By Fletcher Wheaton
One of my favorite things about real estate here in Los Cabos is that there is a good mix of buyers. Americans, Canadians, and Mexicans each represent large groups of homeowners and. investors. Los Cabos remains an attractive destination for real estate investment for many reasons. If you are an investor tired of the stock market turbulence, buying in a dollar- denominated market like Cabo can be a great idea. Below I will list my top 5 reasons to purchase real estate in the area.
1. Most property sales in Los Cabos are done so in the US dollar (USD).
Additionally, most rental income in Cabo is collected in the USD as well. Other USD-denominated markets in Mexico include Puerto Vallarta, San Miguel de Allende, Tulum, Playa del Carmen and Cancun. Workers in Los Cabos also enjoy some of the highest wages in Mexico and can afford to pay higher rents. The fact that you can accept rent in the USD coupled with higher wages makes owning rental properties in Los Cabos very compelling.
2. You can’t beat the lifestyle in Cabo.
It’s sunny here 350 days out of the year and the outdoor activities are endless. Los Cabos is so unique that it will always be a high to mid-range vacation destination. Not only can you own an income-producing property in a growing real estate market, but you can do it in paradise. This also gives the owner the ability to rent out the property for income or live in it and enjoy the Baja lifestyle. Many properties in Cabo rent well on a long term or short term basis, depending on the owner’s preference.
3. Los Cabos has a strong and growing real estate market. It is also a less mature market than other areas of Mexico as Cabo did not really become a mainstream vacation destination until the
last 10 or 15 years. There is still a huge opportunity for organic growth through strong demographics and population growth. The MLS system has been in place for decades and represents most of the real estate transactions in the area. In 2021, real estate sales in Cabo were by far the best ever per MLS numbers making Baja California Sur a billion-dollar market. There is a growing demand for affordable rental options as the local population continues to grow. Buying real estate here offers the buyer an opportunity not only to receive rental income but also the ability for the property to appreciate through strong economics and ongoing population growth.
4. Los Cabos airport continues to add direct flights as well as having continuous year-over-year
growth in flight traffic.
Flight traffic is increasing at 9% this year and already well above pre-pandemic numbers. Many people don’t realize it, but it’s a lot easier to get to Cabo than it is to many cities in the United States. Flights from California and Texas account for almost half of the traffic that comes to Los Cabos International Airport (SJD). The airport here is modern and just underwent a $50 million USD expansion that was completed in late 2019 as demand for flights here continues to increase. SJD airport just announced further plans to grow, including a second runway to keep up with demand.
5.Diversification
If you’re an investor in the US looking to diversify out of stock market volatility, owning property in a USD-denominated destination in Los Cabos is a great idea. The reason I ended up in Cabo is because I came down on a scouting trip with someone who was looking to buy in the area. This buyer had most of their wealth in the stock market and was searching for a way out of Wall Street. This is quite common in Los Cabos and other vacation destinations within Mexico. Most buyers here in Cabo are retirees looking to enjoy the perks of owning their slice of paradise. Another group of buyers to take into consideration are the affluent and wealthy Mexicans buying in Los Cabos to own assets in USD. The Los Cabos real estate market has been gaining a lot of momentum and has shown no signs of slowing down. Real estate still has a long way to run when you look at all the positive factors in the area. Furthermore, I believe Cabo is a much stronger market than other places in Mexico due to the factors listed above. Anyone with a long-term view will do well as Cabo has positioned itself to continue to flourish as a world-class destination. Whether you are looking to buy for investment or for personal use, the Cabo real estate market is a great place to buy and hold for long term appreciation.
