Looking Ahead – Costa Vallarta Real Estate Market

This is the first part (of three parts) of a feature article coming out next month in the Spring issue (February 2010) of Costa Vallarta/Riviera Nayarit magazine. A sneak preview!

Costa Vallarta, the amazing coastline that stretches from Barra de Navidad to San Blas, ranges in ecological diversity from lush tropical forest to arid farmland, encompassing pristine beaches, large estuaries teeming with life and rugged cliffs where the foothills of the Sierra Madre meet the sea, interspersed with delightful coves and bays. In the middle of this coastline lies Banderas Bay, home to popular Puerto Vallarta and a few small seaside towns. But outside the bay, especially to the south, the area remains as it has for years—rather remote, hard to reach, and largely untouched by man and his seemingly endless desire to tame what is wild and natural. Yet, development is inevitable. What’s questionable is the form it will take and the effect it will have on the region and the people who live there.

This article discusses Costa Vallarta and the plans and players involved in its future. As Puerto Vallarta has evolved from a quaint, seaside fishing village (as it is so often portrayed) into a city and service center for Costa communities, it has forced people looking for what Vallarta once was outward along its coastline. This is about the players who are looking ahead, making the plans that will provide real estate opportunities when the market recuperates, hopefully with a product that will protect the region from irresponsible development.

When considering real estate in Costa Vallarta, whether from a developer, realtor or buyer/seller point of view, it’s easy to get caught up in the “here and now” and be overwhelmed by the recent downturn in the market. For many real estate developers, sales have slowed considerably and, concentrating on staying afloat while the market adjusts and begins its recovery, they are now placing cash flow and survival strategies ahead of development strategies—at least for the short term.

However, the large mega-developments involve long-term planning, 10- to 20-year windows, requiring significant investments in time and money when the market may be most difficult. Many projects today have 20-year sell-out projections, longer than most real estate cycles, which means the developer has to forecast and plan to weather both the ups and the downs, the good and the bad of these cycles.

Where “timing is everything” for many developments, it also involves being bold when others are phasing down—or shutting down—and establishing plans for the next wave of market opportunity while also taking into consideration future downturns that may occur during the long-term selling phase of a mega-development. Developing looks easy and like a wonderful business on the upside. It’s the downside, in the troughs—an inescapable part of the business—that separates the serious and seasoned from the lightweight. And it’s the former that are now busy creating plans for Costa Vallarta’s future.

Sections of Costa Vallarta
South of Puerto Vallarta and still within the state of Jalisco, running from the southern tip of Banderas Bay (Cabo Corientes) down to Barra de Navidad, is Costalegre, a spectacular coast that has seen little development, for the most part—just a few towns and secluded, high-end boutique hotels. To the north of Puerto Vallarta, across the Ameca River, is Nayarit and the region commonly referred to as Riviera Nayarit. It’s a different state, with different rules regarding real estate development.There are approximately 100 km of coastline between the two points of Banderas Bay, with development actually taking place within only 55 km, as most of the south shore of the bay is not accessible by road and most of it is “ejido,” or indigenous, land.Riviera Nayarit’s northern coastline (not including the portion inside Banderas Bay) is similar in length (100 km), stretching from Punta de Mita to San Blas. The coastline varies from steep cliffs with dense jungle to beautiful beaches and oceanside plains. In comparison, Costalegre encompasses approximately double that, with nearly 200 km of coastline, from Cabo Corientes to Barra de Navidad. There are portions of it, however, that are not conducive to development. About 50 km consist mostly of estuaries and flat, arid land mostly used for farming. Another 40 km are privately owned, with owners who have little or no intention of selling or developing, at least not anytime soon. This makes Costalegre’s developable land bank similar in size to Riviera Nayarit.

With much of Puerto Vallarta and Banderas Bay fully developed (except for the extreme south shore), any new growth will take place outside the shores of the bay, within Riviera Nayarit and Costalegre. Obtaining information about Riviera Nayarit is relatively easy, as there are many existing projects and numerous real estate agencies with well-informed realtors, plus the slated projects are farther advanced than many to the south in Costalegre.

Finding out about Costalegre is another matter. The principal players and landowners in the region keep information to themselves, partly to protect their privacy and also to inhibit development. There are few real estate companies working in the region, except for a few “coyotes”—independent sales people who live in the region and often do not even have an office. They work as intermediaries, putting people who own land and may be interested in selling together with those interested in buying. Their forte is that they have information others have difficulty finding. Making your way around this region is nearly impossible without a “coyote” or the services of one of the few companies that specialize in the region.

To be continued…


One Response to Looking Ahead – Costa Vallarta Real Estate Market

  1. […] the magazine Costa Vallarta’s new edition, due out in mid’ March. Please also check out Part I and Part II. Riviera Nayarit Map Riviera […]

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