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Americans looking to buy fueling Rocky Point real estate boom
A view from the Sonoran Spa Resort at Rock Point
For Alex Redondo, Rocky Point - 'gringo-ese' for Puerto Peñasco, Sonora - was the scene of the most important rites of passage of his life.
In the early '80s, he took his girlfriend Cecilia there to romance her on Mexican moonlit beaches, spent his honeymoon in a loaned Las Conchas beach house when he married her, and drives their kids there for summer vacations.
"The only high-end hotel was Vina del Mar, and the most expensive restaurant was Costa Brava," he recalls.
Today Redondo is thinking about sinking some money into a condominium in one of Peñasco's new master-planned communities. He says he's got a lot of homework to do before he signs off on any contract.
This once-isolated coastal town of 65,000 is riding the surge of a real estate boom experts predict will only get wider and deeper. They compare the development to the explosion of resorts, and commercial and residential properties that occurred in Cabo San Lucas in Baja 15 years ago.
To see the changes, look no further than Sandy Beach, the five-mile crescent of sand west of town. A few years ago the lonely stretch of beach was best known for its party-hardy strip of cantinas, and held no homes.
In the past five years, about 5,000 new condos have been built at Sandy Beach, most by Sandy Beach Resorts development firm and its subsidiary SBR Realty, led by Gustavo "Gus" Brown, a long-time Peñasco resident. That and other projects have attracted billions of dollars worth of private and public investment.
There are at least 25 existing developments and at least another dozen in the planning stages, say real estate agents and lawyers.
The buying surge has been pushed by weakening real estate markets in Phoenix and Tucson, the easing of Mexican legal restrictions and the growth of mortgage lenders for Mexican properties in the past two years.
About 70 percent of the new investors are coming from Arizona, say developers. Arizonans - particularly retirees - are moving to Mexico either full time or part time. A lower cost of living, beaches, friendly people and increasing amenities are drawing more investors.
Rosa Cantor, founder and owner of Creative Human Resources Concepts, bought a home on this Mexican coast two years ago. She paid $300,000, and says she's happy with the location and deal.
Four years ago the average price was about $200,000. About a year and a half ago, the 228-unit Sonoran Sun project sold out in less than eight hours. Average price: $425,000. That's higher than metro Phoenix's median new-home price of $306,355 last year.
However, Puerto Peñasco is still low balled compared to beachfront property in California, Cantor says.
"Anything comparable in San Diego would cost millions," she says.
In addition, the Sandy Beach development is drawing other big-name Mexican developers. Two major resort developers already have announced a $1.2 billion project within the Sandy Beach Resorts master-planned community at Puerto Peñasco. Mexican development company Grupo SBR will team with Grupo Questro to build two 300-room beachfront hotels, 900 beach condos, an 18-hole golf course and a resort with 1,000 homes and 1,000 condos. The state of Sonora says it will build a convention/expo center.
Almer Elzink, marketing director for Sandy Beach Resorts in Phoenix, says, "What we are doing here is building a master-planned community that will be a complete city."
ABCs OF BUYING
According to real estate agents and foreign investment lawyers, the basics of what to know about buying property in Mexico are:
. United States citizens (or any foreigner) can buy property along the Mexican coast (up to 32 miles from the shoreline). The process is similar to that in the States.
. The Mexican government probably won't nationalize your property because that would halt badly needed investments, not just from the U.S., but also Canada, Germany and Japan.
. Finding a lender is easier than ever. Within the last two years, many U.S. companies have started offering loans to U.S. citizens who want to buy property in Mexico and on the Mexican coasts.
. Take the same precautions in Mexico you would if buying property here.
. Financing property in Mexico is like the U.S. mortgage system - in U.S. dollars, with a U.S. company and a U.S. escrow agent.
. Under the fideicomiso, or Mexican bank trust system, established in Mexico for beachfront property, the bank charges an annual service fee and keeps the legal title to the property for up to 50 years.
Buyers should always seek legal and financial advice from people who are knowledgeable in Mexican business transactions. Never assume anything or base a buy on what lawyers call "promise of trust" deals, says Richard Krumbein a foreign investment attorney with the Snell & Wilmer law firm in Phoenix.
Krumbein says Mexico's legal protections are as good as laws in the United States. "Investing in Mexico is safe. I would do it. I would advise anyone to do it," Krumbein says.
Joan Kane Clancy is a Realtor and owner of Clancy Real Estate in Phoenix. She formed a Mexico-based company to develop 22,000 acres she bought in Puerto Peñasco two years ago.
She advises buyers unfamiliar with Mexico's laws to find a reputable agent.
"In Mexico you don't have to be licensed to sell," Kane Clancy says. "You have to be very careful of who you are dealing with."
She says the downside to living in a laid-back Mexican resort town is just that - sometimes things happen too slowly.
"Not everything is done yet. It's still in the starting stages," the Phoenix Realtor says.
A larger hospital, expanding the local airport to accommodate bigger planes, and a new 375-mile coastal highway linking the port to San Diego are planned, Kane Clancy says.
And although Americans enjoy the exotic living, they still need some hometown comforts, she adds.
"You want the flavor of Mexico, but you want to get all your needs met. You don't have a Costco there yet," she says.
