Following the initial influx of foreign real estate investors into the Mexican property market, the country has remained a steadily popular environment for both investment and re-location. The stable growth of Mexico’s political and economic environment has provided increased security as an emerging market investment location.
Buy-to-let investors are continuously on the increase, especially in coastal resort locations such as Cancun, largely in part due to the steady stream of holiday makers flocking to the tropical destination throughout the year from all around the world.
An extensive list of reasons can be created as to why ever increasing numbers of buyers are continuously looking towards Mexico to increase real estate portfolios, yet the main five reasons have been listed below.
1. Stable Economic and Political Environment
In recent years the Mexican government has strived to reform the political environment, creating a strengthened economy and encouraging direct foreign investment. Foreign investment into the Mexican economy is predominantly from the US and Spain, with construction being one of the smallest sectors. The avoidance of being heavily reliant upon the construction sector provides increased stability and ample room for growth in the real estate sector.
Unemployment is on the decrease, contributing to the economic growth of the nation over the past decade. Infrastructure reforms across the country have been a focus of a succession of political integration, creating continuously improving and modern telecommunication and transport networks.
Due to the country’s stable economic environment, the local currency holds strong. A strengthened currency can assist with determining the economic stability of an emerging market investment environment, displaying an ideal real estate investment location in Mexico’s sought after tourist regions.
2. Strong Real Estate Market Growth
The Mexican government has taken considerable effort to reform the country’s real estate sector for both the domestic market and foreign investors. The domestic market is continuously growing with the fast expanding middle class society and accessibility to mortgage financing.
Foreign investment was initiated predominantly by the North Americans for holiday and winter home purposes. The attraction of a second home along the stunning resorts of Mexico’s coastlines grew considerably due to the capital growth potential, strong yield returns, close proximity with easy access to major US cities and comparably low property prices to popular US coastal resorts.
3. Emerging Mortgage Market
Following the introduction of Mexico’s mortgage market in 2003, the market has grown at an exceptional rate. Decreasing interest rates also assisted with enabling accessible financing options to the domestic market and foreign investors.
Since the establishment of mortgage financing for Mexican real estate, the market has matured in regards to availability, security and accessibility to a wider market sector. Assisting with the growth of the mortgage market has been the country’s growing middle class society in a country becoming increasingly modern and attractive to foreign investment.
4. Ideal Re-location and Investment Environment
Mexican real estate investments soon became a popular choice for European buy-to-let investors for the pure, straightforward investment opportunities the region represents. High demand for properties in locations such as Cancun and exemptions for capital gains taxes for semi-permanent residents have assisted with exit strategies.
The low property taxes, double taxation treaties and free trade zones have helped to increase the numbers of foreign buyers consider living permanently and basing businesses in the country. Restrictions to foreign buyers relating to the location of the property being based within a restricted zone are easily and safely diverted through Mexican Real Estate Trust Agreements.
The growth of the country’s economy has assisted with the fast expanding middle class society, eager to enter the property market. As the Mexican government places priorities on creating access and financing to the domestic population to access housing, the extensive population of the country enable ideal exit strategy opportunities due to the increasing demand of properties against the supply.
5. Growing Tourism
An active tourism sector is highly important for buy-to-let investors, as the tourism market is directly linked to the yield return potential for investment properties. Located in the tropical Caribbean coastlines, areas such as Cancun feature year round tourism markets with exceptional returns during the high seasons.
Cancun receives around 3 million of Mexico’s 22 million visitors annually, attracted to not only the stunning beaches and warm weather, yet also the wealth of cultural attractions located in the surrounding area. The close proximity of Cancun to cities such as Florida enables convenient access for short stay visits.
Tourism continues to grow and equally important for Mexico’s tourism sector is that visitors are continuing to spend more money during their stay on an annual basis. Investors of buy-to-let properties in the resort town benefit from offering sought after private properties for groups of travelers and families being competitively priced in comparison to paying hotel prices for large groups.