Sandy Beaches Trump Threats of Violence in Mexico

• November 9, 2010 • Comments (0)

COSTA BAJA MARINA - MEXICO

For Tim and Nancy Muzyka, the lure of sandy beaches and crashing waves trumped headlines about mass murders.

The couple, who live in Edmonton, Alberta, bought a waterfront condominium in Mexico, ignoring the almost daily reports of drug-related violence in the country. They paid about $500,000 for a 185-square-meter, or 2,000-square-foot, apartment in Estrella del Mar.

The development, covering 330 hectares, or about 816 acres, is on a stretch of beach on the outskirts of Mazatlán, on the Pacific Coast. “I don’t feel any less secure there than walking down the streets of Edmonton,” Ms. Muzyka said.

Buyers like the Muzykas are rare in Mexico these days. As the government battles the drug cartels amid daily reports of carnage, sales of vacation homes are down 40 to 50 percent from their peak in 2007, some developers say. The violence is the latest in a series of bad news for the resort industry, including the global economic crisis and the 2009 outbreak of the H1N1 virus.

“It’s gone from thriving to you could throw a bowling ball down the malecón,” said Cindy Kidd, who markets fractional ownership properties in Marina Vallarta, a tourist development in Puerto Vallarta.

To reassure wary retirees and vacationers, many developers are adding high walls, iron gates and 24-hour patrols to their developments. Marketing brochures highlight security right next to the pictures of infinity pools and spas.

In some cases, builders sit down for sales meetings armed with the latest crime statistics, which show the violence is largely concentrated in the areas bordering the United States.

“It would be ridiculous to try to hide it,” says Alejandro Yberri, chief executive of Costa Baja Resort in La Paz. “It’s all over the news.” There are signs, however, that tourists are starting to shrug off the violence. After plummeting in 2009, the number of air travelers to Mexico was up 20 percent in the first half of 2010, according to government data.

But hotel occupancy rates remain below 2004 levels, according to data from Smith Travel Research. And it continues to be a tough time to pitch Mexico as a spot to invest in a retirement home.

Buyers today are typically looking for a second home, not an investment, and they are usually already familiar with Mexico, developers said.

“People who are buying are people who have been to the destination at least five times,” said Alex Cuttler, head of marketing and sales for Grupo Questro, a developer in Mexico City that is building Puerto Los Cabos, a marina and residential development in Baja California.

In many areas, Canadians and wealthy Mexicans have replaced Americans as the primary foreign buyers.

“The press has done a very good job of scaring Americans, but Canadians and Europeans don’t seem as heavily influenced,” said Mitch Keenan, director of Mexico International Real Estate, a property agency in Merida, on the north coast of Yucatán State.

Sanda Krslak and Steve Lemire of Vancouver paid about 235,000 Canadian dollars, or $228,000, for a two-bedroom, 242-square-meter house in Merida. They fell in love with the city, wandering the old streets at night. “We never felt uncomfortable,” Ms. Krslak said. “The No.1 reason we decided was because the crime rate here is almost nonexistent.”

The Mexico Tourism Board has announced a $55 million campaign to promote Mexico to North American tourists, using the phrase “Mexico: The Place You Thought You Knew.” But many developers said they did not believe the effort went far enough to counter the headlines.

Several developers are forming their own coalition to promote the country as a safe destination. “They need to make the differentiation that not all Mexico is violent,” said J. Patrick Butler, chairman of Club Acquisition, a resort developer based in Aurora, Colorado.

One of Mr. Butler’s projects, El Dorado Ranch, is in San Felipe, 200 kilometers south of the U.S. border, in Baja California. The retirement and second-home project covers about 81,000 hectares on the Sea of Cortez, in an area that has seen little violence.

But Mr. Butler has increased security, including an arrangement with the police to add patrols. And he has dropped prices about 15 percent on home lots, which cost about $40,000 for 1,000 square meters, or a quarter acre.

In sales pitches Mr. Butler usually stresses the value of Mexican property, which is often less expensive than comparable areas in Central America and the Caribbean. “We try to point out the positives, the cost of living, the quality of life,” Mr. Butler said.

Although many developers continue to struggle, Mr. Butler has seen an uptick in activity. In San Felipe, he said, he has sold 25 lots in the past 90 days.

In Puerto Escondido, on the Pacific Coast, Cary Mullen said he sold 15 apartments at his Vivo Resorts Palmarito in the past year, with three sales pending. Units in the project, which is in the early stages of construction, usually sell for $250,000 to $300,000, with studios priced at $60,000, he said.

Puerto Escondido is a quiet town on the southwest coast, well known among surfers, but Mr. Mullen, a former member of the Canadian Olympic ski team, prefers to raise the violence issue early in sales discussions. “Until you talk about it, they can’t hear anything else,” Mr. Mullen said.

reprinted from wsj.com

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Category: coastal development, coastal home development, coastal news, luxury coastal news, luxury real estate, Mexico, ocean home magazine, ocean home, coastal home, oceanfront, by the sea

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