This article was recently posted in the September issue of Urban Land:
The region known as Latin America and the Caribbean (LAC), as defined by the World Bank, consists of 41 countries. One of LAC’s greatest assets is the bountiful real estate that is available for destination resort or retirement development. In many of the countries, particularly those closest to the United States with established air transport corridors, tourism has become one of the most dominant industries. This factor, combined with trends in the U.S. tourism and resort investment, has made the region a magnet for new real estate activity.
The September 11, 2001, attacks on the United States led to important changes in American’s travel habits and boosted the value of resort and retirement development in the LAC region. As outbound U.S. travel gradually recovered, it became clear that U.S. vacationers preferred to stay closer to home. Trips became shorter, more frequent, and focused on destinations within driving distance or limited to a relatively short, non-stop flight. Furthermore, a broad range of U.S. travelers developed a preference for resort locations offering many leisure experiences within a secure community environment. Because these vacationers where spending less on travel and returning more often to resorts closer to the United States, there were willing to invest in those communities.
Those that succeeded, most notably Panama, Costa Rica, and the Dominican Republic, have joined Mexico as the “hot spots” of the current era. Because of their size, the amount of available land, their proximity to the United States, and their well-served air corridors from many U.S. locations, these four LAC countries have the most potential in the region for growth in resort and retire development.
Mexico continues to be the premier destination for U.S. investors looking for resort and retirement real estate in the region, largely due to its proximity to the United States, whose citizens constitute the largest tourist market in the world. Mexico has done an impressive job of reforming its legal, business, and tax systems to modernize and compete effectively with resort, tourism, and retirement destinations in the United States and throughout LAC. Today, Mexico offers world-class resort community projects with top-quality golf and other amenities expected in a high-end resort.
Punta Mita near Puerto Vallarta on Mexico’s Pacific Coast, is sited along pristine white sand beaches and natural islands. Like most modern destination resorts in the LAC region, these projects are mixed use and include different types and styles of for-sale private residences, hotel and retail uses, as well as amenities, with a secure, easily accessible campus.
While Mexico remains ahead of the pack with a sophisticated real estate development industry that functions much like that of the United States, Panama has advanced its development activity significantly.
The LAC region in general, and these four countries in particular, cater to the luxury real estate sector and mass tourism. The largest demand for real estate investment within these countries is in the luxury sector, fueled by wealthy baby boomers who can buy into the new, secure, mixed-use destination resorts being developed throughout the region and can travel back and forth multiple times per year. Panama and Mexico are also attracting a significant amount of retirement development.
Luma, located in Nuevo Vallarta, Mexico, is a combination luxury resort and retirement community for active adults 50 years old and over. Developed by Front Porch, a leading developer of retirement communities in the United States, in partnership with Grupo Krone, a Mexican-based housing and land development company, Luma is siad to the be the first American-developed, full-ownership, active adult, beachfront community in Mexico.
Given the demographic density of wealthy baby boomers and “shadow boomers” entering retirement over the next few years, luxury retirement resorts may be the “next big thing.”
Senior shareholder, regional coordinator of California offices for the global law firm of Greenberg Traurig LLP.