REAL ESTATE NEWS ON VALLARTA

My name is Yemi. 

I am a freelance contributing writer for NuWire Investor, an online Seattle based investment magazine that covers international real estate markets for a a mainly American audience (http://www.nuwireinvestor.com). 

Q-and-A:
What do you foresee happening with the Puerto Vallarta's property market the over the next few years? 

The Boomers and Zoomers (baby boomers with Zip!) are an economic force to be reckoned with, and nothing is going to stop them from owning their dream in paradise. Therefore we will see continued growth in this market.

In your opinion, what are the advantages and the disadvantages of investing in Puerto Vallarta?

This market is proven value and has the legal and financial infrastructure resources for the timely processing of transactions. There is real ‘bang for your buck’ when compared to other areas, Cabo San Lucas for example is far more expensive. Vallarta has all the charm of old Mexico and it is one of the top three destinations in Mexico, generating significant vacation rental income for property owners.
Disadvantage to investing in this market… being late.

Currently, which property sector is the best bet for investors? (Commercial, residential, vacation homes, etc)

The number one best investment is a vacation home, within walking distance that has a view, security and a pool. With these elements, you have value for your own use and the property will produce rental income that can pay down the investment over time while the property appreciates with market growth.

 In your opinion, which parts of Puerto Vallarta are currently booming?

Well, in 2000 Puerto Vallarta had roughly $50 million in resort real estate sales (“resort real estate” is defined as real estate purchased primarily by retirees or second-home purchasers). There were rarely homes selling for more than $1 million and few large real estate developments. In 2007, there was more than $500 million in resort real estate sales, with condos selling for over $2 million and homes in excess of $5 million. There were more than 100 developments spread out around Banderas Bay, allowing Puerto Vallarta to lead in sales volume for resort real estate in Mexico, ahead of major markets such as Los Cabos, Acapulco and Cancun.

Now the entire area is booming, from Rincon de Guayabitos in the North to Mismaloya in the South. The pace and quality of building is beyond compare. The Federal Government’s agency FONATUR has invested heavily in the area. Punta Mita is one of the more famous developments with the Four Seasons, Ritz Carlton and St Regis Hotels surrounded by the Pacific and two Jack Nicklaus Signature golf courses.

What percentage of your clients are Americans? Canadians? Europeans? Mexicans? 

Our website and our sales are the best market indicators we have. With the website, the Mexicans spend the least amount of time, about 4-minutes, the Americans are 5-minutes and Canadians spend an average of 6-minutes. The Canadians and Americans visit twice as many pages as the Mexicans, but the Mexicans spend more time per page. This could be because we are English only at this time, but adding Spanish this summer.

When it comes to buyers, the Mexicans and Americans are usually about 40% each and 20% are Canadian. This year, with the sub-prime crisis and election, price of oil and other economic factors we have seen a noticeable drop in American buyers and a noticeable rise in American sellers. The Canadian buyers have really stepped in with a strong dollar, however as the oil based inflation woes make the media, even the Canadian buyers are being more cautious than usual.

Are they buying second homes, or a primary place of residence?

The buyers are looking in three categories, those that want a full-time winter residence, and those that want the use of a second home combined with vacation rental income and those looking for retirement. Those buyers looking at retirement are seeing more products designed for this market segment and we expect higher numbers in the future. One thing to remember is the Dream… the dream to have a place in the sun, where family and friends can reunite and rejuvenate, and this dream is not going away for a market segment where someone turns 50 every 7-seconds, it is simply on hold. Meaning with our inventory levels this is a buyer’s market. The majority of buyers are looking at second homes.

What price range are they looking in?

There are those looking for under $250, wanting it all, but finding a market where prices are much higher for all the hot buttons; pool, beach, security, view, close to downtown or other amenities. The market under $400 is strong with a lot of options, particularly in the condo market. The soft part of the price range is $500 to $1million, choices are fantastic, excellent values, but a very ‘wait and see’ buyer mentality is affecting this sector. At this price range, buyers are faced with a major investment decision and, when the economic indicators are all screaming… buy gold, inflation is looming, oil is going higher, cash is king, the sky is falling, they put the dream on hold. It is not cancelled, it is simply circling. Homes and condos in this range are where the best deals can be made. After $1million there is lots of choice and we are seeing a buyer, sophisticated in real estate investing, discerning, clear on what they want and where they want it, liquid and looking at the long term. There are 79million baby boomers and their ‘echo boom’ that will continue to demand a second home in the sun. And, Puerto Vallarta offers it all; climate, amenities, infrastructure, security and access.

What kind of amenities are they requesting? (Pool, gated property, ocean view?)

The condo buyers want all the features and amenities. All new product offers; concierge services, rental management, pool, spa, gym, media room, business centre, valet parking, security, restaurant, beach bar, beach, water sports, children’s area and sometimes more. This is the trend and the properties are branding themselves in unique ways. ICON Vallarta for example, is leveraging the brand and design power of Phillipe Starck. San Pancho is billing itself as a cultural centre, while Tahemia and Sensara market to active retirees with on-site medical concierge services and Luma is adults only.

Home buyers are slightly different; they are looking for authentic Mexican architecture, more traditional Spanish colonial in flavor. The high-end condos are going to modular form with Balinese influences, where the living, sleeping, entertaining areas are quite separate from one another.

What draws your clients to Puerto Vallarta? What distinguishes the area from other coastal communities in Mexico?
 
Distinguishing factors– culturally significant, historically unique, a genuine heritage here not lost to rampant developer expansion. What draws people here are the people here. They are friendly, helpful and happy. The arts and music are a vibrant part of the community, the variety of dining rivals any major city in the world. Geographically on latitude with Hawaii, the climate is consistently pleasant and this is the 8th largest bay in the world. The annual whale migration is a major tourist attraction. All the golf gurus are building here, Nicklaus, Weiskopf and Norman. The area has beaches, mountains, valleys, jungles, orchards, ranching, mango swamps and wildlife. It is easy access from every major airport in North America within a four-hour flight-time window.
 
Do your clients feel like they're moving to a foreign country? Or is
there a strong English-speaking presence that makes them feel more "at
home"?

Definitely, this is a foreign country and you feel it, you like it, you want to understand it, yet there is enough English-speaking nationals to make your communications and requests understood. The folks here are very accommodating.

Is access to medical care a consideration in their decision to move to Puerto Vallarta? If so, how?

Whether you are a winter only resident or full-time, the question of medical facilities and services is always raised. Puerto Vallarta has some of the best hospitals, clinics and staff in all of Mexico. There is the San Javier Marine Hospital and a new AmeriMed hospital under construction, as well as a new oncology research facility. Dentists migrate here after graduating from the finer schools in Guadalajara and Mexico City. North Americans travel here for dental work and elective surgery, because it is faster, better and costs less. Not to mention, a very nice place to recover.

What other major lifestyle considerations do your clients take into account when purchasing in Puerto Vallarta?

Activities, what can I do here is the question. The answer is everything, golf, hike, swim, fish, surf, sail, dive, run, bike, explore and more. The other question they ask is ‘How can I contribute to the community?’ The expat population is very active in the community with volunteer work, education and many other philanthropic contributions.

Has the Puerto Vallarta market been affected by the real estate turmoil in the US?

There is an effect on the market, however, not to the degree you might expect. Many are determined to realize their dream of a second home or retirement home in Mexico and have planned a long time for their time in the sun. They have become more cautious, they are shopping for the perfect property and in some categories we are seeing prices drop, but it is not a wholesale reaction to the US situation. Canadians are buying and their banking laws cannot create a subprime crisis and in Mexico there is only 12% of property financed, it has up until recently been an all cash market. So we still have plenty of buyers, just fewer American buyers. But they will be back and the choice and the inventory is here.

What is your forecast for home prices in Puerto Vallarta for the rest of 2008?

If your property is priced right it will sell, this is very important because what the seller perceives as a price and what the market will pay are not always aligned. We spend a great deal of time and effort doing our Comparative Market Analysis and as a result having great success in winning listings and thus attracting buyers. We are seeing more price reductions, but nothing drastic. The market here has not seen price drops to this degree and indicates a buyer’s market. The price per meter has remained mostly flat for the past 6-months and is now showing a downward trend. However, once another winter hits the North and the election has been decided upon, we believe the market will tick upwards slightly in the first quarter. Still a buyer’s market relative to inventory, there are always deals to be made and a good real estate agent knows the market and how to find the right property at the right price.

Is there any particular area in Puerto Vallarta that you think represents a "bargain" for buyers from the US looking to buy there?

Yes. I would direct a buyer to look into new condo construction that has recently come to the market, one-year old, with an owner/speculator who is leveraged in the $500 to $700 range. If it has quality construction, finishing’s, furnishings and all the amenities, on the beach, buy it! The price per meter should be in the $2,400 $2,600 range. These are the sought after rental properties. The other area is single family homes, in the good neighborhoods, with easy access to amenities, in the low to mid $400 range buy these too! Anything oceanfront priced at $1.5million +/- is primed for price reduction and represents choice and value. These areas are found in Conchas Chinas/Amapas, Old Town, Las Glorias and Nuevo Vallarta.