California supplies Vallarta with the largest amount of serious real estate buyers. Property values in California have sky rocketed resulting in huge equities in real estate. This and other factors mentioned elsewhere in this letter will keep us experiencing a real estate boom in Vallarta for the next several years to come. The more CNN speaks if the possible world war III, civil war in the middle east, continued problems in countries that hate the USA who have nuclear capabilities, terrorists plots, the list is endless as you know – the more some people think little old Puerto Vallarta Mexico might be a  “Great plan B”.

2 bedroom Marina front condos in Marinas in California (when you can find them) start at US $800,000. and monthly maintenance fees are at least US $1,300. /month.

Most people from the United States East of California and Texas go to Florida and look at properties from the Miami areas to West Palm Beach and over in Naples (Naples now the richest county in Florida. No longer West Palm).

In these Florida areas Relatively new 2 bedroom beach front ocean view condos start at US$850,000. with monthly maintenance fees running at least US$1,400.–US$1,800. and mandatory Homeowners Insurance with Hurricane coverage run at least US$10,000. a year real estate taxes for non homesteaders US $20,000. A year an rising (2% of market value). Currently reports from Florida are that insurance companies are not writing hurricane coverage in Florida at any cost. Without coverage lenders are calling their loans so you see for sale signs every where.

In Mexico we are still blessed with (when compared to USA) very inexpensive construction costs and those savings are passed on to the buyers in the form of lower sales prices. 2br monthly  maintenance fees US $270. – US $360. See listing sheet for real estate prices. Annual Real Estate tax US $294. A year for a 2br  beach front condo in Porto Fino. No that's not a joke.

Interesting facts: In Mexico only 6% of the homes nation wise are financed with mortgages versus 67% in the USA. Most most Mexicans inherit their homes, buy them for cash or build them themselves with cash that they have saved.
 

AMERICAN TRAVEL TRENDS

eople like myself that have traveled to Europe in the last 2 years are now fully aware of the fact that a certain percentage of the world currently do not like Americans because  of the war. It is like they forgot what happened in the 1940’s in Europe. Vacation travelers do not like to travel to countries that the people of that country obviously do not like you, and look at you as if you have leprosy.

The idea of vacationing in Muslim countries is unthinkable now by Americans.
The number of Countries that are American friendly is shrinking as each day goes by.

The friendliest country the Americans can vacation in currently is Mexico. The friendliest City in Mexico is Puerto Vallarta.

This facts will greatly contribute to increased tourism in Mexico and increased Real Estate sales to baby boomers for the next several years. Clients tell me that investing in the stock market now is just to stressful for them and that passbook savings at Banks currently at about 2% does not provide them with enough interest to get excited about.

Even if the condo /villa only appreciates 4% a year and net rental income is only 6% per year that combined 10% estimated return will be received as good in TODAY’S conservative investment market.

Clients tell me they want to vacation in a resort town they are familiar with, that they perceive to be friendly towards people from the USA, safe as can be expected in today’s world, within driving distance of where ever their home is and it would have to be A warm climate. Bingo! Little ole Puerto Vallarta tops the list of cities to vacation in. In fact Conde Nast Traveler Magazine IN 2002 named Puerto Vallarta as the friendliest International city for American Travellers and the eighth most favourite International Destination in the world. Number 1 was Paris then Sydney, Rome, Florence, Bangkok, London, Venice, Puerto Vallarta, Honk Kong and Vancouver.  

In mid 2001 the peso annual savings interest rate dropped to 3.2% from about 19%. savings rates in Mexico averaged less than 2% FOR THE year 2004. A lot of Mexican nationals have cashed in their certificates of deposits and bought mainly Bayview Grand and Porto Fino condominiums. Most all do not rent them out. They use Christmas and New years, Easter plus the first week IN August. They feel the new beach front condos will appreciate 10% the first year and then 5% per year. They like being in real estate that is bought and sold in US dollars.

Puerto Vallarta is getting an increase of over 55% in Cruise Ship docking due to re-routing. High season we get 8-10 cruise ships a week. Cruise ship tourist don’t buy real estate but a lot return for vacation. Through the years a lot of clients that have bought real estate from me have said their first visit to Puerto Vallarta was on a cruise ship. Puerto Vallarta's newly enlarged cruise ship harbour has 3-985 foot docks which is the last hurdle for Vallarta to be considered as a cruise ship “home port”. when this happens we will obviously see real estate prices go up in Marina Vallarta and at the Venetian. Some cruise ship’s would start and end in Marina Vallarta. Cruise ship people (like myself) look forward to new cruise itineraries. The new improvements will cost an estimated US $24 million dollars and the project is finished as of May 2007. For Mexican to take his family on a cruise he has to go to the USA. The visa problem stops him for doing this. Once Puerto Vallarta is a home port you will see a whole new cruise market open up.

Christmas /New Years brings us a lot of wealthy Mexican nationals that prior to September 11 spent holidays in the USA. A lot have now bought Condos at Bayview Grand, Porto Fino and SHANGRI-LA will spend their time off in Puerto Vallarta rather than in the USA.  for a Mexican to get a visa for their new young children is a major problem now as they have to wait up to 4 months for an appointment with the American Consulate. They can not go to USA with their older children only.

More and more people now have the attitude that in their golden years, they are going to live life to its fullest and if the kids get a little less inheritance -so be it! they earned it and they ought to be able to spend it.

Bayview, Is a 477 Beach Front condo pet project of mine. a lot of the 477 buyers are from the United States and Canada. They have indicated they plan to spend the winters in "SUNNY" Puerto Vallarta and that Puerto Vallarta has the best weather they have ever been in –in the winter.  

Porto Fino Is a beach front project next to Marriott. It consists of 239 condominiums in 2-15 story towers plus 9 beach front homes priced at US $1.2 million each. The first tower of condominiums was delivered in April 2004, second tower delivered in October 2004. ALL 9 of the houses sold in 2003 and all the condos sold in 2005. One of the houses was bought for US $950,000. before they even started construction. Half with the signed contract and half upon delivery. Well 4 months prior to delivery the owner sold the villa for US$2.2 million cash. Developer really mad but you can't have it both ways. Antonio Banderas and Enrique Iglesias have visited who ever owns the house more than once as they walked around the pool at Porto Fino and went over the snack bar and bought soft drinks in skinney bathing suits almost causing heart attacks to some older full time lady residents.

Shangri-La beach front condominiums between the Marriott and Melia hotels was built by the developer of the Marriott. The project consists of 5-18 level TOWERS of 3 & 4 bedroom plus 2 level very large Penthouses. The type construction costs a lot of money. The 5th tower was delivered August - December 2007.

January, 2007 Tres Mares (3 OCEANS)  project will started construction. It is a development by the developer of Shangri-la. It will consist of 576 condos in 4 towers. They will have 18 –US$3 Million dollars cruise ship Harbor fronting large villas. I submitted the name “Harbor point” to the developer when he was in the process of naming the project. The name Bayview Grand was my suggested name for that project and the developer accepted the name.

Tres Mares will be the who's who in Mexico's address. The idea of sitting on the terrace watching 3-985 foot long cruise ships enter the cruise ships  harbor early morning, City lights, sun rises, Sun sets is an experience only a special few will experience  – including this old gringo on the15th level of C building. I like C building best as it has a straight ahead city lights view, cruise ship harbor, sun rise and Sierra Madre Mountain range view.

No more building skeletons for Vallarta: In order to obtain a building permit for a condo or hotel project in Puerto Vallarta you have to give the city a completion bond. to get a completion bond at a good rate you have to build according to the international beach front construction codes and not Jalisco State or national codes. International codes require a special type sea wall that is 27 feet deep with all kinds of rebar in it plus it curves out towards the sea. The pilings go down 72 feet at Bayview Grand and the re-bar is over 1 inch thick. The pilings are 5-6 feet in diameter. At the new Venetian the pilings go down 109 feet. (33 meters) and are 7 feet in diameter. It takes 22 large concrete trucks full of concrete to fill one hole. Each building has 26 pilings. No completion bond required in the state of  Nayarit (NUEVO VALLARTA). At Tres Mares the pilings go down 157 feet (48 meters).

Mexico now considered investment grade

in year 2006 Mexico enjoyed a budget surplus!

Individual investors from the USA feel safe with investing in certain select resort cities in Mexico as they no longer fear Mexico and their devaluation of the peso every few years. They realize that the United States will come to the rescue of Mexico in Mexico's time of need. Not because it's the neighborly thing to do but because the United States wants to be able to call in a favor if in the event some crazy nukes the oil fields of the far east. Mexico's oil fields are close to the Texas border. Pemex, Mexico's oil company is # 4 in the world in oil production.

A pipeline, like the Alaska pipeline, could be constructed underground from Mexico's oil fields to the refineries in Texas. For obviously reasons the United States cannot say this publically.

Pemex oil company announced August 27, 2004 that its proven oil reserves are now known to be at least 102 billion barrels. United Arab Emirates:  98 billion,   Kuwait:  94 billion,   Iran:  90 billion,   Iraq: 113 billion. In an humorous move the next day the Mexican government said the claim false. I'm sure they thought - hell with all that oil the Unit States will take the other half of Mexico they did not steal in February 1848 for $15 million. 

For those of you that forgot your history California, Texas, Arizona and New Mexico use to be Mexico. Mexico surrendered 890,000 square mules to the USA in 1848.

By this discovery in the gulf of Mexico -Mexico’s oil production could go from a current level of 4 million barrel per day to 7 million barrels a day.

Saudi Arabia currently produces 7.5 million barrels of oil a day followed by Russia at 7.4 million a day.

Mexico is now receiving proposed partnership agreements from global oil giants to extract the oil with new deep sea oil extraction technology. Because of the increased income from oil & other sources Mexico has decreased the federal income tax from 34% in 2004 to 30% in 2005 & by 2007 it will be 28%. Mexico has a 15% value added tax on everything. not on residential properties.

March 3, 2007 PEMEX announced their first partnership agreement with a Brazilian oil company to deep water drill and manage heavy –crude fields. The president of Mexico said “This opens the possibility of obtaining technological knowledge for drilling and development in deep and ultra- deep waters”. They will drill at depths of 1640 feet (500 meters) in the gulf of Mexico where they feel29.5 billion of oil are located.

The oil plot thickens. The president of Mexico in his State of the Union address September 2, 2007 said Mexico’s main oil fields could be exhausted within 9 years. At 3 am in the morning of September 11, 2007 the Mexican Congress voted in new taxes that will increase the government's tax income 33%. The tax measures include $2.7 billion will go to Pemex in 2008 so it can start the improvement of its refineries and explore for new oil reserves in the off shore area that Pemex announced existed on august 27, 2004! it appears Mexico is like the USA and that’s it takes a crisis to get what has to be done authorized by congress. New condominium prices are sure to go up in line with the increased costs of the developers which include the new corporate income tax the developers needs to pay of 16.5 % on gross income. Tres Mares increased pre-construction prices on an average 18.4% in late December 2007.

On October 25, 2002 Hurricane Keena’s 70 mph Outer winds hit Puerto Vallarta and heavily damaged all beach front Hotels lobby, restaurants and pool areas. 3,802 hotel rooms closed. Insurance company money has rebuilt the ground levels of those 13 hotels. the construction industry is experiencing a boom in Puerto Vallarta and Nuevo Vallarta. Aetna from USA own the largest insurance company in Mexico. General electric owns the second largest insurance company in Mexico.

Marina Vallarta

arina Vallarta is talked about in Mexico as a class book example of a planned resort community of which the first hotels and condos were delivered in 1988 / 1989.

It's been my personal pleasure to be a part of that process since 1988. First as sales manager for the developer then on my own since September 1994. From A developers stand point Marina Vallarta was sold out in September 1994. Over 3 billion dollars has  been spent in Marina Vallarta so far.  

The developer of Marina Vallarta was a partnership of manufactures Hanover trust, security pacific national bank of Los Angeles (now Citibank and Bank of America) and Mexican steel company.

Interesting Facts

n the summer of January 4, 1999 edition of leisure travel news published two lists by 500 Travel Agency networks. "Best sun destinations in the world" Cancun, Orlando, Phoenix, Puerto Vallarta and then Las Vegas. "top 10 world destinations" London, Paris, Rome, Frankfurt, Sydney, Hong Kong, Amsterdam, Puerto Vallarta, Madrid and Vancouver. Puerto Vallarta has gone from "A sleepy little fishing village" (Famous quote of film maker John Houston in 1958) to a World-Class tourist resort.

The newly elected president of Mexico that took office December 1, 2006 has a master degree from Harvard. His wife is a congress woman how actually is the USA equivalent of the speaker of the House. Both are PAN political party.  The PRI was voted out a few years ago after 71 year ride. Cabinet members were mostly educated in the United States:

1. Secretary of State: Doctorate in economics from Mit
2. Finance Secretary: Doctorate in Economics University of Chicago
3. Economic Coordinator: Doctorate in Economics University of Iowa
4. Energy Secretary: Doctorate in Economics from Columbia University in New York
5. Chief in charge of the President’s office: Degree in Economics from University of Florida
6. Social Development Secretary: Master degree in Sociology from the University of Kentucky
7. Foreign Relations Secretary: International law degree from University in Switzerland
8. Environment Secretary: Masters in agriculture institute of technology, Bedfordshire, Eng.
9. Agriculture, Rural development, Fish: Master degree polytechnic of Madrid Spain

All the secretaries have long Backgrounds in business and administration, both in the public sector and private sector.

17 of the 18 Mexicans are now controlled by global banking companies. Banco Bilbao Viscaya, Argentaria (Spain) bought Mexico's # 1 Bank-Bancomer. Citibank bought Banamex, the countries # 2 bank. Bank of America the # 3 Bank Serfin. HSBC THE # 4 BANK. In November 2006 Wall-mart was granted a Bank Charter in Mexico.

Mexico now has 69 billion dollars in reserves. When the peso devaluation occurred on December 19, 1994 the dollar reserves were only US $3 billion dollars plus a dangerous high percentage of the government debt was very short TERM. The IMF was involved in the restructuring of Mexico’s debt as they needed a class book example of what a country could do if they followed the advice of the IMF. Mexico0s debt is now all long term. In early 2007 Mexico prepaid over $10 billion of their long term debt.

Farmers from the USA now farming in Mexico. I normally stay away from commenting on the illegal immigration issue but this new trend is very interesting to me.

2 years ago a farmer named Larry Cox who farms in the fertile Colorado river valley in Mexico had to leave 750,000. pounds of tomatoes unpicked in Brawley, California due to him not being able to find enough workers at harvest time.

Deportation sweeps have cut one third of the 230,000. seasonal labours. Farmers say U.S. workers do not want strenuous farm jobs. USA growers are now farming over 50,000 acres in Mexico and employing over 11,000 Mexicans. By doing this the farmers can cut their labour costs 90% from us $10.00 per hour to us $10.00 per day. They just rent the land. Environment regulations in states like California that drive prices way up are essentially putting the U.S. farmers out of business so they are going west – young man – going west.

Starting in 2008 the Mexican government and private enterprise will spend US $25 billion dollars over 5 years on infrastructure improvements creating hundreds of thousands of jobs. highways, airports, harbours plus toll roads that will be built and operated by private companies on a concession basis. Wal-Mart of Mexico will open 205 new stores and 53 bank branches in 2008. They plan to hire 21,000 new employees in 2008. In 2007 they hired 15,728 new employees. Wal-mart will offer a revolving credit card the second quarter of 2008. Employer's will deposit into their employee's Wal-mart account thus keeping millions of workers out of banks cashing their checks.

Corporate America's continued move to Mexico

n 2006 Mexico's auto production was up 54% from 2005. Auto exports rose 48% in 2006.

The Mexican auto industry says auto manufactures in the United States sates have been struggling in the face of foreign competition and most all of them have announced plan's to beef up their plants south of the border.

In the summer of 1998 the united auto workers in the United States finally finished digging their own grave. All the United States auto and truck makers boardrooms were busy finalizing their new aggressive Mexico plant additions whereby they will slowly slide out of the United States. Now days stock holders demand management to make decisions solely on bottom line considerations. Those decisions are no brainer's. They cut total labor costs 90%. improve productivity per man hour and they have zero union problems in Mexico. As you know China is where everything is made now. The USA’s trade deficit with China in 2005 is estimated at us$190. billion. 2006 %287 billion. Wal-Mart recently admitted that of the 6,000 suppliers they have 80% are from China. China produces items 40% below Japan, South Korea, Taiwan and Mexico. The United States and Mexico do not know how to deal with the problem of the Yuan being so low and China will not let the Yuan currency float. Recently they said if we can't beat them we will join them and currenlty many China/USA auto maker auto production plants under construction in China.

In 2006 Japanese auto makers grabbed 32% of the Mexico auto sales. Honda, Toyota, Nissan. Volkswagen 12%. GM, Ford & Chrysler combined market. Share was down 7% to 48%. Best selling car in Mexico is Nissan's No-frills Tsuru. First 3 months in 2007. Honda sales up 4%, Toyota sales up 20%.

Bombardier the world's No. 3 aircraft maker in Canada announced plan's to manufacture airplanes in Mexico as early as 2010. In 2006 bombardier built a parts in Queretaro (about 200 miles north of Mexico City) and will employee 1,800 workers.

May 29 and 30^th 2002 was a very special time for Marina Vallarta. The Marriott hosted a trade convention for all Asian countries, APEC (Asian Pacific Economy Co-operation). A lot of the attendee’s were VIP’s including Mexico’s president Vicente Fox, China, Japan, Korea, Singapore, Taiwan and Little ole Papua New Guinea to name a few. 21 countries total.

Instead of having the convention in Mexico City, Guadalajara or Monterrey, the government choose Marina Vallarta in Puerto Vallarta as the number 1 city in Mexico to show off to businessmen from the Asian Countries. for the same reason, a few years ago the Marriott hosted the Gatt Convention (G8). 1200 people had a sit down dinner at one time. (The largest in Puerto Vallarta history).

In October 2002 the former Director of the CIA said something very mater-a-factly on Lou Dobbs money line. He said in the event the middle east oil was cut off that the USA could operate out of the strategic oil reserves for up to one year now with current inventories and that the inventories could be doubled whereby the USA could last for up to 2 years on their own oil supply plus the strategic oil reserves. He went on to add that during the 2 years a pipe line could be constructed from Mexico's oil fields to the refineries in Texas. As you know congress recently approved Bush's plan to double the strategic oil reserves.

It would take billions of dollars to upgrade the Mexican refineries. The president of Mexico is currently trying to get the Mexican congress to authorize Global Oil Giants Investing in refineries. Mexico would still own the oil that comes out of the ground but it has to be refined before it can be sold.  20 year first mortgage  money should soon become a reality in Mexico for USA Canada's who residents of USA/Canada and who want to buy a condo/Villa in Mexico. Bank of America /Citibank /Scotiabank of Canada and  HSBC now own the 4 top banks in Mexico.  Be aware of so called Mortgage brokers from the USA that say they make loans in Mexico. Read fine print about interest rate increases and how they will release the mortgage once you pay it off. Scotiabank has a good program. Their office is in the Peninsula shopping Center. They started the program in December 2007.
Once these banks Mexican lending programs get underway we will see a surge in buying vacation /rental condos in Puerto Vallarta and prices will go up. As a certain percentage of condo /villa buyers are use to and prefer to buy via a mortgage on the Mexican property.

As of now 99% of condo/villas sales are cash sales. Mexican nationals are now able to obtain 20 years fixed interest rate financing for new town homes and homes. The interest rate is 16.5% car loans are 30% per year interest. The same mentality as the USA customers only want to know how much down and how much a month.

A senator from Cabo san Lucas has drafted a constitutional amendment that would do away with us gringos having to own real estate within 50 kilometers of a coast or border. Every major law firm in Mexico city submitted to the government their proposed text for the constitutional amendment. When and if this happens the government feels foreign investment in Mexico will triple. The lady senator from this area (lives in Puerto Vallarta) was asked to co-sponsor the bill. The government is for it. The banks are for it as is big business.

Home Depot opened in November 8, 2007. Its out across from the airport. it will front the highway and the road to Ixtapa next to Guadalajara university Puerto Vallarta campus.

I've been encouraged by some of my newsletter reader's that come to Puerto Vallarta every year that I should write more interesting human interest events I have come by while traveling. My china reports are especially interesting to a lot of my annual reader's.

2007 China