There are many reasons you should be looking to invest in Mexico today. With a GDP on the rise and an increasing amount of direct foreign investment, there is an abundance of opportunity. Mexico’s economy is among the largest in all of Latin America.
Many economists are predicting higher interest rates over the next few years in the U.S, leading many investors to begin diversifying into Mexican pesos. Analysts are also expecting the peso to strengthen relative to the US dollar throughout the coming year. Although the peso has been somewhat in flux, the country’s central bank has made efforts to keep currency devaluation in check. Many Mexican economists show no concerns to this fluctuation, as the variations have more to do with a strong US dollar and less to do with Mexico’s economic viability.
Why You Should Start Investing in Mexico Today
There are many reasons you might want to invest in Mexico today, including:
Tourism is a major industry in Mexico, as millions of visitors from the U.S., Canada, and U.K. visit the beaches and colonial cities every year. Mexico is an ideal place for tourists to come and take advantage of lower prices as the US is riding a strong dollar. Investing in Mexico’s tourist industry is one way to diversify from dollars and still enjoy the stability offered by a first world economy.
As many investors will tell you, it is important not to risk everything on one endeavor. The name of the game is diversification. Mexico offers a grand opportunity for U.S., Canadian, and even U.K. investors to move beyond their local currencies and spread their risk internationally. The country’s economic stability and positive attitude toward direct foreign investment makes it easy to see why Mexico is a great option for diversifying.
A Mexico property purchase can provide benefits beyond capital and currency diversification. Many people are purchasing real estate in Mexico to generate rental income and supplement their retirement. Mexico has the 10th largest population and is the eighth largest tourist market in the world. This presents a unique opportunity for investors looking to live part time in Mexico or cash in on up and coming real estate markets. Property taxes in Mexico are lower than the U.S., Canada, and the U.K., and usually amount to less than $250 per year. If you are living in Mexico for more than six months of the year, you are also eligible for tax exemptions on your capital gains. There are also a number of banks, both Mexican and foreign, that can provide financing for buying and investing in Mexico’s real estate markets.
Mexico provides more than 25% of imported fruits and vegetables to the United States. Bananas and tomatoes top the list, but if you can buy it in your local grocery store, it’s probably grown in Mexico. With a free-trade agreement, proximity, and established shipping routes, Mexico is a natural U.S. trading partner. More than 54% of the land in the country is classified as agricultural; in all, the country has more than 25 million hectares of arable land. And Mexico has the capacity to increase produce production as world and, specifically, North American demand expand. Of course, Mexico comes with some baggage. The drug cartels create security concerns, but the country’s big agricultural growers work to stay out of the way of the cartels.
The United States dollar is at historic highs against the Mexican peso, resulting in some terrific bargains. The cost of living is unbelievably low (even in expensive areas), and the cost of real estate priced in pesos is at bargain levels… at least for now. The Canadian dollar also has a lot of power these days in Mexico.
Both the U.S. dollar and Canadian dollar are enjoying amazing buying power in Mexico…
Mexico’s Global Trade Agreements
Since the North American Free Trade Agreement (NAFTA) passed in 1994, Mexico has continued its rapid growth on an international scale. Mexico’s largest bordering country and most prominent trade partner, the United States, has opened doors of opportunity in the manufacturing and service sectors. The U.S. now accounts for over 80% of Mexico’s export trade and has the highest amount of tourists traveling to Mexico each year. NAFTA has been by in large the most important and successful trade agreement that Mexico has signed.
Mexico has free trade agreements in place with 44 countries, included among those are:
- United States (NAFTA ‘94)
- Canada (NAFTA ‘94)
- Colombia (G-3 ‘95)
- Nicaragua (FTA ‘95)
- European Union (FTA ‘00)
- Uruguay (FTA ’04)
Where to Invest in Mexico
Whether you are investing for rental yields or path of progress, the most prominent areas of opportunity in Mexico are near the coasts, where beachfront property is still available for a bargain.
Mexico’s Caribbean Coast
Playa del Carmen is just an hour south of Cancún and it has taken over as the region’s chic place to be (and the place to be seen). You’ll find vacationing Europeans and North Americans, as well as a sizeable number of expats in residence. Rental yields are as high as 10%… combined with a 12% annual property appreciation. Playa del Carmen may be “discovered,” however investors should still pay attention.
The Riviera Maya is the section of Caribbean coast on the eastern side of the Yucatán Peninsula between Playa del Carmen and Tulum. Development in this area is moving slowly but surely southward from Cancún and Playa, as developers and pioneers seek unspoiled beaches and towns that remain convenient to Cancún’s international airport. The Riviera Maya, and Tulum specifically, holds some of the best path of progress buys you will find today, as expats and investors buy in the path of mainstream developers’ southward progress.
Mexico’s Pacific Coast
Puerto Peñasco is the seaside resort that is most convenient to the United States by car, as it is just over one hour from the border. Also known as Rocky Point, it has been a playground for the western United States and Canada for almost 100 years. Puerto Peñasco enjoys warm, calm waters all year, broad sandy beaches, lots of housing options, and low property prices.
Puerto Vallarta has been one of Mexico’s most-popular resorts since the 1960s, although its rich colonial history goes back hundreds of years. Unlike many resort areas, PV has a number of coastal sections with beaches interspersed among them… meaning different areas have their own unique character. Puerto Vallarta excels when it comes to ocean views. Here, you will find many properties perched on lush, green hillsides, and long views looking out to the ocean.
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