Grand Venetian Update

Yesterday in the Vallarta Opina there was an article about the Grand Venetian, Peninsula and Tres Mares developments looking to change the zoning of their property so they could function as “condo hotels”. This is one way for the three projects to handle the downturn in the economy but removing some of their inventory from full-time (where they may have units just sitting empty), to now functioning also as a hotel. This offers potential purchasers not only use of their condominium but also the ability to rent out their units through the hotel rental program. This has been working at resorts such as the Velas Vallarta hotel for years. Actually, this is how Velas became a hotel. When full-time sales slowed down back in 1995, they resorted to timesharing and functioning as a condo-hotel. 

This can prove positive to the local market in a number of ways. First, with regards to the Grand Venetian, the current litigation going on is with regards to the zoning of the property. It was supposed to be for only hotel development, not for condominium or residential development. By functioning as a condo-hotel, this may be a solution to the problem, one that I brought up with the president of the Hotel & Motel Association a number of months ago. We’ll have to wait and see how this pans out.

This also is positive as it will take a large number of condominiums (at least those offered as full-time condos) off the market. Going into 2008 there were approximately 8,000 condos, new product, on the market for sale. Sales have not been strong for developers so inventory hasn’t been diminished much through sales, but rather through condo-hotel conversion and the fact that a number of projects hadn’t broken ground yet so they could cancel the project or put it on hold. We don’t have the numbers yet (we survey developers in early January), but I believe we will have substantially reduced the number of units on the market. Los Veneros followed suit early this year by selling out a portion of their development to the hotel operator Grupo Posadas.

And lastly, we’ve been in need of new hotels in Vallarta, as the last time a hotel was built here was pre-2001. This will deliver, or should deliver, hotel operations in the Five-star or Gran Turismo category. At Tres Mares in Marina Vallarta, Marriott is taking over some of the towers. We are not sure at this time what brand Marriott will be offering here, but we are hoping its their new luxury boutique hotel line that they have been working on with Ian Schrager.

Brazil, Russia, India & China (BRIC) our new next markets?

 

Tom Kelly had this to say in one of his most recent columns:

…While the “in flow” of Russians, Germans and United Kingdom residents has been common in the past five years along the Atlantic Coast, the “out flow” of Americans heading north to Canada and south to the Central America sun also is increasing.

While the total foreign business — approximately 3 percent — is tiny compared with the number of total deals done in the United States, the category is expected to rise faster than any other housing group.

“I have Realtors who have businesses in Florida and in Panama and others with businesses in Texas and Costa Rica,” said Lawrence Yun, NAR’s chief economist. “They travel back and forth. This can be new business for Realtors or they can also simply focus on the referral business.”

Sierra del Mar – Los Arcos

Yesterday was the monthly meeting for AMPI Puerto Vallarta (Local real estate board), with this one held at Sierra del Mar – Los Arcos. The Osunas’ ( developers of Sierra del Mar), held a breakfast meeting for members, situated on the beach in front of their new development. Excellent meeting with over 100 members/affiliates showing up. Great to see this many people attending and hats off to David Pullen for doing an excellent job this year as the chapter’s president. It has been a very productive year for him and his board directors.

Sierra del Mar Los Arcos consists of condominiums, townhouses and homesites situated in front of the Los Arcos rock formations on the south shore of the bay. They currently are working on 17 condominium units and a model is now open. They have done a wonderful job presenting a very nice floor plan, open to the ocean and beach with plenty of windows and terrace space. This is about the best price in town to get an oceanfront condominium of this size and quality situated right in front of the ocean. Once again, SdMar has delivered a quality product.

For more information: www.sierradelmar.com

Good Article in the Vancouver Sun about PV real estate

Good article – Thanks Victoria, and congratulations!

In Mexico, the asking price of a new-construction home is one-quarter to one-third the asking price of a comparable Canadian home. But property ownership by foreigners is restricted. The weather is lovely, but . . . And the scenery is so different, but . . .

A recent Mexican real-estate seminar by Canada2Mexico Consulting provided an opportunity to investigate the dream and the reality. Providing the answers below is Victoria Pratt, a former Vancouverite now selling Mexican real estate.

You can read the full article at:

http://www.canada.com/vancouversun/news/story.html?id=29b118ff-fe7c-4bc6-9a20-9579c72d6060

Potential Solution for Real Estate Developers facing slowing sales

Bruce Greenberg of Montaña Verde, a consulting and appraisal company that has been doing work in Mexico for many years, is currently teaming up with Deloitte Mexico (Deloitte as this time has not signed onto the program officially, but they are studying it), to offer a potential solution for real estate developers in Mexico during this economic downturn. Their recovery plan is structured to assist the many multi-facted problems developers are facing, such as:

1. Lack of liquidity and insolvency problems

2. Possible foreclosure proceedings

3. Inability to comply with construction deadlines

4. Unable to meet obligations to deliver units to buyers

5. Market/product mismatch leading to inaccurate sales, absorption and pricing projections

6. Consumer defaults on payments

7. Lack of consumer confidence and buying power

The above mentioned issues, have already had a detrimental impact on various regions of Mexico, most significantly in the Tijuana and Puerto Peñasco regions. Puerto Vallarta has so far managed to avoid the problems the other regions face, but there may be a few projects that could use assistance as we move into 2009.