Mexico ranks as one of the world’s top tourist destinations and it’s not hard to understand why. Beautiful beaches, tropical weather and a rich culture are just a few examples that will make anyone fall in love with the country. Many people dream of owning property in Mexico, whether as a lifestyle or investment purchase or a combination of both. Unfortunately, many think that their dream is out of reach. Yet, owning a property in Mexico is more affordable and easier than many people think. In this article, we outline our top 3 locations to buy a property in Mexico.
If you are interested in a tropical place under the sun for your next property purchase/investment, this article will give you an overview of our top 3 markets in Mexico: the Riviera Maya, the Puerto Vallarta – Riviera Nayarit area and the Cabo area.
In order to be in our top 3 locations to buy a property in Mexico, a location has to meet our strict criteria:
- Easy access with good international air connections.
- Nice weather year round.
- While there may be a “high season,” many people visit year-round.
- Plenty of fun activities.
- Infrastructure that supports tourism.
- Strong demand from many different types of visitors from around the world: short- and long-term renters, remote workers, digital nomads, families, retirees and people waiting for homes to be delivered.
- An ability to attract visitors in good times and bad.
The Riviera Maya
The Riviera Maya is one of the most visited places in the world with millions of tourists flooding its beach towns every year. It is an 80-mile stretch of Caribbean coast located in the Yucatan peninsula between Cancun and Tulum. The Riviera Maya is the ideal destination for those looking for white sand beaches, turquoise water, jungle, activities, culture and history.
The government has been investing massively in the region’s infrastructure to ensure a continued and growing number of visitors. 50 years ago, Cancun was merely a coconut plantation. Today, the Riviera Maya is one of the most visited locations in the world. Pretty much every hotel chain has a presence there and a large number of airlines fly into Cancun International airport, which keeps growing. The government is not resting on its laurels though. They are now building a high speed train through the Riviera Maya and are going to build a new airport in Tulum.
The real estate market in the Riviera Maya has been growing steadily for the past 20 years starting first with Cancun and expanding south through Playa Del Carmen and Tulum.
Located at the Northeastern end of the Riviera Maya, Cancun is an upscale cosmopolitan city. It is divided into two sections: downtown (El Centro) and the Hotel Zone (Zona Hotelera). Downtown is very modern with high rises but it has still kept its authenticity in some of the older neighborhoods. The Hotel Zone is a long beachfront strip in between the Caribbean Sea and the Nichupté lagoon. With high-rise hotels, luxury resorts and their all-inclusive service, nightclubs, restaurants and shopping malls, the hotel zone attracts the overall majority of the tourists. This is where many students from the US and Canada go to party during the spring break.
Cancun is more of a resort town where people come to be in luxury all-inclusive resorts by the beach. Therefore, it is not our favorite place to buy an investment property. Indeed, it is practically impossible to compete against the numerous and huge all-inclusive resorts, which is where most tourists want to go anyway.
Playa Del Carmen
Playa del Carmen is located in the middle of the Riviera Maya about 50 minutes south of Cancun. Once a sleepy fishing village 30 years ago, it has turned into one of the world’s hottest vacation destinations. Development accelerated over the years, to the point that the city was the world’s fastest growing at some point. Playa del Carmen has turned into a sophisticated internationalized cosmopolitan beachside city of close to 300,000 residents with millions of visitors. It has large malls, an international dining scene, big box stores, medical centers, and more. English is spoken everywhere.
The city is a very popular destination for tourists, digital nomads, remote workers, investors and retirees alike thanks to its top-notch infrastructure. The city is family friendly with multiple theme parks around to entertain the kids. Basically, it has something to appeal to every type of visitor. People come from many different parts of the globe and at different times of the year.
Playa Del Carmen is located by the beach. You can find everything you would expect from a top beach destination. Beautiful beaches, an exciting nightlife, world-class golf courses, … The 5th avenue (Quinta Avenida) is a 5-mile long pedestrian street. It is the center of the city and is filled with luxury shops, a plethora of cafés and restaurants serving delicious food and trendy bars that are busy day and night.
If you own a modern, comfortable two-bed condo in the right location, you could generate an attractive rental income by renting your place when you are not staying at your property. You could make $40,000 or more yearly and still get plenty of time to enjoy your property if you buy close to the beach and 5th Avenue!
There is no more large piece of land available in downtown Playa Del Carmen. As a result, new construction takes place further and further from downtown, which is less short-term rental friendly. Alternatively, developers could buy older buildings and tear them down but the condos would need to have a high price tag given the very high cost of the land. All of this limits your future competition when renting or selling.
Located at the Southwestern end of the Riviera Maya, Tulum used to be a backpacker and bohemian paradise of palapa restaurants and rustic cabanas on the beach until not so long ago. However, it was beautiful, with powdery white-sand beaches, the azure Caribbean waters and the fringe of palm trees. Soon enough the international jet-set, in search of the next Ibiza or Mykonos, found Tulum. Fashion designers and hipsters from New York, celebrities from Hollywood, the moneyed party crowd from all over the world, descended on Tulum. Then the masses followed.
Tulum still retains its counterculture vibe. It’s a place of yoga retreats, Maya healing rituals in the jungle and full moon dance parties. There really is something for everybody, something that caters to the different markets that come here now: young couples, groups of friends, retirees, part-time expats and snowbirds, digital nomads and the newly liberated work-from-home crowd.
In recent years, the town has become more high-end, due to wealthier travelers flocking in. As a result, prices in Tulum are more expensive than elsewhere in the Yucatan peninsula. Tulum has a boho chic vibe with eco-friendly construction in the jungle. With that bohemian trend comes holistic attention for the body. People not only come to relax on the beautiful beaches but also for yoga retreats and other enjoyments at the different spas. Despite the growth over the past years, it has somewhat kept its laid-back lazy town feel.
Tulum is a relatively small town and it is divided into three main areas: the town, the hotel zone (Zona Hotelera) by the beach and the jungle in between, which is being developed. In Tulum, there is no equivalent to Playa del Carmen’s 5th Avenue and there are not any condos or villas really close to the beach. It is about being in the jungle in the middle of Tulum while having access to both the beach and the town. If you own a modern, comfortable two-bed condo there, you could generate an attractive rental income by renting your place when you are not staying at your property. You could make $30,000 to $35,000 yearly or more and still get plenty of time to enjoy your property.
Puerto Vallarta and the Riviera Nayarit
Located on the Mexican Pacific side at the border between the states of Jalisco and Nayarit, Puerto Vallarta is located by the Bay of Banderas (Bahia de Banderas). The area attracts a lot of tourists, snowbirds and digital nomads during the whole year thanks to the nice climate.
From a real estate point of view, a huge positive is that the area is a branded international destination, as is the Riviera Maya. Moreover, the geography means that there is a limited amount of land available to build, which should be favorable for the supply/demand balance and therefore future rental income and capital appreciation.
For decades, Puerto Vallarta has been a go-to vacation hotspot for Americans, Canadians, Europeans, and middle- and upper-class Mexicans. Together with the neighboring Riviera Nayarit, the city is the second most popular beach destination in Mexico, after the Riviera Maya.
It’s a hopping place, with whale watching, sport fishing, golfing, dining out, sunset cocktails on the beach, shopping, live entertainment like Broadway-style shows, jazz bands, and more. It is all the fun visitors like. There is something for every age group and type of person, which we like to see.
While the international connectivity of the airport is excellent, tourists also arrive by boat. Puerto Vallarta’s cruise ship terminal can and does handle three ships at once.
When it comes to real estate, the main areas that attract the most visitors are El Centro, Old Town and the Zona Romantica, which is the most popular. Those are also the most popular zones for expats. South of those, you will find Amapas and Conchas Chinas which are more exclusive due to their hillside location and the majestic views of the bay.
Real estate here can be quite pricey compared to most of Mexico, which does not mean that they are expensive, especially compared to the US or Canada. This is especially true for condos centrally located in town, where you are close to everything visitors want to do. There are plenty of people willing to pay top dollar as they come to Puerto Vallarta, fall in love with the lifestyle, and buy. Much of the old town, with its charming cobblestone streets, pleasant parks and plazas, historic buildings, and miles-long seaside promenade (malecon) became so hot it has been maxed out, which results in higher prices.
With a very large unleveraged average rental yield of around 10%, the rental market is very strong, which compensates for the higher prices. Buy the right piece of property and you can do even better. Also, as prices continue to rise as the area gains in popularity, significant capital gains can be had. The adjacent Riviera Nayarit (discussed below) can provide a great alternative with lower prices in spite of the strong rental market.
The Riviera Nayarit
As Puerto Vallarta was getting maxed out, it could not expand along the coast towards the South, as the Sierra Madre meets the Pacific Ocean there. Therefore, the expansion went the other way over the border with the state of Nayarit and Nuevo Vallarta was created. The expansion is continuing northward with the support of the government through big infrastructure projects to boost tourism and further improve accessibility.
The Riviera Nayarit stretches beyond the northern part of Puerto Vallarta in the state of Nayarit over 192 miles of coastline with around 20 coastal towns. Nuevo Vallarta, Punta de Mita and Sayulita are those who attract the most visitors, especially foreigners.
Initially, Puerto Vallarta and the Riviera Nayarit were marketed together under Puerto Vallarta – Riviera Nayarit by the Mexican government. This made sense given the proximity and the common airport. Given the success of the Riviera Nayarit, it has become a destination in its own right and it is now being marketed separately. Nayarit’s new governor has even decided to rename Nuevo Vallarta Nuevo Nayarit, as Nayarit has become a recognized brand name alongside Puerto Vallarta.
The government is attracting many new luxury hotels and residential developments to position the Riviera Nayarit as a new capital of luxury in Mexico. There is already Punta Mita, the gated community of the wealthy with the Four Seasons and the St. Regis. They are creating a second such community, Costa Canuva further up north. It will house the Fairmont and the Ritz-Carlton.
Also, the new highway that will link Puerto Vallarta and Mexico’s second city Guadalajara, the region’s main source of visitors, is almost complete. It will significantly cut the travel time between the two cities. It will pass along the Riviera Nayarit and significantly increase its accessibility from Guadalajara but also by cutting the travel time to Puerto Vallarta and the airport as well.
There is clearly a path of progress that will support the rental income and capital gains in the Riviera Nayarit for years to come. This is very interesting because, aside from the luxury enclaves, the price point is generally lower than in Puerto Vallarta itself while the rental income is still there, although not as high.
The Mexican government, through its FONATUR tourism development agency, has a great track record developing little stretches of this country’s coast. Paying attention to where FONATUR is moving and investing accordingly is a great strategy that has worked and is still working throughout Mexico.
Los Cabos means “the capes” and refers to the two cities of San Jose Del Cabo and Cabo San Lucas and the corridor along the Sea of Cortez in between the two. The area is located at the tip of the Baja California peninsula where the Pacific Ocean meets the Sea of Cortez With a stunning desert landscape that meets the water, Cabo boasts a warm, dry climate with low humidity.
In the 1940s, when Hollywood stars wanted to escape the paparazzi, they went to Los Cabos. They were joined by presidents, wealthy businessmen and the international jet set. They gave Los Cabos a reputation for exclusivity and glamor, a reputation it still holds today. Cabo San Lucas and the corridor are home to some of the world’s most luxurious hotels. As for San José del Cabo, the more traditional Mexican city, it has undergone a renaissance.
The lifestyle boasts sun and sand, sea and surf, super-luxe hotels and day spas, fine dining, yacht trips, world class golf courses (a lot of them designed by champions like Jack Nicklaus and Greg Norman) and fishing. Cabo has it all and, today, it’s attracting more than just the jet set. Lots of ordinary folks are vacationing here, buying second homes and riding out the cold winters back home.
The area has been growing at a fast pace for the past 40 years. From a small fishing town in the 1980’s, Cabo became one of the biggest tourist destinations in Mexico. Like the Riviera Maya and the Puerto Vallarta – Riviera Nayarit area, Cabo is surfing the remote working trend. As a result, Cabo is already flooded with professionals, young and old, single and with families, all with laptops in hand looking for rentals and looking to buy real estate. In the meantime, the air connectivity continued to improve.
Real estate here can be even pricier than in Puerto Vallarta, which does not necessarily mean that it is expensive, especially compared to the US or Canada. It is still possible to find opportunities with double digit rental returns and strong capital gain potential. Like the Puerto Vallarta – Riviera Nayarit area, Cabo is expanding, which creates opportunities at better price points as peripheral areas become easier to access. Think Todos Santos on the Pacific side and the East Cape on the Sea of Cortez side.
In our opinion, these three markets are the best places to buy a property in Mexico today. They are great places to vacation and enjoy great weather and beautiful beaches. They all attract a lot of tourists and are great for earning high cash flows with short-term rentals. They are also great when it comes to capital appreciation because they are well-established sought after locations.
Properties in these markets can therefore be a great lifestyle purchase. They are a great investment purchase too. And they are perfect as a combination of both.
If you want more information on this topic or any other topic pertaining to buying or investing in real estate in Mexico, reach out to us through the contact form.