What great timing!

This was announced today by the Mexican government, on the day the stock market dropped by more points than in any other time in history. What are they thinking? Shouldn’t they, at this point in time, be taking care of the tourism destinations that already exist and will most likely be hurting in 2009? Why not put this into infrastructure development for the country? Or improve local infrastructure! 

 

MEXICO, September 29 (RIA Novosti) – Mexico’s government will pour billions of dollars into a resort to be built on the country’s Pacific coast, set to be the largest sea resort in the world, President Felipe Calderon said.

“The national fund for tourism development has adopted a program of building a new tourist center on the Pacific Coast at a cost of $6.1 billion,” the president said in a speech to mark World Tourism Day on Saturday.

The president called on local and foreign investors to participate in the construction of the resort, which is likely to be built in the vicinity of either Ixtapa or Huatulco, both already popular tourist destinations.

The resort is intended to outshine the Cancun resort on the Yucatan Peninsula.

Tourism is a major contributor to the Mexican economy, creating jobs for 2.2 million people and bringing over $7 billion in revenue in the first half of 2008. Within the period, a total of $11.5 million foreigners visited the country, 5% more than in the first half of last year.

MLS Activity compared to 2008

Here’s some stats I recently compiled from Multi-List Vallarta, comparing 2007 YTD to what has happened so far in 2008.

Please keep in mind that these are based on the “re-sale” sales of the MLS service and do not reflect what may be taking place with new products with developments. As well, keep in mind that this only includes sales that are “reported”. There are still some offices that do not report their sales (although very few), and we are not sure if offices are reporting 100% of their sales.

Gross volume for sales is off 20% compared to last year same time.

Number of sales is off 6%.

The average sales price was $387,000 in 2008, while it was $375,000 in 2007, so average sales prices actually went up.

The median sales price (take all prices from low to high and select the number in the middle) was $280,000 so far in 2008, while it was $250,000 in 2007.

So why is volume down but average price up?

The big drop in sales has been in the high end of the market.

So far in 2008 there have been only eight sales of $1 million and just one over $2 million. In 2007 there were 13 sales of $1 million with four of those over $2 million.

The big surprise was the average difference between list price and actual selling price. In 2007 this was 8.5% (traditionally high). But in 2008, so far this year, it has been only 6.6%, which is close to our running average in the market. This is positive news for the market, there don’t seem to be a lot of distress sales taking place to date.

Mexican Economy and Stock Market Update

This was recently posted in the newsletter for Actinver-Lloyd. It shows that with all that has been going on, the Mexican economy and market has been doing well and has, (can I really use the phrase?), “strong fundamentals”! But make your own decision:

• In the last decade, Mexico’s sovereign debt has experienced four upgrades (the last one in October 2007), and is well in the ‘investment grade’ category with a stable outlook
• Mexico does not rely on foreign capital: reserves exceed foreign-denominated debt and local markets provide the country’s capital needs
• The Mexican financial system is strong, enhanced by tighter supervision, and, as a result, there is no exposure to the subprime market or other troubled assets
• Discipline and sound policies underpin financial stability: a stable currency, sound public finances, and inflation converging to that of developed markets
• Cetes, the Mexican equivalent of T-Bills, have been a great low-risk investment. The cumulative return has been more than 17% during the last 3 years: a great return for such a low-risk asset
• The Mexican Peso has been stable even in the current turmoil; there is no exchange-rate controls in Mexico since 1995 and foreign reserves continue to grow
• Despite the market correction, the Mexican stock market yielded 70% in US dollars in the last three years; 82% including dividends

Looking for good news out there?

Well, there is good news to be found, and if you check out Jim Scherrer’s website, you’ll find plenty of it about the Puerto Vallarta real estate market. I enjoyed his most recent article regarding the return the Mexican Bolsa has experienced over the past seven to ten years. Check out some of his other articles, he’s been turning out quite a few over the past year!

Well its good to see a positive slant on things…

This was posted by the Ventura County Star:

Rob and Mary Ladner pictured their dream retirement as a sailing trip around the world. But everything changed when they cruised into the big, balmy bay of Puerto Vallarta 10 years ago. Seduced by swaying palm trees, colorful markets and cheap beachfront housing, the Ladners dropped anchor. The couple bought a corner condominium in a master-planned community 1,500 miles from their native California, but with nearly all the amenities of home. Crossing the border to find a better life, the Ladners are in the first wave of what some are comparing to a reverse migration flow. With 76 million American baby boomers hitting retirement age over the next two decades, experts say as many as 8 million may choose to live out their golden years in Mexico.

How to reduce condo inventory – quickly

Over the past few months there has been talk circulating, even by the marketing people, that Tres Mares would have a hotel component, perhaps even the Ritz Carlton. Well talk is now its going to be the Marriott Group, who would have a hotel, fractional and full-time units. This makes sense as the developer is also the landlord of the current Marriott CasaMagna hotel located close by in Marina Vallarta. They are also talking about having convention space as well.

If this is true, this would seriously reduce the number of condominiums currently available on the market, as there are around 600 condos slated for this project, of which about 25% are already sold. Last year Marriott struck a deal with Ian Schrager, who some say invented the concept of the “boutique” hotel, to create a new brand for Marriott for a high-end line of boutique hotels with about 150-200 rooms each. It would be very good for Vallarta if they chose this new brand, as Vallarta is in need of a very high-end hotel to rival the one’s along the north shore of the bay such as the Four Seasons, St. Regis, and soon to be built Rosewood hotel.

MLS Inventory remains stable

Inventory for listings posted in Multi-List Vallarta, the MLS service for the real estate associations in Vallarta, has continued to remain rather stable with around 850 properties listed and an average about 90 new properties coming in each month. This is for the resale market. For new product, see my last posting regarding real estate developments. This is for the past two years.

mlv-inventory-sept

A little good news from the Hotel Industry

This was recently featured in the September issue of Hotel Magazine:

Latin America: Land Of OPPORTUNITY 

Mexico is ripe for more growth, and brands are increasingly bullish on the prospects of Central and South America.  By Derek Gale, Senior Editor 

With growth from Mexico on down to Argentina, developers and brands are finding plenty of room for expansion in Central and South America. “In Latin America, I would expect that we will have in excess of 80 hotels by late 2011,” says Ed Fuller, president & managing director of international lodging, Marriott International. “We find all of Central America of interest. Each market is defined by the destination, and as each market defines itself, we (will) put appropriate product in.” 

On thing that has worked well for Marriott so far is putting its Courtyard product near tourism destinations for different customers, Fuller says. 

Mid-scale product in general may be the ticket throughout the region, as it is “clearly the fastest growing and the most in demand,” says Alvaro Diago, area president for IHG in Latin America. “While the region still has many challenges, the evolution of the middle class continues, as does the parallel need for mid-scale products,” he says. “There is a shortage of these hotels in most secondary and tertiary cities in the region.”

Sorry for lack of postings

For those of you who have been checking back here regularly, sorry for not posting anything lately but I’ve been on vacation in Europe. And while there it became very obvious that a real estate downturn that started in the USA has turned global. Its getting extremely nasty in England and already is in Spain. France doesn’t seem to be far behind nor Germany. The way things are going it seems the USA could lead the way out of this, and at the same time bring the dollar up with it. 

Haven’t had a chance to talk to realtors or developers how things are going around here, but I’ll start asking around.