Mexico’s Real-Estate Move: A Challenge or an Opportunity?

Author: Zheng Nie

Published:

Worrying about the United States expansionary ambitions in the mid-1800s, Mexico prohibited foreign ownership of land within 50 kilometers (31 miles) of the coast or 100 kilometers of an international border. This policy was pretty efficient for protecting the homeland but it did block some foreign investments throughout history. As the financial crisis spread all over the world, Cancun realized it needs help from foreign investors and this help was going to break the law. Some real-estate developers believe the move could boost the nation's vacation-home market, while others think it would be hard on the locals acquiring their own estates.

Some lawmakers notice that Mexico’s economy is thriving, thanks to retiring Americans, Canadians and other foreigners. The new amendment did attract some amount of foreign investors to the real-estate market because it allowed foreigners to buy residential property along a coast or border in the same way Mexican nationals can. For example, they built resorts along the coast in Cancun and they invested millions of money to the tourism market. Returning tourists came back for new experiences, and therefore Cancun’s tourism market boomed.

However, some people worry that the foreign investments would make real-estate prices high. The high prices would make it difficult for the middle or lower class people to purchase homes. More homeless people would therefore intensify the government's burden in such a bad economic situation. Also, people worry that speculators would aim at Mexico’s real-estate market. They might buy more than one property and pass property along with the higher prices. It would possibly lead to housing bubble like Japan in the 1970s, following with a decade of stagnant growth and economic malaise.

Do you think this change in Mexico’s real-estate market would be a challenge or an opportunity for Mexico?