Calgary developer invests
in Mexico's booming resort market
Recent government rule changes allow Canadians more
freedom, flexibility and safety to own Mexican real estate
Calgary-based developer Cary Mullen at his Vivo Resorts near Puerto
Escondido, Mexico. New rules make it safer and easier for Canadians to
invest in Mexico’s booming resort market. | dHz Media
Baila Lazarus
Western Investor
February
20, 2017
Former Canadian
Olympian and current Calgary developer Cary Mullen has blown up some
myths about investing in Mexican real estate, but it took diligent digging to
discover a route to safety and potential profit.
The
100-year-old regulations covering foreign ownership within 50 kilometres (31
miles) of a coastline have been relaxed somewhat, but using a “fideicomiso” (bank trust) is still required, Mullen found.
Even so, there’s a lot of old thought and misinformation around about what can
and can’t be done.
Mullen,
a World Cup champion downhill skier who represented Canada at the 1996
Lillehammer and 1992 Albertville Olympics, applied the same training discipline
when he began to research Mexico’s real estate invesments.
“When
I first started, I believed the rumours rather than knowing the facts,” said
Mullen. “I spent thousands of dollars with lawyers in Mexico learning about the
specific steps and process.”
Mullen
purchased oceanfront property near Puerto Escondido in Oaxaca to build Vivo
Resorts, a 76-acre gated community of luxury residences.
Some
of the rumours Mullen refers to were that developers had to have property held
by a Mexican bank trust and that they had to have Mexican partners.
“I
learned that you could also have the trust be through some international banks
such as HSBC or Scotiabank,”
Mullen explained. “I learned the government had changed that rule [about
partners] and a Mexican company can be owned 100 per cent by a foreigner and it
can own Mexican property outright.”
Vivo,
which offers built, under-construction and pre-construction condos, overlooks
800 metres (2,624 feet) of beachfront. At full build-out Mullen expects to have
114 home sites and 400 condos. Priced from US$249,000 to US$500,000,
condominiums range from 1,288 square feet to 1,600 square feet. Private homes
with pools range from US$329,000 to US$949,000.
Mullen
said that despite some confusion in property ownership rules, sales have not
been impacted. As soon as the owners find out the facts, they feel confident
about buying, he said.
Diane
and Bill
Veniot of Edmonton were two owners who bought
into the Vivo development in early stages when it only had one building up.
They heard about it at a home show in 2012 and, knowing they didn’t want fractionals or time-shares, Vivo – and Mullen – attracted
them.
“Cary
was able to explain the ins and outs of buying,” said Diane Veniot.
“He knew how to do business here, so we were confident.”
They
estimate their $250,000 purchase has gone up by 40 per cent in four years.
Colin
Richardson
of Vancouver has had his eye on Mexican properties for about a decade, watching
values tank with the rest of the world in 2008. When he started to see movement
again in 2014, he began to look seriously. In November 2016, he paid US$70,000
for 15,000 square feet of property in a gated community in La Paz, in Baja
California Sur, where he plans to build a vacation home.
He
chose La Paz for its stability, citing a strong middle-class and the presence
of a research facility and university, as well as its proximity to swimmable
beaches, but with less of a touristy crowd.
Richardson
advises buyers to be clear around issues of purchase and construction currency.
“You
purchase the property in U.S. dollars but when you build, the construction cost
is in pesos,” Richardson said. “Because the peso has devalued against our
dollar, that’s a big advantage.” He said this is not the case everywhere in
Mexico, such as in Cabo San Lucas, just a few hours
away, so buyers need to add that to the list of questions to ask.
Les
Twarog, a realtor with Re/Max Crest Realty Westside
in Vancouver, has several investment properties in Mexico in his portfolio.
The
strip between Cabo San Lucas and San José del Cabo is undergoing rapid development, he said.
“In
the last year and half, there’s a building boom like I’ve never seen in 20
years,” said Twarog. “There were 20 to 30 cranes
building hotels and
high-end developments, like
Coal Harbour, at $2,000 per square foot.”
Like
Mullen, Twarog conceded some Canadians have doubts
about Mexican real estate.
“Many
investors are leery of buying.” said Twarog. “But
really sophisticated investors will choose Mexico.”
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