Situated in north America, Mexico is bordered by the United States of America together with Guatemala and Belize. Consisting of 31 states, the country has one of the most heavily populated cities in the world in the shape of Mexico City.  The country itself has a land mass approaching 2 million km2 and a population approaching 110 million, making it one of the largest in the area.

 

Introduction To Mexico

The economy of Mexico is highly influenced by local trading partner the USA, with a number of American multi-nationals having a strong presence in Mexico (as well as south America).  In what may be a surprise to many, Mexico is actually classified in the top section of countries by economic wealth, with an upper-middle income rating.

While the political landscape has been fairly volatile in the past, a strong US influence has enabled much of the infighting and friction of earlier years to be subdued.  However, the economy has under gone a number of periods of high inflation, high unemployment and currency concerns although heavily aligned to the US economy the situation at the moment is very steady.

The climate of Mexico is as diverse as the terrain which takes in hot flat areas as well as mountainous ranges on the country’s border regions.  As you would expect form such variations of terrain, temperates can vary markedly although the country is generally classed as being fairly hot and humid, although areas in the north can be a little cooler.

For many the reality of Mexico may be very different to that often portrayed n the world wide press, the country has a great reputation for nurturing business and has a number of multi-nationals with trade links all over the world.  While heavily reliant on the US for trade, Mexico is able to stand on its own two feet.

Property Market in Mexico

While it is a little known fact, about one hundred and sixty years ago the US paid some $15 million for almost one third of Mexico (an area which now houses California, Nevada, Utah, Arizona and Texas), the US population are making more orthodox purchases in the country.  As housing prices soar across the States, many US citizens have ventured south buying up many of the coastal properties on offer - with prices any where up to $1 million.

As a ball part figure, Mexican property is valued at approximately one third of similar US properties, despite the the countries being so near.  This has encouraged the spread of tourism which in turn has attracted much development and ongoing changes to the many coastal settlements.  When you consider the amount of foreign investment into Mexico is set to reach $20 billion in 2006, the scale of foreign interest becomes clear.

While it is often the spacious well developed areas of the country which receive the headlines, there are also a number of run down almost derelict towns where residents are struggling to survive. Slowly but surely the expanding wealth of the country is start to reach these unfortunate Mexican nationals, as the economy continues to grow.

While areas such as Mexico city have proved to be very popular with both foreign companies and foreign investors,. the area is fast running out of affordable land.  This has caused the property market to mushroom outwards from Mexico City, bringing many neighbouring cities and towns into play.  While there is large investment from none US counterparts, it is the US who again dominate investment in this area of the Mexican economy.

Buying Property in Mexico

There are many similarities between the US property purchase procedure and the Mexican equivalent, although all buyers must be aware that the Mexican property sector is not regulated, therefore it is essential that you take local advice to ensure you appoint the best available.  There are basically four additional parties involved in a property transaction in Mexico, who include an Estate Agent, Buyer’s Lawyer, a Bank and a Public Notary.

Assuming that no short cuts are taken, and the four parties are appointed by recommendation there is very little to fear from the purchase process.  As in the States, when a transaction is agreed in principal there is a requirement to lay down a deposit (which is none refundable), at which point the initial agreement would be drawn up.  Then it is basically a case of the parties involved thrashing out a deal and finance as soon as possible, and then complete the transaction.

It seems almost inevitable that the property sector in Mexico will be more regulated fairly soon, with pressure from the US authorities who are keen to arrange protection for a number of their nationals who have interests in the area. Mexico pretty much follows the US in most cases, as they depend heavily on trade and employment opportunities.

Future Property Market

It will come as no surprise to those who have even looked at Mexico, that the country is heavily swayed by what is going on in the US property market. That particular market is showing signs of slowdown, and a similar scenario can be expected with the Mexican market in due course.  However, because there is more “value” in Mexico when comparing property prices, any fall should be fairly limited and fairly short lived.

As the tourism industry in Mexico continues to go from strength to strength it is inevitable that non-US visitors and investors will grow in number.  This will add a more defensive nature to the economy and the property market, and perhaps reduce the current heavy dependence on the US.  There is no doubt that Mexico has many areas of natural beauty and the welcoming authorities have been responsible for an increase in overseas interest.

While there will come a point in the future when the US hold over Mexico is reduce, this situation may well be a little way off.  For those looking for a short term picture of the Mexican property market, look no further than the US equilivant which is currently riding a little too high.  However, it will be interesting to see if foreign investor take advantage of any short term slip to introduce more funding into the sector, and snap up some of the prime sites available.  There should be some interesting times ahead for those willing to wait a little before investing into the Mexican property market.