November 3, 2006

Real Estate Development Grips Mexico’s North

Backed by some of the world’s biggest names in capital, mega-projects are transforming the landscapes of northwestern Mexico. Representatives of US tycoon Donald Trump, for instance, recently announced a new $200 million-dollar condominium development slated for Baja California’s Rosarito Beach area, a popular tourist destination located about 30 minutes south of San Diego. Sources inside Trump Ocean Resort Baja disclosed that the 400-unit condo complex in the exclusive, ocean-front Punta Bandera zone will be flanked by a shopping center and world-class restaurants.

Gabriel Robles, president of Tourist Developers Association of Baja California, commented that Trump’s project joins the fast pace of growth in the Tijuana-Rosarito-Ensenada corridor, where 2,500 new projects are underway. “This shows us that foreign capital is confident about investing in Mexico, especially Baja California,” Robles said.

The Baja real estate boom is the Pacific Coast’s version of a similar condo and real estate frenzy that is unfolding across the Gulf of California in the state of Sonora. As a result, residents of Phoenix, Arizona, once consigned to a landlocked, blistering piece of desert described by some as a hell-hole during the high months of summer, now enjoy their own beach. The three-and-one-half hour trip from Phoenix to Puerto Peñasco, Sonora, is getting cut considerably with the completion of a coastal highway in northwestern Sonora. Already, an estimated 1.6 million tourists, especially Arizonans, visit Puerto Peñasco and Rocky Point every year.

Boosting the fortunes of Puerto Peñasco’s tourist industry is the propensity of US tourists to seek safe vacation getaways in the wake of 9-11, according to some observers. Following the pattern of international tourist development, Puerto Peñasco has become a second home for many affluent tourists who were enamored by their first visits and then decided to purchase land.

Some credit fallout from the US housing market across the border are also propelling Puerto Peñasco’s rapid growth. “Low mortgage interest rates and the boom in real estate values in the United States allowed many people to make extra money to invest it in cheaper properties,” said Juan Luis Martin, president of the Playa Norte company.

Investments in the once-quiet resort have soared from an estimated $56 million dollars in 2001 to a projected $1.2 billion dollars for the 2006-09 time period. Residential real estate sales are so hot in Puerto Peñasco that tiny apartments in the upscale Bella Sirena development fetch about $600,000 dollars. Still, for the less well- heeled, Puerto Peñasco offers options in the form of 4 trailer parks that rent lots with utility hook-ups for $20 dollars per night.

Exploding on the coastal fringes, northern Mexico’s development bonanza could move inland if an idea floated by Mexican billionaire Carlos Slim Helu comes to pass. The head of the new Ideal development and construction company, Slim recently proposed the construction of a new highway along the northern Mexican border.

Speaking at a border development forum in Mexicali this month, Slim suggested the opening of a Mexican highway running parallel to US Interstate 10 across the border.

According to Gabriel Flores Viramontes, the president of the Business Coordinating Council of Ciudad Juarez, Slim contended that a new border highway would enhance the economic competitiveness of Mexico’s northern border cities. Among others, outgoing Mexican President Vicente Fox and prominent Ciudad Juarez businessman Miguel Fernandez Iturbide attended the Mexicali meeting.

Reprinted from Frontera NorteSur an on-line, U.S.-Mexico border news Center for Latin American and Border Studies New Mexico State University Las Cruces, New Mexico.

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