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As of 2025, the pre-construction market in Los Cabos has undergone a dramatic shift compared to the post-COVID boom years. Back in 2021, demand far outpaced supply, making pre-construction a popular and lucrative option. This rush attracted both eager buyers and a flood of new developers.
Fast forward to today, and the landscape has changed. There is now a surplus of supply over demand. Despite this, developers continue to launch ground-up projects, making it essential for buyers to thoroughly understand the risks and rewards before proceeding.
Resale vs. Presale in Cabo: A Price Comparison
In many cases, it is safer, smarter, and more cost-effective to purchase a resale property rather than a presale one. For example, recent MLS data from the Tezal area in Cabo San Lucas shows that the average 2-bedroom resale condo under USD 500,000 is listed for around USD 353,000. In contrast, the average pre-construction unit is listed at USD 358,000. That’s a negative spread. While every project is different, and there are exceptions, this trend suggests that a built, finished condo may offer better value.
Weighing Risk and Reward in Pre-Construction Deals
Buying pre-construction is ultimately about striking a balance between risk and reward. Since the property isn’t complete, you should be compensated in the form of price appreciation, a newer design, or a better location. However, the price gap (or delta) between pre-construction and resale inventory has tightened significantly. With the current oversupply of resale inventory, it’s often possible to purchase a completed unit for the same price as one still under construction.
Work with a vetted real estate agent who knows the market and can help you evaluate your options. Each project has its dynamics, and an experienced agent can guide you through what’s real and what’s just hype.
Payment Structures and Timing in Cabo Pre-Construction
Payment structures in Mexico vary widely in pre-construction deals. Typically, you’ll begin with a refundable deposit for two or three weeks, followed by a first payment of around 35%. Many developers use your funds to finance construction, so progress payments are often required. I highly recommend negotiating milestone-based payments, which are tied to construction phases rather than arbitrary calendar dates. This negotiation ensures that your money is tied to real progress, not just promises.
I have heard many people argue about which payment structure is better. The reality is that each project is unique, and I have observed that some payment structures are more effective than others.
Why One-Size-Fits-All Payment Plans Can Backfire
For example, I’ve seen buyers and agents claim that a 35% down and 65% at completion payment structure is ideal. While I understand the logic, I’ve also seen this approach backfire.
In one case, no one wanted to release the final 65% until the developers completed their unit. However, the developer needed those funds to finish the project. Although the development was eventually completed, all buyers could have received their condos 6 to 12 months earlier if payments had been made progressively during the construction period.
The point is that the payment structure is just one part of the puzzle and shouldn’t be the sole factor when judging the strength or reputation of a developer.
The Impact of the US Dollar and Mexican Peso Exchange Rate
Another essential factor to consider is the exchange rate between the US Dollar and the Mexican Peso. In markets like Los Cabos, foreign buyers typically pay in US Dollars, but developers cover most of their costs — construction, labor, materials, permits — in Pesos.
If the Dollar weakens significantly, it can jeopardize a project. For example, if a development was planned when the exchange rate was 20:1, and it dropped to 16:1, the developer’s projected margins can quickly vanish.
This can also cause the developer to cut corners, often in areas that are not visible. This financial strain is compounded by rising land values, which push up starting price points. Buyers should evaluate these risks before making a purchase, not after the purchase has been made.
Delays, Permits, and Bureaucratic Bottlenecks in Cabo
In 2025, we’re seeing more delays due to municipal processes, including the creation of condo regimes (which provide formal ownership and title) and connections with CFE (electricity) and municipal water. These delays are another good reason to consider resale inventory, where these challenges have already been resolved.
Why Being the First Buyer Isn’t Always Ideal
Also, be cautious about buying the first units delivered in a new development. These early owners are often “guinea pigs,” dealing with incomplete HOAs, ongoing construction, and a developer more focused on finishing the project than managing the property. Always get a third-party inspection before making your final payment so you have the leverage to correct any issues.
Expect Delays: Logistics and Geography in Cabo Construction
If you are buying a new construction property in a ground-up development right now, consider planning on a six-month grace period in this market. It is rare to see projects delivered on time.
Investors who do not plan on living in the unit tend not to care as much, but if you plan on living in the unit, it would be wise to prepare for delays rather than be disappointed if and when they occur.
There is a significant demand for construction at present. Cabo is very isolated from the rest of mainland Mexico, so you need to factor that into your materials, labor, and timelines.
A Riskier Market for Buyers in 2025
Despite a strong economy over the past few years — the S&P 500 rose 52% from 2023 to 2024 — pre-construction projects have still been delayed, halted, or abandoned entirely. Competition has increased, risk is higher, and market conditions are less forgiving than they once were. In a downturn, the worst place to be is in a ground-up pre-construction project.
Due Diligence: What to Look for Before You Commit
There’s a significant difference between investing in a well-established development with proven sales and purchasing a concept that’s merely land, renderings, and promises. Your agent should check the sales velocity of any project you’re considering. A strong project should show steady and verifiable sales, not just clever marketing.
For more information on the pre-construction market in Cabo, please contact Fletcher Wheaton at fletcher@remexico.com or 624.229.5228.
A version of this article was originally published on the REMEXICO Real Estate blog and is republished here with permission.
Real Estate Agent
For more information on the pre-construction market in Cabo,
please contact Fletcher Wheaton at fletcher@remexico.com or 624.229.5228.