Video: Real Estate market in Mexico – Analyzing the Real Estate Investment BOOM in Tulum, Mexico
I travel full time around the world looking for unique investment and immigration opportunities. I’ve been to many booming cities in Africa, the Middle East, and Asia.
However the real estate market in Mexico , specifically in Tulum is quite unique in the sense that it is a small town, and that the construction projects taking place there are quite large and are very creative from an architectural point of view.
Tourism is booming as well thanks to Tulum’s positioning as one of the world’s top destinations for digital nomads, high end tourism, and health & spirituality.
Though Mexico generally feels a bit sleepy, Tulum rather gives off Wild West vibes, in a good way.
So what are the price points, the rental yields, and what is the case for investing there? Watch Luigi and I visualize the Tulum real estate boom in this video.
- Real estate boom in Tulum
- Rental yields in Tulum
- Catalysts for real estate investors in Tulum
- Driving in Mexico
- Real estate development visit with underground wine cellars
- Dirt road driving and more developments
- Small villas in Tulum
- HOA fees and property tax in Tulum
- Buyer’s agent services in Tulum
- Residency in Mexico through real estate investment
Make sure to get in touch with Luigi
If you are looking for lifestyle of investment real estate in the Riviera Maya area of Mexico (Cancun, Playa del Carmen, Tulum), look not further than Luigi from Montreal. More details on his services here.
I also wrote a whole article on the real estate market in Tulum, including in which neighbourhoods to invest.
Easy residency in Mexico
Mexico is one of the easiest places to obtain a Plan B residency. I did it myself.
Importantly, if you set foot in Mexico between 2015 and 2020 for even just one day and still have the stamp in your passport, there is a special Mexican government program to grant such people a fast-track 4 year residency. Details here. This program is set to expire soon (end of year, but may or may not get extended), so you must hurry up.
To a World of Opportunities,
The Wandering Investor
If you want to read more such articles on other real estate markets in the world, go to the bottom of my International Real Estate Services page.
Available services in Mexico:
Articles on Mexico:
- Easy 4 year residency for past tourists in Mexico
- Analysis of the Tulum Real Estate Investment Boom
- Making a Real Estate investment in Playa del Carmen – decent diversification in Mexico
If you want to discuss your internationalization and diversification plans, book a consulting session* or send me an email.
*a consulting session is a discussion about your portfolio and objectives. It does not constitute legal, financial, tax or investment advice.
Transcript of “Analyzing the Real Estate Investment BOOM in Tulum, Mexico”
LADISLAS MAURICE: Hello, Ladislas Maurice from thewanderinginvestor.com. So today, I’m with Luigi, my favorite real estate agent, here in the Tulum and Playa Del Carmen area. Luigi, how are you?
LUIGI: I’m fantastic. How can I not be? Okay, look at where we are.
LADISLAS MAURICE: [laughs] So I’ve had a lot of people ask me about Tulum real estate specifically. So I’ve been spending a few months here in the Riviera Maya in Mexico with Luigi. We did a whole analysis of the market in Playa Del Carmen. We went through the exact numbers, rental yields, we drew a map together in terms of the areas that are interesting to invest in, etc. And people have been asking me for the same thing here in Tulum. So what’s important to know here is that Tulum is absolutely booming.
LADISLAS MAURICE: It’s, we’ll have a look afterwards. We’ll take the car, we’ll go see. But there’s essentially all these like really cool construction projects…
LADISLAS MAURICE: everywhere. So this is just an example. This one is finished. But this is what you get when you invest in Tulum. This is the sort of architecture. Like it’s green, you’ve got like these pools, and the amenities are crazy. From a lifestyle point of view, Tulum is amazing. In terms of an investment, honestly, I don’t know in terms of rental yield, specifically, we were having this discussion.
Capitalization Rates / Rental Yields in Tulum
LADISLAS MAURICE: Like, what are your thoughts around rental yields here in Tulum?
LUIGI: Well, Tulum did have a huge boom, and it’s still booming. So you’ll see a lot of construction everywhere, a lot of streets still aren’t even paved, just a lot of construction. And that means that because of Instagram and influencers, there’s been a lot of people visiting Tulum. So units are being rented, that is an absolute, for sure, 100%. And the average daily rate is a little higher than Playa Del Carmen. What we don’t know is, with all of this construction, you have a lot of buildings that are around the same process and the same timeline in construction. So they’ll all be ending and being delivered probably in the next year to the next two years. And so there’s going to be a lot of product on the market in the next two years. So we don’t know what that’s going to look like in a couple of years, what the average daily rate is going to be like, what the occupancy rates going to be like.
So we’re kind of in that boom phase. So we really don’t know. Right now, in this high season coming, so in the next couple of months, there will definitely be good returns, a lot of places will be rented, it will be pretty tough to find a place to rent in high season here. So it’s a guessing game at this point.
LADISLAS MAURICE: Yeah, it’s essentially there’s the potential for a lot of imbalances, because both supply of rental units, like you’re saying, is booming due to all the construction. They look like this, they all look amazing. And because Tulum is, like you’re saying, being promoted by all these influencers, etc., it’s really making it onto the tourism map for this type of tourism. So there’s also a massive boom in tourism. So what’s growing faster, tourism or the supply of units, we don’t know like what it will be in the next year or two.
LADISLAS MAURICE: So we know what supply will be roughly, but we don’t know what will happen in terms of tourism. So if we look at past numbers, we can get net-net, after all expenses, etc., probably like 5% to 6%.
LUIGI: Depending, yeah.
LADISLAS MAURICE: Depending.
LUIGI: And then some buildings that are managed a little bit better could get anywhere 7%, 8%, depending on the proximity to the beach, amenities. And yeah, just we really don’t know.
LADISLAS MAURICE: Past figures.
LUIGI: They’re past figures, yeah.
Catalysts for Tulum Real Estate
LADISLAS MAURICE: But future figures, we don’t know. But what you get is amazing architecture. So there’s a few things happening in Tulum, why the market is booming. So one is all the digital nomads in North America, in Europe, they’re all traveling. Inevitably, at any given point, they will end up here in Tulum for at least a few weeks, or at least a few months…
LUIGI: A few months.
LADISLAS MAURICE: because it’s just so in everyone’s face. So this is a huge trend. They’re coming here for a few months at a time, typically. So again, interesting for rentals. And secondly, the Mexican government is investing a lot of money in this whole region of Yucatán and Quintana Roo. So what we’re seeing is they’re actually building, right now, a brand new train network that will go from, you know, Cancun, to Mérida, to all the tourist places, even down here to Tulum. So when this part will be finished, from Cancun to Tulum, it’s not clear yet, but it’s part of the plans. The other parts are already being built. So this is a major catalyst because Tulum is an hour and a half away from Cancun Airport. In peak season, it’s more like two hours. So it’s close, but not necessarily that close, but the train will make it a lot zippier to get here.
There were also plans for an international airport in Cancun, which was due to open in 2024. But the government just said, “Right now, we’re prioritizing the train.” So last month, they announced that they’re freezing that investment for now. But at some point, it’s an inevitability that these airport plans will come online again, seeing the massive boom that’s happening here. So when people ask me what is Tulum good for, I’d say, from a lifestyle point of view, it’s amazing. For people who want to spend a few weeks or a few months of the year in Tulum and rent out their units the rest of the time. And then, also for people who want to be part of the boom, you know, there’s a boom happening, and what they’re building here is really cool.
So what we’re going to do is, because essentially, this is kind of the story for investing here, is what are they building? What type of architecture are they building? And what sort of lifestyle does Tulum have to offer? This is essentially is the thesis for Tulum to really see, to make a difference versus other investment destinations across the world. Because what’s being built here is truly unique. Like, I can’t think of many places where you can find such beautiful developments.
LUIGI: Tulum is a brand.
LADISLAS MAURICE: Yeah.
LUIGI: Tulum has become a brand. It’s definitely a different lifestyle, a lot of biking, yoga, people who want to be more connected to nature, a lot of spiritual movement, a lot of people come here to heal. So it’s a very different lifestyle. It’s become a brand, even the architecture, the style with a lot of wood, a lot of the natural materials, a lot of vegetation. It’s just a really unique place. So I, definitely, encourage anybody to come down and visit at least once.
LADISLAS MAURICE: Yeah. Even if you don’t come here to invest, at least come check it out.
LADISLAS MAURICE: Because a lot of this architecture we see now in Tulum and will potentially see in other destinations in the future, but what Tulum allows architects to do is to run wild.
LADISLAS MAURICE: So this is really interesting. From this point of view, in terms of seeing trends, Tulum is really ahead of other destinations. So right now what we’re going to do, we’re going to jump into my rental car, and we’re just going to try to show you the boom that’s happening, show all the construction work, to try to show you the vision of what Tulum is trying to achieve.
LADISLAS MAURICE: All right.
LUIGI: Even the malls are different here, even the plazas are different, everything is different. So we’ll go take a look now.
LADISLAS MAURICE: So, Luigi, how can you help people invest here in Tulum?
LUIGI: Yeah. So first, probably there’s a lot of questions of what area to invest in, whether it be Playa, Tulum, Akumal. So, you know, when you have questions and you don’t have the answers, it’s really hard to make a decision. So first thing is to reach out. We’ll start a conversation, and then I’ll be able to answer all of the questions that you may have. And then, through some of my questions, I’ll be able to get a clearer picture of what people are looking for. And then I’ll get right down to business in searching for the exact property that meets their requirements. And then you can enjoy visiting. Or, there’s a lot of people buying and they’re spending all year round here, too.
LADISLAS MAURICE: Yeah. A lot of that. Many people are moving to Mexico, it’s easy to get residency here in Mexico. I did quite a bit of content with Sergei.
LADISLAS MAURICE: It’s one of the advantages, essentially buying real estate is one of the ways you can obtain residency in Mexico, and it can turn, after a few years, into permanent residency relatively easily. So there are a lot of side benefits to owning real estate in Mexico as opposed to in other countries.
LUIGI: Right. And then what I’ll do is I’ll do, you know, through questions, of course, I’ll find out if you’re more interested in a return on investment, if this is purely an investment where you’re looking to rent out your units, or your home, or if it’s more of a lifestyle, where you’re going to be living here. So, you know, then I’ll look for the proper real estate for you. And it’s a really fun process. I really enjoy it. I mean, how could we not? How much fun did we have today?
LADISLAS MAURICE: [laughs]
LUIGI: Look where we are. I mean, how could you not enjoy this? So even if, at the end of the day, you come down and you visit just to get some information, you’ll have a great time whether you buy or not. And that’s what I’m here for.
LADISLAS MAURICE: Cool.
LADISLAS MAURICE: And then you were, also it was interesting, you were mentioning one of your clients who is looking at buying an apartment. And you’re suggesting that that person, because there’s this developer you know.
LADISLAS MAURICE: And there’s the possibility of changing the units because it’s all off plan. Can you explain?
LUIGI: Yeah. So the beauty about, so there’s a lot of pre-sales happenings, there’s a lot of construction happening here in this area. And so when things are in the process of being built, then there’s, sometimes, with some developers, a little bit of flexibility, where if you were to purchase two or three units in a row on the same floor, we could, sometimes, change the floor plan a little bit and turn those three units into a three-bedroom, or a two-bedroom with a lock off, turn it into a one-bedroom, a two-bedroom, and a third-bedroom lock-off. So now, the investor will have the ability to appeal to those who are looking for a three-bedroom, or maybe someone that’s looking for just a studio, and they can still rent out a two-bedroom right beside it. So there’s a lot of flexibility and, that way, you can really reach all markets, a three, two, and one-bedroom, or even the studio market.
And if you’re buying multiple units in the same building with the same developer, then there’s usually a little bit of negotiation on there to get even a better discount. So that’s some of the flexibility we have when you are buying a pre-sale.
LADISLAS MAURICE: Yeah.
LUIGI: It doesn’t always happen. But, you know, if you have good connections and good relationships, then we can do our best to make it happen. Yeah.
LADISLAS MAURICE: Cool. Fantastic. Thank you, Luigi.
LUIGI: You’re very welcome.
LADISLAS MAURICE: So if you’re interested in getting in touch with Luigi, there is his email below, his contact information. And also I wrote a whole analysis of the Tulum real estate market. So we dug into all the different neighborhoods, where to invest, where not to invest, where it’s developing, where it’s an issue, which target market for which area, etc. There’s a link below to this article. Luigi, thank you.
LUIGI: It was great. Thank you so much. Take care, everyone.