During the economic recession of 2008-2009, the United States market had a strong participation in the acquisition of real estate for second homes in Mexico. When this economic recession occurred, these US buyers lost a large part of their purchasing power, due to restrictions on mortgage loans for properties outside their country, since these loans covered about 70% to 80% of the total amount of the property root they acquired, and the rest was covered by their own savings.
However, far from this being an impediment for this market to continue acquiring real estate in the main tourist destinations in Mexico and especially in the Riviera Maya, the opposite happened, the US market began to set its sights on real estate products to which he could face with his own savings, without the need for mortgage loans, causing a rebound in real estate products with ranges between $ 200,000 to $ 300,000, an opportunity that the developers of Cancun and Playa del Carmen knew how to take advantage of very well.
And what does this mean to us?
Taking this as a precedent, and in the face of the economic recession that is being experienced now caused by COVID-19, I see a good opportunity for the national market, because many developers in the Riviera Maya who market their real estate products in dollars are hitting their rates exchange rates from 21 pesos per dollar to 19 pesos, a strategy that will encourage the national investor. Likewise, I see a great opportunity for the US and Canadian markets, which, with the same amount of dollars, will have access to better real estate products, benefited by the appreciation of their respective currencies against the Mexican peso, so this foreign market it would be acquiring larger real estate products, with better finishes, better located, and better connected.
But… why invest in real estate now and not wait for the situation to improve?
From my point of view, although it is true that real estate is affected during economic crises and recessions, it is also true that it is one of the most stable investment vehicles in these times because the real estate product hardly loses value, as On the contrary, it remains in price and then begins its upward trend as economic conditions are restructured; something that we cannot say about other investment vehicles such as the stock market, funds, currencies and even gold, which present great volatility with rises and falls from one day to the next, not to mention that second home real estate products in tourist areas like Playa del Carmen, they offer very good annual returns due to the attractiveness of the income derived from vacation rentals, which makes it even more a solid investment vehicle.
In summary, I want to clarify that just as there are economic cycles, there are also real estate cycles, and today the COVID-19 season will reward all those investors who are caught by this crisis with enough liquidity to make strategic purchases in real estate either in early pre-sales or in pre-construction, or even opportunity acquisitions, which will have a good revaluation in their sale price when the time is right, and attractive annual rental returns in what is expected for their resale strategic.
Iván Pérez
Project Manager and Real Estate Developer
