The real estate market is experiencing a significant impact on prices, particularly in the luxury residential sector of the country’s major cities and prime tourist residential markets. According to forecasts from JLL Los Cabos, Tinsa, and the Mexican Caribbean E Report platform, the market is currently witnessing its highest levels in the past two decades. Various factors contribute to this trend in the local market, including inflation, increased raw material costs, a shortage of skilled labor, and overall confidence in the market. However, for the luxury residential market, the last three years have seen remarkable periods of substantial capital gains.
Fernanda Sánchez Attolini, the director of JLL’s Los Cabos office, points out that the number of units sold with values exceeding USD 1 million in the dollarized Los Cabos market grew by 300% in 2019 and 267% in 2020. These transactions accounted for a significant 68% share of total sales, which is noteworthy considering that, prior to the pandemic, such high-value properties made up only 56% of the market. Additionally, the most significant capital gains have been observed in properties with values ranging from USD 400,000 to 499,000.
It is essential to mention that these figures do not account for sales of branded residences or properties within master development communities, where average prices can reach an impressive USD 5 to 6 million. Some properties have even been sold last year for a jaw-dropping USD 45 million.
This surge in property values is attracting the attention of buyers and investors to Los Cabos, as it outperforms other regions like Riviera Maya, where residential properties in the same period only experienced a modest gain of 2.2% with a value per square meter of MXN 86,438. In cities such as Mexico City and Monterrey, the property segment saw a slight slowdown in terms of property displacement.Despite the impressive growth, Sánchez Attolini believes that this period is an outlier for the Los Cabos market. Prices are likely to adjust, potentially leading to increased growth in other areas, such as San Jose del Cabo. For now, the luxury residential market in Cabo remains a hotspot for discerning buyers and astute investors seeking exceptional opportunities for capital appreciation.