets the spring breakers, but as the city gets more and more hotels, some hospitality firms are looking further down the Mayan Riviera. And Tulúm, some 75 miles south of Cancun, is starting to heat up. Because there is a protected reserve on one side of town, there’s not a lot of land to develop, which supporters say helps price appreciation. And the Mexican government is increasing infrastructure in the area, with the goal of tripling tourism to the area by 2020.
The city is also gaining some cache with the so-called 1 percent. In January, the area is especially popular with fashion designers. And Hollywood stars retreat there regularly.
Located an hour south of Mexico City, this city (nicknamed “the city of eternal spring” is an escape for well-off Mexican citizens. In terms of commercial or industrial building, there’s no demand here, but residential companies are showing interest in the area as a budding vacation resort for people who want something that’s not on the coast.
Like Tulum, this seaside city is benefiting from government efforts to build out infrastructure to increase tourism. Big chains are starting to talk about expansion, and prices are starting to rise, though they haven’t really exploded yet. The area south of the city has been effectively built out, but interest in the northern territories is starting to grow quickly.
Situated on the US border, this city has a highly educated and skilled population. That educated workforce is particularly appealing to factories looking to set up operations in the country. Additionally, it’s two hours east of San Diego and just over four hours from Phoenix — meaning it’s a short drive and also has easy air access through U.S. airports.
Cabo San Lucas
Along with Cancun and Puerto Vallarta, Cabo completes the tourism triangle of Mexico. Like its cousin cities, it’s accessible to visitors from the U.S., Canada, Europe and South America. But while there are certainly resorts opening here, the biggest push these days is for business class hotels.
While beach towns like Zihuatanejo and the coastal area south of Tijuana might seem appealing due to price, the recession was harder on those towns due to overbuilding — not the case in Cabo. It could be five or more years before those beach towns start to see real recovery, says Swedback.
This city has always been important to Mexican businesses, but a number of international firms — including Sony, Boeing and GE — have also opened branches here in recent years. It’s viewed as an “Americanized” city and is especially popular for call centers, says Goldenstein, since the Spanish accent of residents is faint to non-existent. It’s a highly developed city, though, so real estate is already at a premium.