A recent analysis of world-wide hotel prices could be of significance to Mexico real estate buyers; while the world on the whole is reported to have increased in price per room by about 2% during the first trimester of 2010, Mexico, on the whole, has dropped 7%, according to the Hotel Price Index report from Hotels.com.
While this could be taken as a good sign for buyers who are looking for a vacation or retirement home, looking for a large American and Canadian presence, and low prices, it might also be an important consideration for investors planning to invest in a condo for rental income.
A number of locations saw price increases, of course, some as high as 17%! But the places with the most drastic drops included Mazatlan at 18% and Cancun at 21%. This data, which is based on what people are actually paying for their rooms, rather than posted prices, most likely means that these locations are showing a greater amount of flexibility during low seasons, offering discount packages to keep the tourists rolling in.
For buyers considering a Cancun home or condo for retirement, this is good news; it means that a large number of visitors will continue to be present in the area – this means that they will be spending, and cash flow will be more consistent, bringing ongoing investment. It could also point to a lower cost of living; tourists will often choose an area with lower prices available, which would push this kind of statistic down. This points to an area with a larger variety of price options.
Property investors, however, buying homes or condos for the purpose of rental income from tourism might want to take this fact into consideration. Cheaper hotel rates means stiffer competition to rent a condo out to visitors during the low-season. This by no means indicates that it's not a good idea, or can't be profitable; many investors of this sort see the biggest chunk of their gain during high-seasons, and simply cover costs during low seasons. This only means that this fact will have to be taken into account in planning an investment strategy.
Playa del Carmen, on the other hand, saw rates fall only 3%. This means a Playa del Carmen home or condo for vacation rentals will probably see less fluctuation (but not necessarily in occupancy, since this has a lot to do with the total demand.)
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Region: Playa del Carmen real estate.
Thomas Lloyd graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. A Mexican Certified Realtor he is the current president of TOPmexicorealestate, you can contact him at (512) 879-6546.
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