With the arrival to two powerful developers, Nuevo Vallarta transformed. A big impetus to buyer interest was the creation of two good golf clubs with food and sport.

Recently, I took clients north into the Nuevo Vallarta township, which has continued to grow commercially as well as residentially. The indoor shopping mall is continuing to add more stores as the number of residents and visitors increase each year. Nuevo Vallarta is often named as the one of the two most frequently requested destinations in all of Mexico.

Developed over 30 years ago by the Mexican government, NV failed to attract attention in the beginning because most governments do not know how to develop real estate like professional developers. Every lot was plotted and every curb and street was built. After while, grass grew in the streets and lots were unkempt and over grown. I remember getting lost looking for a notary office in 1997, and none the few people I saw knew where it was, much less where they were.

With the arrival to two powerful developers, Nuevo Vallarta transformed. A big impetus to buyer interest was the creation of two good golf clubs with food and sport amenities. Condos were built around an improved marina and the place began to take off. I think it is fair to say that Nuevo Vallarta has come into its own and without it, Flamingos Beach developments would not have the success started by its older sister.

Boating is a big draw for visitors and residents alike. The marina is considered by my boating friends to be their first mooring or slip of choice. For those who like outdoor activities, there are clubs to join which include, tennis, golf, swimming and sailing. The natural terrain makes biking, running or fast walking a pleasure.

NV is the site for most of the Vallarta Adventure Tours by bus or car. You have your choice of many restaurants. There are a number of hotels with or without all inclusive menus, take your pick.

We saw three properties on this trip, and realized that the product has changed to fit some niches which these particular developers have created to attract buyers. This may not seem unusual to Canadian and American buyers, but niche marketing has not been done by many developers/builders very often in this market.

The art of knowing the demographics of the client base you want to go after has not been used in many projects here previously. I guess there are several reasons for this: there were not a lot of luxury full time condominiums in the market, so whatever was built was popular. The classic rule of more demand than supply kept the builders busy and happy for many years. The successful young builders in the Amapas area had a dream that others would like their look of contemporary interiors, imported stainless wire cabinet fronts, frosted glass bathroom partitions, curved ceilings and indirect lighting. These young developers didn’t conduct any in depth market research to decide to build their break- out designs. Buyers loved this new look…………. and the great view from the property location didn’t hurt either. They sold out their first projects and brought many previous buyers with them on each new endeavor.

Guadalajara builders and developers for a number of years have had opportunities in this resort area with their cash. Without need for mortgages, there was not a list of criteria which the lender would want to know before lending money. This developer money was not borrowed, except perhaps from family and friends. No lender required a business plan, absorption rates, and inventories of supply and demand, title insurance, market appraisal or surveys. These items are driven by the party lending money as a business to a stranger.

Imagine that for the past 10 years, there has been more development in this area with very little commercial lending involved in either the purchase of the land or the construction of the properties. In much new construction, the “lender” has become the buyer who has put 30% down, directly to the developer in most cases, and made payments over the course of the construction, to finance his own condo to be built.

This construction money is not lent to the builder at an interest rate he has to pay; it is the money for the purchase before it is built.

When most of the projects are sold out and the absorption has been good, there has been no immediate need to think of how to attract a certain type of buyer and what they like in a unit. There has been no need to know how many buyers will like the product so it will be sold.

The public has begun expressing concern about the amount of inventory which is being built (and what is announced to be built). Experience tells us that when an idea is successful, more people get into that business and create more products. More products usually slow absorption down and prices soften. The rule of supply and demand applies to all type of products and commodities. One of the ancillary rules then becomes how does one “niche” himself or attract the buyers he needs for his product? More competition requires more of an edge against the competition.

Well, I think I saw some of this new product being built with the forethought of gaining an edge…

What would these builders decide? Beachfront should be the long walking kind, with mountain views visible from the back of the property. Add a lot of services which entertain, exercise, and treat the body and soul, and you have the buyer’s attention. Add parking underground, salt water and fresh water pools, concierge services, business centers, 24 hour security. Take the tropical elements and translate them into clean new products which give a “feel” of living in the tropics: native hard wood beams, pergolas, light colored stone walls, lush landscaping, high ceilings, large bath rooms with double sinks, LARGE closets, and high-speed internet. Include a full upgraded appliance package. Make that list include a stainless steel or color coordinated refrigerator; full oven and stove combination, microwave, dishwasher and disposal. In times past, the developer offered appliances in the sales price of a stove and sink, nothing else.

The buyer is further interested if his “dream” get away offers discounts for buying in preconstruction or soon thereafter. A bigger discount perhaps can be had for paying all or half of the purchase price up front.

The new heavier emphasis on wellness and sports has spawned new properties which operate as a resort hotel with special gym, oriental steam room, special treatment rooms, full range of massage, aromatherapy, aquarobics, tai chi, Pilates, spinning, racquet ball courts, kayaking, a learning center, roof top terraces, on site restaurant and bar.

A really creative idea and enough money can create an ocean front presence without ocean: create sandy beaches and a series of fresh water pools one mile long. Put the condos in the middle of this mile long “ocean front experience” and a four star golf course. Add deeded parking, optional furniture packages. Top it off by offering a two year guarantee of a 7% return through rentals after payment of yearly condo maintenance fees, and you generate some real excitement!

To further add interest, build private pools on the terraces of the condos. Design the bottom floors to be larger inside and have large “yards” even make the ceilings higher so there is more interior natural light. If the developer really knows who he is going after as a target group, he can focus on the baby boomers and the 50 years old or more who are retiring earlier or having more leisure time. This buyer appreciates a more all-adult community, with what is described as American–style health care and a full English-speaking staff. Offer two and three bedroom units with prices from $405,000 USD to under $2,000,000 USD to attract a wider range of pocket books. Add the experience of an American Adult Community developer with the taste and money of a Monterey, Mexico developer, and you have what I believe will be a very popular product.

Harriet Murray

This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller conduct his own due diligence and review.