The silver lining in Mexican real estate

Second-home purchases on rise despite drug violence in some regions

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Mar. 25, 2011

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Second-home purchases on rise despite drug violence in some regions

Steve Bergsman
Inman News™

Cary Mullen has one of the toughest jobs in the world.

He needs to convince fellow North Americans to buy a second home at his new development in Mexico, a country portrayed in the worldwide press as a vast killing field in an endless drug war.

As if the three-time Olympian (a downhill skier for Canada) hadn't faced enough challenges in his life, he had to go for one more. Like passing a competitor while surging past a gate, he seems to be succeeding. Despite the barrage of bleak news coming from the third-largest country in North America, people from the colder environs of the continent still want to spend months of the year sipping margaritas on a sunny, tropical, Mexican beach.

Mullen, president and CEO of Calgary-based VivoResorts, tells me his company is building 154 beachfront condominiums and 104 villas at Puerto Escondido, along the far southwest coast of Mexico. The nearest resort town and airport is 60 miles away in Huatulco.

"We launched sales at the end of 2009, and last year was very good for us," Mullen reported. "We wanted to sell seven units in our first building. We sold 17 'firm' with another six 'conditional' sales. We're looking to start construction on a second building in the next few months."

VivoResorts isn't the only Calgary firm working the Huatulco area in the state of Oaxaca, Mexico, which seems to be popular for Canadians living in the Western provinces (once-a-week charter flights from Calgary directly to Huatulco). A company with the unlikely name of Own Mexico is developing two properties down there: Oasis Pacifico, single-family homes on 1.5 miles of white-sand beach; and Viewpoint, a 33-unit condo building on a private peninsula located in the town of Puerto Angel.

The bigger development, Oasis Pacifico, will build out 100 homes on 34.5 acres of oceanfront land. The homes will end up 1,800 square feet in two stories; the cost about $220,000. At Viewpoint, a condominium will empty $200,000 dollars, or loonies, from your wallet. Both reasonable but not inexpensive prices -- unless one compares them to average home values in Calgary, Canada, at $401,000, or Vancouver, Canada, at $679,000.

Own Mexico doesn't seem to be doing too badly, either. In 2007, the company took over an existing development to create Oasis Pacifico. According to Brandon Antonini, the firm's sales and marketing director, two homes have been sold recently and six are under construction.

Are people ignoring the never-ending stream of news about drug wars in Mexico? I asked Antonini.

Nothing is that easy, he said. "The publicity is daily, the statistics staggering. There is a global umbrella of negativity over the entire country."

So, as director of marketing, how does he overcome all that?

Huatulco has a silver lining, he said. "The city is extremely far south and most of the violence is in the north. If you Google 'Huatulco crime' or 'Huatuclo violence' you will see almost nothing. The area has a small population spread over a long coastline. There are no economies of scale for drug dealers."

To paraphrase Antonini, the Huatulco coast is an island of reality in a sea of muck.

It's an uphill battle, Mullen conceded. "You have to try to get people to realize Mexico is a very big country. If something happens on the border it has no reflection on a place like Huatulco. It's like saying if there's a gang war in New York City, you shouldn't go to Ohio."

VivoResorts and Own Mexico have done better by focusing their marketing efforts on Canadians desperately seeking sun and less so on Americans. Own Mexico does no advertising in the U.S.

There are a number of reasons for this marketing approach. First, Canada is a country with many, many months of very, very cold weather and the appeal of sun-drenched beaches is overwhelming. Secondly, because home prices in Canada's big cities are so expensive, second homes in Mexico look cheap. And thirdly, the Canadian dollar has been very strong of late.

Mullen said he sells to an international market and recently picked up a couple of U.S. buyers, but most of the purchasers have been Canadians.

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