For many people, their interest in real estate investment in Mexico often begins and ends with Mexico City. This isn’t surprising, given the scale and potential of the capital city. And yet it is also a huge missed opportunity for investors, according to real estate investment expert Miguel Sánchez Navarro Madero.

“Mexico City quite rightly gets a lot of attention from real estate investors,” Miguel tells us. “There are an enormous range of options there for any real estate investor. Whether you are interested in investing in a shopping mall or a residential block, you’ll find it in Mexico City.

“With 20 million people, it’s incredibly densely populated, but it is also relatively wealthy and the standard of living is good. So it is no wonder that investors want to tap into that economic potential.

“But there also lies the challenge,” says Miguel. “Mexico City is a crowded, booming market for investors. It all means we’re seeing some dramatic price rises that are squeezing the returns that investors can expect to enjoy. Take just one area – Coyoacán – as an example. In 2017 alone, we saw a 49% rise in house prices there.”

Looking at real estate beyond Mexico City

That kind of appreciation is great for existing investors who are enjoying the massive potential returns. But it can prove a barrier to those people who are just starting out. The answer, Miguel says, is to look beyond Mexico City for alternative real estate investment opportunities.

“In recent years, Mexico as a whole has become more attractive to investors, particularly in real estate,” says Miguel. “There’s now more economic stability across the board, thanks to the new United States-Mexico-Canada Agreement (USMCA), replacing the North American Trade Agreement (NAFTA). And reforms to mortgage laws (for example reducing fees) and easier access to loans has also provided a boost to the general real estate economy.”

So what are the areas that potential investors should look at, beyond Mexico City? Here are Miguel’s top picks.

Tulum

“Tulum should be one of the primary targets of anyone thinking of investing in Mexican real estate outside of Mexico City,” says Miguel. “We’re talking here about an area that has some of the most beautiful beaches in Latin America. It attracts in the region of 17 million visitors each year, so any rental business is reliably constant.

“We’ve also seen a regular increase in the value of property in the area over the last few years – around 8 per cent per year. The Riviera Maya as a whole is booming. But because much of Tulum is a protected national park, it means that the market there is higher end and more exclusive.”

Puerto Vallarta on the Pacific Coast

“Puerto Vallarta represents a wonderful opportunity for real estate investors,” says Miguel. “It’s an area where prices were previously low, but the market there has now rallied considerably.

“People are attracted to the area because it is a beautiful town in a very safe and stable part of Mexico. You’ll get plenty of interest in vacation properties from visitors to the area, but also longer term rentals too. The cost of living there is much lower than the US, but also compared to Mexico City too.”

Merida, Yucatan

“Merida is a popular city that is attracting more and more visitors every year (around 4 per cent year on year),” says Miguel. “It was recently named the American Capital of Culture and there are regular flights to this beautiful city from the US.

“All this adds up to a place that has an excellent quality of life and is also one of the safest in Mexico. Those two things alone make it very attractive to any real estate investor.

“But what really makes it stand out are the property prices themselves. The average price per square meter in Merida is around half of the average in Mexico City. That will have a major impact on any yield you’re hoping to enjoy.”

Huixquilucan

“My final pick has to be Huixquilucan,” says Miguel. “This is an area that is getting a huge amount of attention from investors at the moment. I’d recommend that people get in there quickly while there is still value to be had.

“The leader of the municipality, Enrique Vargas del Villar recently claimed that the area has the highest levels of private investment in the country – around  $1,200 million in real estate investment alone.

“The attractiveness of Huixquilucan for investors all comes down to the enormous economic potential of the area. It has the highest per capita income of anywhere in Mexico, and there has been a huge amount of commercial development to support this in recent years.

“We’re seeing new schools, shopping malls and even university complexes springing up across the area,” adds Miguel. “All of this represents a great opportunity for both residential and commercial real estate investors.”