Mexico’s Tulum is a buyer’s market

In March last year, as the US began to head into lockdown, wealthy New Yorkers fled to homes in the Hamptons and the Hudson Valley, hunting for space, nature, and a home office. But property developer Christian Helies, 37, who is used to jetting between the city and Mexico’s Yucatán peninsula for business trips, decided to take a different route. 

For $395,000, Helies moved into a three-bedroom condo on the beach, in the gated community of Puerto Aventuras, next to Playa del Carmen. 

“When I realised there might be some issues about travelling or just the idea of being at home in New York in general, in a terrible environment, I just figured I’d rather be here,” he says. “If you’re going to weather a pandemic it’s nice to do it somewhere with nice weather and
beautiful tropical water.” 

If you’re going to weather a pandemic it’s nice to do it somewhere with beautiful tropical water

In the past two decades, Playa del Carmen and Tulum — the top spots on the Yucatán peninsula’s Riviera Maya (a 1999 rebrand of the previously named “Cancún-Tulum corridor”) — have seen huge levels of residential development, largely fuelled by droves of expats from the US and Canada, as well as Europeans and Mexican second-home owners. 

Now, despite anecdotal accounts that the pandemic has persuaded hundreds to follow their Caribbean dreams, a vast supply of new builds is proving difficult to shift, and some sellers are having to reduce prices.

In 1998, Playa del Carmen had a population of 20,000. Twenty years later, it had grown to 252,000, and is expected to top 300,000 by 2023, according to Mexico’s Population Council. Property prices in Quintana Roo, the Riviera Maya’s state, have also been climbing steadily.

The annual growth in the average property price was 8.1 per cent in 2018 and 10.8 per cent in 2019, according to the Sociedad Hipotecaria Federal, which publishes Mexico’s house price index. Since the pandemic, growth has been slightly curtailed: last year annual growth was 7.5 per cent.

However, due to rapid development in recent years, estate agents report that buyers are able to negotiate harder for discounts on many of the area’s new-build condos.

Sixty kilometres south of Playa del Carmen, Tulum is a relaxed tourist haven famous for its Mayan ruins, and its “eco-chic” vibe — a magnet for tourists, celebrities and influencers who avoid the high-rise resorts, frat bros and glow parties in Cancún and Playa del Carmen during spring break. 

In the 1990s, Tulum was little more than a bus stop for tourists visiting the Mayan ruins on the coast. Even in 2013, when Carlo Toluzzi, a partner at estate agents Engel & Völkers Playa del Carmen, bought some land between Tulum town and the beach to build a house for himself, “there was nothing but jungle”, he recalls. “I thought, ‘Am I making a mistake?’ Because maybe in 10 years I am going to be alone in the jungle.” His fears were unfounded — Tulum now has a population of around 40,000. Prices in Tulum range from between $2,000 to $4,000 per sq metre, compared with $3,800 to $7,000 per sq metre in Playa del Carmen, according to Sotheby’s International Realty.

Younger buyers are particularly keen on studio apartments, Toluzzi says, where they will work from home and then rent out when they leave. A studio within walking distance of the beach sells for around $100,000. 

In January this year, the region was moved from yellow to orange under Mexico’s Covid-19 traffic-light system, which means bars and restaurants have to reduce capacity to 30 per cent, but beaches remain open. “The virus is here as well, I’m not going to deny that, but everything’s outdoors, everyone follows protocols; it’s just a different way of dealing with it,” Toluzzi says. 

Liszett Torres, of Sotheby’s International Realty, says her Riviera Maya office sold more homes last year than it did in 2019, and agrees that Tulum is the current hotspot of activity.

But, “there is too much supply; there is more supply than demand, so the buyers are in control.” There are currently 380 developments in Tulum offering apartments for sale, built in the past three to four years, she estimates.

The market in Tulum is largely dominated by presales, and buyers who are prepared to make a larger deposit can get a significant discount. Torres says that in 2019, these discounts were usually between 2 and 7 per cent, depending on the size of the downpayment, but now could be higher. For example, Amour, a development set to open in Aldea Zama in 2022, is on sale with a 20 per cent discount if buyers make an 80 per cent downpayment.

There can be drawbacks with presales, says Toluzzi. “If you buy a new development that is going to be finished in two years, you have to be aware that there might be new developments next door by that time.” 

And in a few years, Tulum could look very different indeed. In October 2020, Mexico’s president announced plans to open a new airport there in 2023; meanwhile construction is already under way on the controversial 1,500km “Mayan Train” around the Yucatán peninsula.

At the same time, campaigners have raised concerns about the ecological impact of development on the area’s mangrove forests and unique underground river system. Less than 20 per cent of Tulum is connected to a sewer. 

“It’s this weird thing where people with a lot of money just want to relive the hippy time,” says Toluzzi. “But the sad thing is that a lot of people are not aware about the destruction.”

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