Market Bell Weather?

There are a number of ways to see how the local real estate market has been weathering the economic storm that prevails throughout the world. With statistical information not readily available, however, we need to look elsewhere. A good measure is looking at local real estate publications and how they are doing. The upcoming issue of Vallarta Lifestyles will be 100 pages below last year’s issue of over 300 pages (and its biggest issue ever). The loss of advertising pages has been nearly exclusively with real estate developers and offices, other sectors remained the same, such as dining, shopping, art, home decor and activities. Real estate is definitely the shrinking market, at least for advertisers. There was a certain amount of denial in the market, that this slowdown in sales was really happening, rather than just a slow summer season. Now that high season (well, supposedly “high season”) is here, and sales have remained slow, developers are curbing back on their expenses, bracing for a tough season. 

It will be interesting to see how other publications that tend to be “pure” real estate, will weather this market downturn. Talk on the street is that it remains more difficult for developers than for re-sale real estate offices, but there is nobody that has not been touched by current economic conditions. 2009 is going to be a very interesting year…

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2 Responses to Market Bell Weather?

  1. Horst Steinmeyer says:

    Grupo Iberostar Pulls Out of Litibu

    Litibu is a major development adjacent to the Four Seasons Resort in Punta de Mita.

    Litibu was being developed as a stand alone resort with at least three hotels, two condo developments, townhouse condos and golf courses. The Litibu project was a joint venture involving Mexico’s tourism and land development crown corporation, Fonatur, and one of the world’s largest resort developers, Group Iberostar, among others.

    As a result of poor sales and slow cash flow, Groupo Iberostar is walking away from the Litibu project. We do not have further details except to say the Iberostar was not able to find a buyer for their share in this partially completed project and is unwilling to commit any further money to the development.

    There are condo projects on the site including La Tranquila. HSC Financial attempted a site visit at La Tranquila in March of 2008 to confirm construction progress and we were denied entry to the grounds without attending a sales presentation. At the time, we had very serious concerns about claims made regarding sales-to-date and construction progress.

    We are unable to report on the status of sales contracts for Litibu sub-projects.

    Any developments to any projects related to Litibu should have no further funds advanced. If any cash has been advanced, it is probably lost, however we recommend that you hire a local solicitor in an attempt to recover money or to at least document losses.
    Posted by Hazen at 3:24 PM

    Hazen S. Colbert lives in Mexico and Canada. He is Managing Director of HSC Financial (Canada) Inc., and its Mexican subsidiary HSC & Associates.

    Horst Steinmeyer

  2. Horst G. Steinmeyer says:

    Hola John, best for a peaceful 2009.

    I was actually forwarding Hazen S. Colbert´s comments that he had published earlier this month on his blog.

    Here is our own stance:

    We are afraid, that the success story of Riviera Nayarit is about to convert itself into a another bubble. ´Pull out´, ´walk away´ and ´bankruptcy´ means ´negative´ investment, doesn´t it, i.e. figures published, like the supposedly 350 mio US$ investment committed to 35 projects in 2008 aren´t true anymore.
    (Don´t think anybody runs a check on those figures anyway).

    ´Pull out´ of a major investor in Litibu (Iberostar) and bankruptcy of another (Martinsa-FADESA), who together bought about 80% of the Litibú (Riviera Nayarit) lots from Fonatur a bit more than a year ago, with promises of multimillion investments in hotels, condos, villas and for massive employment opportunities in the region makes me think that Sectur, Fonatur and especially the Governor of Nayarit are running the risk of ending up in a ´dream world´.

    You (and others in the business) know: There were other ´fold-ins´ in 2008 and there will be more next year.

    We think that this represents a golden opportunity to do some of the pending homework (infrastructure, black water treatments, solve the garbage problems and fresh water issues, spur a true economic community development process like Punta de Mita Foundation starts doing, incl. work on social, cultural, and above all public security issues, prevent further destruction of mangroves, of protected rain forest and fauna, curb increasing beach pollution, etc., etc) …. before starting to promote ´Riviera Nayarit´ again, …. by then, hopefully, coming closer to promises made.

    Horst G. Steinmeyer
    Coordinador ALIANZA de la Costa Verde

    ALIANZA de la Costa Verde: Una red de asociaciones civiles y personas, que promueve el Desarrollo Sustentable en la Bahía de Banderas y Costa Sur de Nayarit.

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