Slowing in New Construction

Discussion in 'Living in Cancun' started by RiverGirl, Jul 25, 2008.

  1. RiverGirl

    RiverGirl Guest

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    Steve - Some people love the hotel zone. Others hate the traffic getting there at rush hour and hate being 25 minutes from a decent grocery store. And now that the beaches are so bad there people may be going elsewhere for their long walks on the beach.

    Puerto Cancun is a troubled development for many reasons. But lots of people feel there is real value there. Some of the projects look pretty nice. And Puerto Cancun is closer to the airport than certain parts of the HZ. I guess time will tell whether the value is really there.

    As to the issue of hotel rooms vs condos. Hotel rooms are built when a vacation spot is hot. Condos are built when the vacation spot is no longer hot. I think that's pretty obvious.

    It's not a matter of there being no land left, that's thinking about it backwards. At some point developers decided to build condos and NOT hotel rooms on the remaining land. They did so because the tourism numbers in Cancun have fallen steadily for years. So condos were a better way to make money off that land. If tourism was stronger here you can bet they would have built hotel rooms!! The trend is clear to those of us who live here and keep our ears to the ground.

    Cancun's airport is already the second busiest in Mexico, after Mexico City. I imagine it's use will grow for some time as the Riviera Maya gets built up. They are building another runway there right now.
     
  2. BVG_Steve

    BVG_Steve Regular Registered Member

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    RiverGirl



    Cancun tourism is way up and predicted to keep climbing, and what I said about busiest airport was 2nd busiest in Latin America and not Mexico. Right now #2 and #3 airports are in Brazil, but the Cancun areas tourism has been climbing and is expected to double within 10 years.

    Not certain where you are coming up with your stats RiverGirl or why you say Cancun tourism numbers have fallen steadily for years when in fact the opposite is true, Cancun tourism numbers have risen steadily for years.

    I ma not sure I agree with the hotel vs Condo deal, I live in Palm Beach Florida and all of South Florida is a huge vacation area and condos far out number hotels on the beach. The only a few true full ownership condos in the Cancun HZ one is Villas Marlin, until recently when they build BVG. There is very little supply of full ownership condos in Cancun on the Caribbean. Puerto Cancun is more designed for folks who will spend 3-6 months or more in Cancun, the HZ is designed more for vacationers. I highly doubt there will be many weekly renters in Puerto Cancun

    Below are Cancun tourism stats 2007 vs 2006

    Rank Month # visitors % CH
    1 Mar 207,356 40.3
    2 Jul 205,297 24.7
    3 Jun 194,930 22.4
    4 Apr 193,710 42.5
    5 Feb 181,493 58.2
    6 Jan 174,376 105.8
    7 Dec 167,500 4.0
    8 Aug 166,867 15.5
    9 May 166,708 18.7
    10 Nov 143,483 7.9
    11 Oct 115,041 13.1
    12 Sep 105,541 6.8

    First 5 months of 2008 vs 2007 up 10% once again off a huge increase last year, and in fact Cancun is a shining star in Caribbean tourism and has impressive gains especially considering the fact it works off a huge base

    http://www.onecaribbean.org/content/files/july21Lattab08.pdf

    Not certain what makes you think Cancun hotels are not hot when in fact they are booming in an otherwise bad economy. The stats show hotel registrations are way up in cancun

    As you cna see I did a ton of research before I made my purchase and the facts are opposite of what you are indicating.
     
  3. BVG_Steve

    BVG_Steve Regular Registered Member

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    Plus as I stated many times compare an oceanfront condo in Cancun to South Florida

    Here is one on singer island for 1.1 million, in Cancun this would be about $475,000. Property taxes in Florida are $26,000 per year, in Cancun 1000 per year . This unit is not even oceanfront but has a side ocean view.

    http://sunland.idxmedia.net/featured.php?listnum=R2620331&proptype=listings

    Plus many people consider cash flow when buying ocean front properties. In Florida you cannot do weekly rentals, it is against HOA policies and against the law unless property is zoned as a hotel.

    In Cancun the cash flow is very good and it keeps values up

    Buy a 500,000 condo in Cancun

    500K x 6% - 30,000 per year plus about $15,000 in hoa fees and expenses, 45,000 in rental income gets you there and is easily obtainable in Cancun.

    The rule with real estate is basically 15 times rent is a bargain on a purchase price. So in essence 34,000 in annual rent is needed to justify the $500K price tag. Another method to show these properties are not over priced and are a true bargain as in Florida and most of USA you will see prices as high as 25 times annual rent, and again the property taxes here are a killer so the Cancun properties are valued priced on a cash flow basis and with limited supply of ocean front condo on the Caribbean prices will have a floor IMO
     
  4. CancunMole

    CancunMole Addict Registered Member

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    I have no idea who this advertising person is nor what his practices may be but I do know that I have seen any number of pics/shots/angles of the BVG infinity pools since when, maybe even before Wilma, and to me, they all look the same.
     
  5. RiverGirl

    RiverGirl Guest

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    Steve - Hasn't there been controversy at BVG over the policy on whether short term rentals are allowed? And how's the beach in front of BVG? And how well does management there get along with owners? What percentage of owners at BVG are paying maintenance? And didn't I hear that BVG hadn't been paying beach tax and that the tax assessor was getting ready to put liens on the condos there?

    BVG will be a disaster in a hurricane. Look at what happened to Tower 1000 during Wilma, everyone's furniture ended up in the lagoon, did it not? And what's up with the hurricane shutters the management was going to make everyone buy there? Where are they? They took money from some owners, but didn't deliver the hurricane shutters.

    BVG is a nice property. I like the architecture. But it's not perfect. If it was in the states the management couldn't get away with a lot of what they've done there. You may be getting a good deal compared to prices in Florida, but you can't sue your HOA here for screwing up.

    I don't have time, this moment, to look up tourism stats. But I know what I hear from immigration agents and I know what I hear from people who've lived here for many years. All of them say the same thing. Cancun used to have more tourists. Now a huge number of tourists are going to the Riviera Maya.

    I live next door to someone who owns a bunch of arts and crafts stores. His Cancun stores used to be his lifeblood. Now he's ready to close them because there are no tourists coming.

    Maybe Cancun has changed, maybe it used to fill with tourists who left their hotels, maybe now the hotels are full but the tourists stay in them and don't go out? I don't know. But since I came to Cancun local business owners have told me over and over that they used to make more money, that their businesses used to be full of tourists.
     
  6. BVG_Steve

    BVG_Steve Regular Registered Member

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    RiverGirl

    First off let me clarify, you have residential BVG and Portofino BVG, I am in Portofino BVG. residential BVG is the building with 4 towers and the first project completed. Portofino BVG in the one with 2 towers and closer to the party zone and is newer. Same builder.

    As far as controversy with short term rentals, yes and no. Last August I had a contract to buy a unit residential BVG and that is when the controversy erupted and I was about to sign the contract that day when it erupted and backed out. In the hoa rules it stated no short term rentals, long story short that is illegal in Mexico and some owners sued the hoa and rule cannot be enforced. An owner in Mexico is legally allowed to rent as they Desire.

    The beach in front of BVG is ok, residential BVG is not nearly as nice as Portofino BVG, as residential has a lot of rocks, portofino does not and beach is pretty good although the beach by km 13 by villas marlin is better IMO.

    As far as beach tax and BVG, again residential BVG has a whole set of issues different then portofino BVG as it is 2 separate complexes and 2 different HOA. There are a lot of issues with residential bvg, as the developer is a little crooked and he runs the hoa for now and assessed everyone there for hurricane shutters and past due hoa fees prior to delivery etc. I heard lots of stories.

    In Portofino he is trying to strong arm owners into paying hoa fees prior to delivery as well. Now I bought my unit in April and did a transfer of rights from someone who bought in pre-construction. The unit was ready to live in but never lived in when I bought it. I hired an attorney even though I did a ton of homework before I bought I still wanted an attorney. I used to go down to Cancun when I was looking and spends days hanging around BVG talking to owners to find out the goings on. I heard many horror stories and also heard of many satisfied owners with no issues.

    Anyway my attorney made the developer put in writing what conditions were needed to title the property and got It signed and there were no conditions and developer stated in writing all fees and hoa fees were paid in full. I actually closed my unit and titled it last Monday and to the best of my knowledge I am the first in Portofino to do so.

    Other owners are not so lucky and are in disputes with developer over the past due hoa fees etc preventing them from titling property unless they give in and pay developer these fees they o not feel they owe. There is a letter circulating amongst owners to withhold hoa fees etc until they get developer to give in.

    I paid all my hoa fees and like I said I have title. The beach taxes were paid or I would not have been able to close and the notary has to ensure all taxes are paid. The builder paid 2007 and I paid 2008 taxes. They were small anyway. But what could happen here is law suits liens etc like you suggest and right now most owners of residential and portofino do not hold title like I do. Some owners at residential do hold title though.

    So if the builder files bankruptcy on these projects or liens go on the owners who did not title will have issues. If your unit is titled and registered you will be exempt from the issues.


    Back to the hurricane shutter issue. Again this was only an issue with residential BVG and as stated earlier he runs the hoa, they claim to have had an hoa meeting and claim to have announced it. The owners dispute this. anyway they passed a resolution for installing hurricane shutters and assessing owners. A 2 bedroom was like 15,000, a 3 bedroom like 20,000 etc. The shutters were worth less then half. But it was assessed as an hoa assessment, thus preventing owners from titling property unless they paid hoa fees in full. It also prevented then from selling property or transferring rights as it would show up during a transfer if buyer did their homework (some did not and got screwed).


    The theory goes tha the builder did not have the proper insurance during Wilma and thus tower 1000 had a ton of damage and this was his tactic for making up for those losses. Anyway some owners did pay the assessment, some got the shutters etc. Most did not and their was a law suit from the owners. The suit was settled 2-3 months ago, where every owner had to give in around $5000 - $6000 to reimburse those who paid the assessment and get out of the hurricane shutter contract.

    Eventually if you have a little longer term horizon you will do well here once the hoa is turned over to the owners, which should be within the next 12 months. This has depressed prices especially at residential that has a lot more of these issues then portofino. So yes I agree with your assessment of the current way hoa is ruin but it will change.

    And actually the 2 women Sandra and Flor who work for portofino BVG hoa are great and I have nothing but good things to say about them. also I had a couple issues with my unit as far as construction and repairs and the developer fixed everything in a timely manner and I have had nothing but good experiences with the developer, contractors and the hoa. So there is 2 sides to every story. Again this is no different then the states, the developer runs the hoa for 1-2 years after construction is completed and turns it over to the owners. It is never run correctly by developers even here in USA and it is not until owners take over do things improve. But this makes for a great buying opportunity as you can get units near pre-construction pricing from 3 years ago if you are patient and wait for a disgruntled owner.

    Portofino does not have the shutter issue, and in fact I had my shutters installed myself a few weeks ago.
     
  7. Steve

    Steve Administrator Owner

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    My guess would be these figures are based on International airport arrivals. While it may be true that these figures are increasing (and the 2nd runway under construction is somewhat testament to that) what the figures dont show are the eventual destination of the arrivals.

    There has been massive development between Cancun and Playa del Carmen in recent years, Tulum has grown much larger too. Both at the expense of Cancun imho. I think it would make very different reading for Cancun proper if the figures could be broken down further.
     
  8. BVG_Steve

    BVG_Steve Regular Registered Member

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    Steve

    This is probably true but also understand Cancun is working off a much bigger base as far as # or tourists and hotel room capacity then Playa or Tulum. Eventually when the base gets higher in the others growth will slow there.

    Bottom line what I am saying is the odds are very good that Cancun oceanfront property in the HZ will be worth a lot more in 10 years from now then it is today.

    Remember the airport in Riviera was not approved, location to airport, hospitals etc will always make Cancun HZ a popular spot, as said earlier everything is location, location, location and I personally feel deals areas good as they will get in the HZ now, especially buying in BVG properties at these prices
     
  9. RiverGirl

    RiverGirl Guest

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    Steve - I agree that most of the management problems at BVG will take care of themselves as the developer moves out and new management moves in. Future owners won't know or remember all the crap that's happened. And. like I said, I like the architecture there.

    If I were you I would look more closely at the beach tax issue. I don't understand the situation there but I was told directly by someone in the tax office that the developer had not made a single beach tax payment since buying the property. And if the HOA is legally responsible for that tax, but hasn't been paying it then it could still be possible for you to get your escrituras, the notario would not necessarily uncover the problem in their research. When I mentioned BVG to the people in that tax office the reaction was dramatic, there's a problem and it's a big one! If I were an owner there I would research this all the way, I would ask the management for proof that the beach tax is fully paid. Again it could be that only Residencial is the one that hasn't paid beach tax, but if I were you I would make absolutely certain that tax has been paid.
     
  10. CancunMole

    CancunMole Addict Registered Member

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    Let us all hope and pray that there will be a seafront in 10 years. Playa Chac Mool used to be beautiful and assessible to all, oh well. Can anyone recall how the Miramar Mission and Aristos (where BVG is now) Hotel's beachfronts fared after Gilbert? I do remember both the Krystal and Beach Club (now Palace) pools having caved into the sea.

    From the AHC - Cancun Hotel's Association - Website, http://www.ahqr.com.mx/ingles/ahqr.php, some interesting occupancy statistics:

    http://www.ahqr.com.mx/espanol/files/comparativo.htm

    IMO, it is the All Inclusives and the deterioration and infringements upon the beaches that have been the most hurtful to Cancun overall. I also think that while the AI trend runs high, that the AIs will negatively impact individual rentals just as they have the timeshares.
     
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