Puerto Vallarta Real Estate Sailing On
09 Oct 2009
by: Yemisrach Kifle
Puerto Vallarta was once a quiet fishing village, but ever since it
served as the backdrop for John Huston’s 1964 film “The Night of the
Iguana,” starring Ava Gardner and Richard Burton, the sleepy seaside
town has grown to become the blockbuster resort that it is today. This
longstanding popularity only seems to be increasing among both tourists
and retirees, and as a result, Puerto Vallarta's real estate market is
thriving.
Many foreigners looking to retire
in Mexico have chosen this seaside town for its beautiful scenery, its
small size and the relative ease of conducting day-to-day life with
limited Spanish required. Interest among international buyers is so
great that almost all real estate agencies quote prices in dollars.
About Puerto Vallarta
Puerto Vallarta, west of Guadalajara
Located on the Pacific coast, the municipality of Puerto Vallarta
occupies 502.19 square miles and has a view of the beautiful Sierra
Madre mountains. With its estimated population hovering around 300,000,
the city is the fifth largest in the Mexican state of Jalisco.
Tourism is the largest industry in the area, followed by
agriculture and fishing. Puerto Vallarta is the second most visited
resort town in Mexico and welcomes 2.2 million tourists annually,
according to Visit Puerto Vallarta Mexico, an online guide to the city.
The city’s official slogan, “where Mexico comes to life,” rings true
to John Youden, founder of Puerto Vallarta's real estate multiple
listing service, Multi List Vallarta, and owner of Vallarta Lifestyles
Publishing Group, he said. “Puerto Vallarta is a Mexican town that
became an international tourist destination. Los Cabos
and Cancun, for the most part, were planned destinations,” he said.
Puerto Vallarta has a lot of Mexico to offer, according to Mr. Youden.
“Its downtown central area with its plaza and Malecon offers something
truly unique. It is also very close to Guadalajara, Mexico’s second
largest city.”
The lights of Puerto Vallarta at dusk along the Pacific coast
Puerto Vallarta was ranked in NuWire's top five Mexican real estate markets in 2008.
In 2000, Puerto Vallarta sold roughly $50 million in resort real
estate, which is defined as property purchased by retirees or as a
second home, according to Darryl Bowie, the general manager of Coldwell
Banker La Costa Realty. Million-dollar homes were rare and there were
only a few large scale developments. In 2007, resort real estate sales
reached $500 million. There were condos selling for $2 million apiece
and homes garnering a hefty $5 million, according to Coldwell Banker La
Costa Realty.
As of summer 2008, there are more than 100 developments around
Banderas Bay, making Puerto Vallarta first in resort property sales in
Mexico. Punta Mita, one of the better known developments, has Four
Seasons, Ritz Carlton and St. Regis Hotels and two Jack Nicklaus
Signature golf courses. "The whole area is booming, from Rincon de Guayabitos in the north to Mismaloya in the south," Bowie said.
The major property buyers in Puerto Vallarta are Mexicans, Americans
and Canadians and mostly they come looking in one of three categories,
according to figures from Coldwell Banker La Costa. Some are seeking
full-time winter homes. Others are looking for a second home that can
also double as a rental property. Many are looking to retire in Puerto
Vallarta.
"This year, with the sub-prime crisis, 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 news, even the Canadian buyers are being more
cautious than usual," Bowie said.
Those who are looking for properties under $250,000 but want
amenities such as a pool, beach, security, view and proximity to
downtown are finding a market where prices are much higher than they
expected, according to Bowie. The market under $400,000 is strong,
especially in the condo sector. However, sales from properties valued
between $500,000 and $1 million are not doing as well. "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," Bowie said.
"The $500,000 to $1,000,000 market seems to be softening at this
time, with a desire toward either less expensive condos in the $300s or
very high-end condos and villas, typically over $2 million," said Wayne
Franklin, president of Tropicasa Reality. The top end of the market is
doing quiet a bit better than any other portion of the market. "This
makes sense because economic fluctuations affect high profile clients
less," Franklin said.
A coastal resort in Puerto Vallarta
The paperwork and real estate language used during property
transaction may seem similar to those used in the United States but
international buyers must remember that similarity does not translate
into sameness. They must research every turn and ensure all procedures
are completed in accordance to Mexican law. Generally, property
purchase involves a bank, a lawyer, a real estate company and a public
notary, according to Mexonline. Transactions that are not within
restricted zones don't need to involve banks. Read more bout Mexican
real estate law in our article The Myth of Mexican Property Ownership.
"Investors need to do their homework and work with an AMPI [Mexican
Association of Real Estate Professionals] agent to make sure that they
are being represented properly," Franklin said. Buyers must review and
evaluate documents of their chosen development critically to ensure
that everything is as it seems. "If the investor has found a valid
project, preconstruction
developers sometimes offer great discounts for entry level into a
development. Others offer terrific terms throughout the course of the
construction. In Mexico, prices increase on developments as inventory
decreases, so price escalations are typically built into the model. You
may also find a developer whose sales have stagnated. They’ve reached a
plateau and they need to get moving again. Being in the right place at
the right time can pay off in these projects. You may be able to
convince a developer to give you that 'special deal' on the next unit
sold so that he can get sales moving again," he said.
The next few years
Real estate agents are optimistic about the future of the Puerto
Vallarta property market as new developments are planned to open the
town to even greater numbers of tourists. "A new highway is under
construction to Guadalajara, which will bring more visitors to the
beach. This will be a huge boom for Vallarta. People will need lodging,
food and want to shop and drink. All businesses will enjoy an uptick in
activity, real estate and hotels especially," said Franklin.
"The baby boomer population continues to retire with huge wealth
despite U.S. economic factors. Vallarta, with its proximity to major
wealth centers in the States, will continue to grow and be among one of
the top vacation and retirement destination as baby boomers look for
more out of life," he added.
"[The market] will certainly continue to grow. A slowdown is taking
place, as elsewhere in the world, but it will pick up again," Youden
said.
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