Prices for houses in Playa del Carmen have been rising, but property investment in Sayulita is ahead of the curve for all the right reasons
For many years now Mexico has become far more than a great tourist destination. Savvy investors and business people have identified investment opportunity in many locations in Mexico. Certain towns and cities in Mexico share the unique Golden Mix of location, potential and lifestyle. Also, significant improvements in national infrastructure have helped certain property sectors to see a steady rise in real estate prices over a few years, making it a perfect time for property investment in Sayulita.
Playa del Carmen is an excellent real estate example as a case study that shows how investors are increasingly re-selling at a higher price, renting out their properties as a business, or using them as a retirement home. To help our clients understand and equate all the important factors we use a growth curve to visualise the best time to get involved in a property deal.
There are many factors to consider when investing in property. As the above curve shows it is advantageous to invest when the market prices are lower. As with Sayulita, house prices are steadily rising but still significantly lower than a more developed area like Playa del Carmen.
Private investment in the luxury home market closely follows the first 2 factors on the list below. Analysis of all significant factors helps us to confidently assess growth potential for your investment.
There are also many other important considerations to ensure that market prices will continue to increase, so we have listed them below to help you understand what to look for. Here are the top 8 factors that contribute to appreciation in property prices.
1.Tourism developments in Sayulita
Perhaps the first indication of growth potential is government support and investment. Recently, Sayulita was included in the Pueblos Magicos program which included a sizeable investment in local infrastructure. The program is designed to develop “Magical Towns” that offer something unique and cultural.
Major hotels have started to open in the region, including 3 new golf courses, and other service companies are beginning to establish a presence here.
2. Historical growth in the region and projected population growth
Since the 1960’s Sayulita has been developing under the shadow of the beautiful city Puerto Vallarta. The region started developing rapidly and Sayulita quickly gained the reputation as “A Hidden Sanctuary” in paradise. Realtors and estate agents started to recognise the growth potential in Sayulita about 5 years ago and since then Sayulita and the Riveria Nayarit has expanded consistently as an excellent location for luxury property development.
Added pressure on the property market from new industries entering the region, a consistent increase in tourism, with new jobs being created, has increased the projected population growth in Sayulita. All of this are fantastic indicators when analysing the economic growth of a region.
3. Interest Rates
The lower the interest rate the lower the mortgage repayments and depending on how you would like to structure the investment this can be fixed or variable. Recently, mortgage interest rates are low again since the recession. All this means a well-structured mortgage on low-interest rates can reap high-end rewards in the future.
4. Global Economic Markets
The International Monetary Fund published a projection for growth in 2016 as a modest 3.2 percent but that recovery is projected to strengthen in 2017 and beyond. This is driven primarily by emerging markets and developing economies, many of which are in the southern Americas like Mexico. Read more here
We all know that political and environmental issues can change economics quickly but as it stands there is a much higher chance of global economic recovery and growth than another recession.
5. More Renters in the Market
There is a growing number of younger renters in the market. One of the fastest growing metrics right now is how people are spending money on experiences rather than material things. The younger generation is choosing holidays and adventures over expensive clothes and cars. This has contributed to an increase in property investment as a rental business along the Riveria Nayarit coastline as business people identify new opportunities. For example, Sayulita`s rental market has grown consistently over the past 10 years as holiday makers, adventures, and especially surfers come to discover this unique destination.
6. Houses are more Popular than Apartments
This is sometimes a reluctance to finding an apartment to rent. Home-owners confess that renting an apartment can feel like a step backwards to move to an apartment. As a real estate investor, this is a great opportunity. From our experience, we know that homeowners often make better tenants because they treat their rental home as their own for the time they are staying there.
7. Real Estate is a great long-term investment
Real estate is still an excellent long-term investment. If you consider the growth over the last 15 years, regardless of the recent crisis, real estate within the restricted zone of Mexico is still valued much higher than it was. Also, if you decide to rent your property you won’t have a problem finding renters to pay your mortgage.
8. The Lifestyle that the region provides
While it is possible to buy luxury property in many locations across the world, one should consider the lifestyle surrounding the location. Shrewd investors select locations that offer as many lifestyle choices as possible. Culture, cuisine, leisure, health, outdoor activities, and safety are all essential elements that contribute to the growth of a region.
Timing is Everything
In the 1990’s Playa del Carmen was definitely not a hot property market. This changed when it was recognised as a beach holiday destination and attracted many European visitors. Hotels and investors entered the market and the room inventories doubled in a matter of just 10 years. With the dramatic increase in growth, the year-round population boomed and the real estate market began to expand.
During the first few years of the 2000´s, many investors would purchase pre-construction condo units to sell them 12 months later with 30% or more appreciation. One realtor we interviewed about the boom remembered his clients commenting that “I should have invested in that property when I first saw it a few years ago”.
While Playa del Carmen is experiencing a downturn in appreciation values, Sayulita is perfectly situated to repeat the dramatic increases that Playa del Carmen had. For those of you who remember the appreciation wave of the early 2000´s then now is your opportunity to buy into the market before the next wave.
Want to know more?
Here’s our guide to Buying Property in the Restricted Zone in Mexico.