Loreto: Mexico's Next Real Estate Hot Spot

Article written by Elizabeth Smith

Source: NuWire Investor.com

If you are like most Americans, you have at least heard of—if not visited—popular Mexican destinations Cancun, Los Cabos and Ixtapa. What you likely haven’t heard of is Loreto, a tiny fishing village poised to cash in on the next big tourism boom.
Photo of Loreto Bay Villages courtesy of Loreto Bay CompanySince being selected for development as resort towns by Mexican federal tourism agency FONATUR, Cancun, Los Cabos and Ixtapa have undergone huge tourism booms and price appreciation. FONATUR has recently turned its attention to Loreto, building infrastructure and developer relationships that suggest Loreto will soon join Mexico's list of tourism heavyweights.

A strategic location

Baja California extends south from southern California and shares many of the same attractions, including a warm, sunny coastal climate and beautiful beaches. Unlike California, however, prices are much more affordable.
"Baja is geographically the Florida of the West Coast," Jim Grogan, president and CEO of Loreto Bay Company, said. "If you can imagine an opportunity...to purchase and develop seaside resorts in Florida 100 years ago, that's the opportunity that exists in Baja."
"There's really no affordable beachfront left in southern California, and everybody's hungry for their place in the sun," Alan Axelrod, Baja investor and managing member of Axelrod Capital Management, LLC, said.
Americans are quickly discovering the charms of life across the border, along with its attractive prices. More than half a million American citizens live in Mexico, according to the State Department.
Just a two-hour flight from Los Angeles on the east cape of Baja California Sur, Loreto is located in what is still a relatively undeveloped area with low prices in comparison with California or with popular Los Cabos, which is located at Baja's southern tip.

Home prices in Loreto range from $130,000 USD to $865,000 USD, while land costs run from $40 per square meter near the highway to $200 per square meter on the water, Linda Neil, an accredited buyer representative and real estate consultant based in La Paz, said. Construction costs average about $75 to $80 per square foot for new home construction, and costs are a little higher for remodeling an existing structure, she said.
Demand for properties in Loreto is likely to increase as high prices in Los Cabos and on the U.S. side of the border cause would-be vacationers, retirees and second-home buyers to seek more affordable markets.

Infrastructure

Thanks to FONATUR, Loreto has received more than $200 million in infrastructure improvements, Grogan said. This gives it a distinct advantage over most of Baja, in which limited infrastructure acts as a "barrier to entry," he said.
Infrastructure advances have included Loreto's own international airport though which Alaska and Delta Airlines offer nonstop service from LAX and Continental Airlines offers nonstop service from Houston, Grogan said.
FONATUR also built a marina, two hotels and a golf course, and put in roads, water, sewer, utilities and water/sewer treatment plants, Grogan said. A state-of-the-art hospital is in progress and is set to open this year, he said.
In spite of the fact that Loreto has only 14,000 residents, a regional plan has already been developed that designates where the hotel district will go, where the housing will go and where the commercial nodes will be, Axelrod said.

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Loreto: Mexico's Next Real Estate Hot Spot