An uncertain political environment in the United States is prompting some high-net-worth Canadians to head even further south for vacation real estate investments this winter, the Toronto Globe & Mail reports.
With Donald Trump occupying the Oval Office, Canadians are carefully considering the geopolitical landscape before laying out their purchase plans and Mexico is benefiting.
The peso has dropped some 15 per cent against the greenback since Mr. Trump’s victory in November while the Canadian dollar has strengthened. Although most Mexican properties in the desired oceanfront areas are priced in U.S. dollars, local real estate experts still contend it is an affordable market for Canadian investors.
“I don’t think that we’ve ever been busier,” says Charles Tibshirani, a Canadian lawyer who moved to Mexico eight years ago and opened a law practice three years ago. “Real estate transactions are multiplying and multiplying.”
Mr. Tibshirani says his three Mexican offices handle about five to six closings a week – 50 per cent of which involve Canadian investors. And some clients are willing to leave deposits of upwards of 80 per cent on $400,000 (U.S.) properties that are at least a year away from being built.
The Mexican real estate market, still in recovery mode from the downturn in 2008, is in the midst of a building boom with some 16 hotels and other developments under construction in the Los Cabos area alone. Caisse de dépôt et placement du Québec teamed up with a consortium of Mexican institutional investors in 2015 to create a co-investment vehicle to spend some $2.8-billion (Canadian) on infrastructure projects in the country over the next five years.
Mexican hot spots include Los Cabos, also known as Land’s End, as it is located on the southernmost tip of the Baja Peninsula south of California; and the Yucatan Peninsula, which is situated between the Gulf of Mexico and the Caribbean Sea, and visited by more tourists than any other Mexican region.
Abril Pola, a Century 21 agent in Los Cabos, says Canadians are attracted to Mexico’s ocean views, quality of life and affordability. A two-bedroom condominium can be purchased in the Los Cabos area for about $200,000 (U.S.) – a far cry from prices in Vancouver and Toronto.
“The cost of living is ridiculous,” Mr. Tibshirani says, adding that he pays less than $700 a year in property tax on his property valued at approximately $300,000.
Still, Mexican real estate does not come without some risks. Mr. Trump’s election has sparked widespread uncertainty in the country – a big part of the reason the peso is so cheap to begin with. Tensions are running high over NAFTA renegotiation, the prospect of a border tax and a proposal to build a wall dividing the two countries. In the wake of Mr. Trump’s election, already-low economic growth projections have been cut substantially.
Real estate and travel experts suggest Canadians do their homework to understand the laws and restrictions for home ownership in Mexico to avoid the lasting effects of “Margarita fever” – a common malady among foreign investors that induces them to act quickly after seeing the advantages of living in Mexico instead of weighing all the pros and cons.
“People are buying but it can be difficult to purchase in Mexico. There is a whole set of rules that people have to abide by. The ownership structures are unique there,” says Stephen Fine, president at snowbirdadvisor.ca, an online guide for Canadian snowbirds.
“I would say do your homework first. Learn about the local customs and the real estate ownership laws for foreigners there with someone who is either an expert in Canada or an expert locally who has a good reputation.”
With a complicated legal and real estate system – Mexican lawyers and real estate agents have no accountability to associations – it is recommended that foreigner investors hire reputable representatives to help walk them through the process.
“You have to be a little more careful because you don’t have the state to protect you. In Canada, we have licensed realtors and licensed lawyers. We have all kinds of boards and commissions to protect the consumer,” Mr. Tibshirani says.
“Here you have to be more cautious. You have to have your documents reviewed. You have got to take care of yourself to manage your affairs.”
Though Mr. Tibshirani contends there is very little risk to purchasing in Mexico, he suggests spreading your wealth among a number of properties.
“Don’t put all your money into one property that’s worth a million dollars. Instead buy four or five at $200,000 or $250,000 and you are going to get a much better rate of return,” he says.
more recommended stories
Japanese delegation comes to Mérida to strengthen bilateral relationship
The project of the Chicxulub crater.
First house entirely made of Sargassum built by Mexican inventor in Quintana Roo
PUERTO MORELOS, Q. Roo, September 20,.
Protests in Homun, Yucatan against the opening of mega pig farm
On Friday September 21, the conflict.
Day of the Dead Parade Mexico City, three years stunning the world
For the third year in a.
Viva Aerobus announces new direct flights between Cancun and the U.S.
Viva Aerobus, the ultra low cost.
Vessel control centers urgently needed in Quintana Roo
“A control center like the one.
Photographic festival coming to Mérida in November
For the first time, the Mérida.
Trump demands a border wall but many congressional Republicans just not into it
WASHINGTON DC – President Donald Trump.
Mexico analyzing U.S. proposal on deportation funding
MEXICO CITY (Reuters) – Mexico’s government.
López Obrador promises an extra 10 billion pesos for earthquake recovery
President-elect Andrés Manuel López Obrador yesterday.