I came across this article the other day in International Living and it does give an accurate overview of the investment opportunities in the Yucatan Peninsula. I have several clients that are taking advantage of this great opportunity & I hope to do so too in the next year. Hopefully, I will have my photos of the Riviera Maya including Tulum, Playa del Carmen, and Cancun posted soon.
6 Reasons Why You Should Buy This Piece of Caribbean Coast
By Ronan McMahon
Regular readers will know how bullish I am on the real estate market in Tulum (located at the southern tip of Mexico's Riviera Maya).
Home to a protected biosphere and UNESCO world heritage site, ancient Mayan ruins and lush green jungle, this is a pristine unspoiled paradise. It's the quintessential Caribbean...
Just 80 miles from Cancun, these beaches have the same sugar-white sand and clear blue waters as Cancun, but long overshadowed by its big brother up the coast, this tranquil getaway managed to stay off the radar...attracting a chic and trendy set looking to escape from crowded resorts.
This is a place you could make money.
Here are six reasons why real estate in Tulum could represent a strong income opportunity.
1. You can buy low
Real estate prices in Tulum can be as much as 30% lower than in Playa del Carmen, which is just a short drive down the road. Rental and occupancy rates however are still strong in Tulum.
With rental property, the most important figure is the rental yield. If you buy a property for $200,000 and the property earns $10,000 annually in rental income, your gross rental yield is 5%. If you pay $100,000 for the same property, the yield doubles to 10%.
All other things being equal (rental rates, and occupancy numbers, for example) buying the property at a 30% discount gives you a substantially higher gross rental yield.
2. You have multiple sources of renters
You never want to have all your eggs in one basket, right? Some rental markets are dependent on visitors from the U.S. When the U.S. economy slowed, it was extremely difficult to fill rentals in these markets. Tulum attracts visitors from a variety of places: North America, Europe, South America, and Central America. This is good if you own a rental property here as you have a cushion if one market disappears.
3. There are hotel shortages
Today in Tulum, there is a shortage of quality vacation rentals, as well as hotel rooms in the best resorts. While there is a high and low season, and rates are priced accordingly, there is still year-round demand. You aren't dependent on making your entire annual rental income in a short season.
4. Future supply has constraints
If a large number of new hotel rooms and/or short-term rentals come flooding onto a market, it could flip the supply-demand balance that was previously in your favor. The protected Sian Ka'an biosphere at Tulum covers 1.3 million acres. There's an additional 200,000 protected acres south of the biosphere. That limits the amount of land available for residential and resort development.
5. A government plan calls for more visitors
A planned international airport here is expected to land three million visitors directly to Tulum in its first year of operation. A government plan calls for the increase of tourist numbers in the region from three to 11 million. This means more potential renters.
6. The clientele
Mexico's influential tourism authority wants to attract a more upscale and independent traveler to Tulum. Think yoga on the beach at sunset, rather than crowds of spring-breakers partying. This sophisticated market is more stable and less price sensitive. They won't move on as soon as another place offers all-day buffets or cheaper alcohol. Buying the type of property that appeals to this chic set should give you good occupancy.