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Surge in Interest in Secondary Luxury Homes Market

A recent article in the New York Times entitled As Markets Waver, the Rich Park Money in Luxury Homes, suggests that there is an increasing interest by affluent Americans for a second (vacation) home, and for many that may mean outside of the United States. Mexico has traditionally been a favorite destination for both Americans and Canadians, because of its close locality to major city and markets, and for many other good reasons as well.

NYT staff writer Kerry Hannon states that, “While owning residential real estate is typically part of a diversified investment portfolio, what is different in the last year or two is the role the uncertain economy is playing in making purchasing decisions. Many high-net-worth investors are plunking cash in a second or third high-end residence as a safety net, stemming from concern about a wide range of economic and political factors. These include the possibility of rising interest rates in the United States, China’s slowdown, low oil prices, conflicts in the Middle East and the reality that equities have been lethargic and bonds have floundered in a bear market. People with money are keen to diversify it beyond the U.S. stock market in particular. A vacation or second or third home in a sunny Shangri-La is an increasingly appealing option. It’s a hard asset that doubles as a lifestyle enhancement and that cushions the buyer from any shocks U.S. markets may be in for.”

U.S. stock markets are at all-time highs, so many may be seeing this as an opportunity to take out some of their gains and further diversify their portfolio, while also obtaining they can use and enjoy with their families.

Hannon continues, “While most ultra-high-net-worth individuals opt for a second or third home in the country where they reside, an increasing number of people with net assets of more than $30 million are buying homes in other countries, according to a 2015 report by Wealth-X and Sotheby’s International Realty. International homes account for 16 percent of non-primary ultra-high-net-worth residences, compared with 11 percent in 2010. The middle-market buyers are spending $250,000 to $500,000 on single properties, but high-net-worth individuals are spending $1 million or more in many markets…”

These are market price ranges where Puerto Vallarta and Riviera Nayarit currently show significant value. The $250,000 – $350,000 price range has the most activity in recent years, and the current inventory offers plenty of options with city, golf, marina, hillside or beach locations. For the over $1 million market Punta Mita and the north shore of Banderas Bay has recently seen a significant upturn in activity and realtors and agents, from the leads they are receiving, are predicting that it will certainly continue into the upcoming high season.

Punta Mita featured in Forbes

Punta Mita, located near Puerto Vallarta on the most northerly point of Banderas Bay, received a very big boost this week from Forbes, with a lengthy article by luxury experience writer Jim Dobson. The article, entitled, The Future of Punta Mita, the Secret Retreat for the World’s Top Tech Billionaires, portrays the luxury resort destination as a favorite of many in the tech industry, with several executives from companies such as Apple, Yahoo, Amazon and Qualcom, as being homeowners within the development. The article also emphasises the substantial investments of Bill Gates, through his company Cascade Investment Group, which owns the Punta Mita Four Seasons hotel and recently purchased a second hotel development site within the development that may end up being a second Four Season hotel, though geared more for adults rather than families.

Punta Mita does seem to have the interest of tech executives, as it is a only a direct, three-hour-plus flight from San Francisco bay area to Vallarta, and then a just a short drive to the most northerly point of the bay. As the managing director of Punta Mita Andrés Rossetto says, “Some homeowners who own tech companies in the Bay Area have joked that it is often quicker and easier to get to Punta Mita than driving to Lake Tahoe for weekend getaways with the family.”

Punta Mita has, for more than five years now, hosted the Mita Tech Talks, a two-day conference (scheduled for February) that unites people from Silicon Valley and Mexico to discuss tech industry initiatives and forge relationships. The conference has proven to be instrumental in building recognition for Punta Mita with the U.S. tech communities, especially around San Francisco.

And from recent conversations with a few real estate agents in Punta Mita, interest of tech executives has increased in recent months, with even the recent Trump win seeming to play in favor for further interest in the resort for serious real estate buyers.

Capital Gains Tax on the Sale of Homes in Mexico

If you are selling your home in Mexico it is of the utmost importance to know, before you sign an agreement or offer to sell, how much you are going to pay in Capital Gains Tax (ISR) because this amount is going to be deducted from the price of sale. Before signing a private sales contact or offer, make sure you have a WRITTEN calculation of the Capital Gains Tax from your tax consultant or your notary. Make sure you review the calculation and confirmed with your consultant that there are no other ways to reduce the amount of Capital Gains Tax. In many cases, we have seen that with good tax consultant and a little knowledge of how the Capital Gains Tax is calculated (and a little pressure) the amount of tax can be significantly reduced.

Do not wait until the closing day to review the calculation of the Capital Gains Tax with the Notary because it will probably be to provide information to make changes and because in the agreement/offer that you already signed you already agreed to use the notary to handle the closing (and for this, the notary tax calculation). From the moment that you agree to put your home up for sale, you should be very clear how much of your asking price is going to be going to pay the Capital Gains Tax and the options you have to reduce this tax to the minimum legal amount.

This article is a summary of how Capital Gains Tax is calculated on the sale of a home if you are:

A Mexican tax resident, or
A Foreign Tax Resident (person or entity)
We hope this article is of use to you and helps you better understand how Capital Gains Tax on the sale of a home is calculated, as well as the options that are at your disposal to reduce this tax to the minimum legally allowed.

First, to understand why Capital Gains Tax is different for a Mexican tax resident and a foreigner (foreign tax resident), as well as to understand what the Mexican tax authority understands as a “sale”, we must go over some definitions:

“Sale”: For tax purposes, the sale of a property occurs when:

A transfer of ownership, even when the selling party hold back delivery of title.
A transfer of beneficial trust rights when the property is held in trust.

“Fiscal Residence“: You are considered a tax resident in Mexico when you set up your home in Mexico. However, when you have a home in another country, you´re considered a tax resident in Mexico if Mexico is where your “center of vital interests” is.
“Center of Vital Interests”: You are considered to have your “center of vital interests” in Mexico when more than 50% of your total income comes from Mexico, or when you have established Mexico as your “main center of professional activities”.

You are not considered to have a fiscal residence in Mexico when you only temporarily use a home for tourist purposes and your “center of vital interest” is not in Mexico.

Sale of a home by a Mexican Tax Resident

How is the Capital Gains Tax calculated?
The formula is: Income – Cost – Deductions = Capital Gains

a) Income. – The income is the amount of the sale. If a value is not given, an authorized tax appraiser will determine the amount.

b) Cost. – The cost of the home is the cost properly documented purchase, adjusted for inflation and. The cost of construction includes any properly documented improvements. Notes and Special Rules of construction cost includes:

When your deed of purchase (escritura) does not mention the value of the construction, you can use 80% of the value of the deed or the proportion used in the appraisal that was given at the time of purchase.
Construction costs depreciated 3% annually and cannot be 20% below the initial cost. The resulting cost will be adjusted for inflation.
Improvements in the property will be subject to the same depreciation rules as set above and must have the proper supporting documents (facturas).
Maintenance is not a deductible cost.
If for some reason the seller cannot verify the cost of construction or improvements made after the purchase, the seller can use 80% of the value of an appraisal of such improvements provided that such appraisal is properly registered and allowed by the notary. The registry of this appraisal must conform to municipal registry requirements.
Your Cost is always calculated in “pesos” per Mexican law. Even though many properties in Mexico are listed with dollars sales values, all calculation of taxes are based on the conversion of dollars into pesos. Recently this has had some major impacts on what a seller “thinks” his cost is and what it really is.

The follow example will shed clarification on this:
Bob purchased a condo for $ 300,000 dollars in June of 2006. At that time the peso was at 11 to the dollar and therefore Bob’s deed shows a purchase value of $ 3,300,000 pesos ($ 300,000 dollars x 11). This was at the height of the real estate market in most tourist destinations and Bob paid top dollar for his condo. Bob has enjoyed his condo for many years but now wants to sell it and just recuperate his initial investment, so he signs an agreement to sell it for $ 300,000 dollars thinking that “I will not have to pay tax because there is no gain”. Unfortunately for Bob, the peso today is at 20 and a $ 300,000 dollars sales value is now equal to $ 6,000,000 pesos. Without figuring in inflation, Bob is now showing a capital gain of $ 2,700,000 pesos ($ 6,000,000 pesos sales price less $ 3,300,000 purchase price) and is being asked to pay a capital gain tax of 35% or $ 945,000 pesos ($ 47,250 dollars). Since Bob cannot close this deal unless the notary withholds this amount, he ends up selling for a significant loss. If Bob would have known before he signed a sales agreement that this was the capital gain he was looking at having to pay, he probably would have adjusted his price up to compensate for the tax withholding.
There are some other rules that apply to determine the cost of construction and we recommend that you check with a consultant on which may apply to your case.

a) Deductions.- Deductions include:

Expenses and fees of the notary paid for the purchase and sale.

Local tax on sale of property, paid by the seller.
Payments made on the appraisal of the property.
Commissions paid on the purchase or sale of the property.
The above deductions must have the appropriate supporting documentation (factura) and should be adjusted for inflation.

a)Capital Gains Once you have subtracted the Costs and Deductions from the Income, you will have what is considered as your Capital Gain. Over that amount you will apply a tax rate of between m 1.92% to 35% depending on the amount of the Capital Gain. As a general rule, 35% begins to apply to amount of Capital Gain above $ 250,000 pesos (About $ 13,000 dollars), so as a rule of thumb just use 35%.

As mentioned above, on the sale of a home by a Mexican Tax Resident (physical person), as well as for Foreign Tax Residents, the notary public that handles the sale is responsible for calculating and withholding this tax. Before you agree to use a notary for a sale, make sure you know what he or she will be withholding, and make sure that you have check that calculation with a tax advisor.

Exemptions on Capital Gains Tax on the sale of a home given to Mexican Tax Residents (Not Foreign Tax Residents)
Physical persons that are Mexican Tax Residents can exempt the first 700,000 thousand “UDIS” (in October 2016 amounts to approximately $190,000 dollars) of the Capital Gain on the sale. To understand how this is calculated, take a look at the following example:

Case 1: When the amount of the sale does not exceed 700,000 “UDIS” (approximately $190,000 dollars for October 2016), the sale is fully exempt from Capital Gains Tax.

Case 2: If the sale exceeds the above amount, you must pay tax on the amount exceeding that amount ($ 190,000), determining deductions “in proportion to the amount obtained by dividing the excess of the total amount of the sale.” How? Here is an example:

For purposes of simplifying, the calculations are made taking the US dollar currency, but it is desirable to emphasize that all calculations will be made in pesos.

Original purchase price: $300,000 USD

Sale price: $1,000,000 USD

Capital Gain. Which is equal to $810.000USD as a result of reducing the allowable exempt income of $190,000USD ($1,000,000USD less $ 190,000 USD). In this case, 81% of your income will be taxed ($810.000USD between $1,000,000USD). For your acquisition, you can apply for the cost $243,000USD or 81% of your purchase price ($300,000USD).

Gain of capital.- At $810,000 (Capital Gain) is subtracted $243,000USD (cost) is giving a profit of $567,000USD for an amount on which the tax will be calculated.

Exemptions notes:
The exemptions contained herein only can be used once every 3 years.
Another important consideration is that the Mexican Tax Resident must report the sale on his or her annual tax return even though no tax is paid; otherwise the partial or total exemption of income would be lost, with the inevitable consequence of having to pay an additional tax.
In addition, you should consider the notaries/commercial notary must issues digital tax receipt (CFDI) which serves as the proper document to prove the purchase price paid (cost) so that it can be deducted from a future sale. The deed alone now is not enough to prove your cost basis in the property and you must have a CDFI on any purchase after December 31st, 2013.
To prove “tax residence” you must provide the Public Notary with any of the following documents:

Voter Identification (INE)
Electrical or phone receipt.
Bank statement of any recognized bank or an investment fund.
Note: The documentation must be in the name of the taxpayer, spouse, mother, father or child of taxpayer.

Sale of a Home in Mexico by a Foreign Tax Resident
If you are not a Tax Resident in Mexico and you are selling your home in Mexico, you have 2 options for the Capital Gains Tax, these being:

Option 1 General rule: You can pay 25% of the total amount of the sale (without subtracting from the Income any Costs or Deducitons). We have seen 1 case in the last 20 years where someone opted to do this, so it is not really used; or

Option 2. Apply 35% to the Capital Gain, using the same formal we saw for the Mexican Tax Resident above; this being Income – Cost – Deductions = Capital Gain.

It is worth noting:

Foreign Tax Residents cannot apply for the benefit of the exemption rules.
Option 2 only applies when: a) The seller has a legal representative in Mexico, or b) the transaction is formalized through a public deed (before a notary).
The requirement also applies for the notaries to give a digital tax receipt (CFDI), which will serve as an appropriate document to prove what the purchase cost was when it comes time to sell.
Impact of not having a CFDI for the buyer
Buyers that have purchased property after December 31st 2013 must not only have the deed to prove what the Cost of their property was, they now also must have the CDFI that shows such costs. If you have bought property after December 31st, 2013 and do not have the CDFI to prove what you paid for it, the notary handling the sale will be able to deduct your purchase price (Cost) from the sales income, which will dramatically increase the Capital Gains Tax you will pay at the time of sale. The bottom line is if you buy property the closing documents must include the CDFI that properly states the value of your purchase.

If you are a Foreign Tax Resident and do not have a tax ID in Mexico (called an “RFC”), which is required to generate a CDFI, the notary can create what is called a “generic RFC” for you. Please note that some notaries do not agree on this point and will not generate a CDFI for a Foreign Tax Residents that does not have an RFC (which can take months to get some times). If the notary does not agree with issuing a CDFI to Foreign Tax Resident with a “generic RFC”, we suggest that you look at finding one that will.

Before you commit to selling your home by signing an agreement or offer, make sure you know what you are going to be paying in Capital Gains Tax. Also make sure you that the notary you will be using to close the sale has given you a tax calculation and that you have revised the tax calculation before agreeing to use the notary to withhold the Capital Gain amount from your sales price.

This article was written by Gabriela Rojas Jimenez and David W. Connell. You can find more articles and seminars in www.teranrojas.com and www.mexicolaw.com.mx. This article is co-owned by Connell & Associates and TR & Associates and its reproduction requires the written consent of Ms. Rojas and Mr. Connell, who have the rights of this work. Copyright 2016. This article is a general explanation of tax issues valid at the time of publication. For each particular case we recommend obtaining written information from the applicable fiscal responsibilities of your case.

Capital Gains on the Sale of Real Estate in Mexico

Anyone considering buying or selling a property in Mexico should be aware of how the could be subject to capital gains taxes. Our article regarding this subject, originally written by local attorney David Connell and fiscalist Gabriela Rojas, has just been updated to reflect recent changes in the tax law.

“If you are selling your home in Mexico it is of the utmost importance to know, before you sign an agreement or offer to sell, how much you are going to pay in Capital Gains Tax (ISR) because this amount is going to be deducted from the price of sale. Before signing a private sales contact or offer, make sure you have a WRITTEN calculation of the Capital Gains Tax from your tax consultant or your notary. Make sure you review the calculation and confirmed with your consultant that there are no other ways to reduce the amount of Capital Gains Tax. In many cases, we have seen that with good tax consultant and a little knowledge of how the Capital Gains Tax is calculated (and a little pressure) the amount of tax can be significantly reduced….”

You can read the full article here.

5 Homes for Sale in Puerto Vallarta with Amazing Swimming Pools

Luxury homes have long been a characteristic of the Puerto Vallarta Real Estate Market. These are the top 5 amazing pools matched with breathtaking views in high-end homes for sale in Puerto Vallarta and listed on MLSVallarta.com.

1. Villa Bahia in Conchas Chinas. 6 bed, 5 baths.

Built with affection and vision, this luxurious villa is a sublimely colorful, indoor/outdoor coastal retreat. This newly constructed property showcase overlooking Vallarta’s south shore and has a large sundeck with a freshwater infinity pool and a saltwater system providing a soothing and luxurious mix of heated waters.

2. Villa Mandarinas in Mismaloya. 8 bed, 9 baths.

Designed and built by Alberto Alvarez, as seen in Architectural Digest and Leading Estates, this villa is a stunning ocean front estate near the jungle village of Mismaloya. The villa features a man-made beach platform and sea pool at the ocean’s edge.

3. Casa Velas in Lower Conchas Chinas. 4 bed, 6 baths.

Done in a Mediterranean architecture style and professionally decorated and appointed with original art work and furnishings, this spectacular beachfront luxury villa is located in the prestigious and famous Conchas Chinas residential area.

4. Villa Monterrey in Upper Conchas Chinas. 4 bed, 5 baths.

Find sensual curved lines in this Mediterranean architectural concept with a sublime tropical decor in the heights over the Zona Romantica and Los Muertos Beach.

5. Casa Redonda in Conchas Chinas. 6 bed, 6.5 baths.

Designed by internationally acclaimed Austrian-Mexican architect Alejandro Zohn, this home has a spacious sundeck terrace, lovely infinity pool and a grand palapa covered mirador/outdoor living area overlooking the Banderas Bay and parts of Puerto Vallarta.

MLSVallarta has more nearly 1,500 properties listed for sale in or near Puerto Vallarta, Riviera Nayarit, and Costalegre.

You also may be interested in:

Which Puerto Vallarta high-end villa would you choose? Share your picks in the comments below!

New FIABCI Mexico President – Silvia Elias

Recently, Puerto Vallarta’s Silvia Elias of PV Realty, was unanimously elected to be the new president of FIABCI, (the International Federation of Real Estate Professionals), for Mexico. FIABCI is a real estate professional network with over 3,000 members in 65 countries, and is the most representative organization for the real estate industry in the world.

Silvia has been a leading broker in Puerto Vallarta for many years. She served as the president of AMPI Puerto Vallarta, and also as regional coordinator for AMPI national. She has earned many real estate designations and certifications during her professional real estate career.

This is not just good news for Silvia and PV Realty, but for Puerto Vallarta and the region as well. Silvia is featured above (5th from the left) with other FIABCI and AMPI members.

COMING SOON to PV’s Romantic Zone – PAVILION

Currently under construction and marketed by Elengorn Realtors in the heart of downtown Vallarta’s Romantic Zone, is the newest condominium project of the developers CRAGSA entitled Pavilion. As with their other successful projects such as Zenith, Pavilion offers buyers exceptional design, quality and style at affordable prices. And with this central location, new owners are minutes from the beach, shopping and some of Vallarta’s finest restaurants. Six levels of construction with 61 units, (studio to two bedroom units), including ground floor commercial spaces, and a common area rooftop pool for residences. Complex will have underground parking and storage lockers available for purchase, interior courtyard, 20 m swimming pool, solar panel heated Jacuzzi, Fitness room, and 24-hr security. Prices start at just $116,440 USD with pre-construction discounts offering 18% off the list price. Delivery is scheduled for the end of 2017, just before Christmas. For more information contact Elengorn Realtors.

Million Dollar Condos in Puerto Vallarta-Riviera Nayarit

For those seeking the ultimate second home or residence in the Puerto Vallarta-Riviera Nayarit area, there may be no better option than one of the million dollar condos currently listed for sale on MLSVallarta, the #1 source for Puerto Vallarta and Riviera Nayarit real estate information.

These luxury properties offer the best in finishes, features, amenities and of course, bay views. Take a look at these eight, currently listed on MLSVallarta, high-end condominiums available for a million dollars.

1. La Cruz de Huanacaxtle, 3 bed, 4 baths, $1’090,000 USD: Solana Residence 1

Located at Real del Mar overlooking the beauty of the ocean, magical sunsets, and splendid vegetation, this contemporary Mexican residence includes large terraces with jacuzzi and, living and dining area with marvelous views.

Look for other condos for sale in La Cruz de Huanacaxtle

2. Flamingos, 4 bed, 4 baths, $1’080,000 USD: Quinta del Mar II PH 602

Situated in the newest tower of Quinta del Mar, this condo is facing directly onto the ocean and has stunning views all up the coastline. Very uniquely designed, this unit is in a semi-circular shape providing an open style and having a softer and more comforting feel.

3. Flamingos, 2 bed, 3 baths, $1’058,308 USD: Villa La Estancia 2202

Close to Nuevo Vallarta and steps from the beach, this hacienda-style condominium has travertine marble flooring, maple wood cabinetry and doors, full furnishings, and common pool, SPA and, gymnasium.

Look for other condos for sale in Flamingos

4. Amapas, 3 bed, 3 baths, $1’050,000 USD: Horizon PH8

This unique Horizon penthouse is a tropical melding of space, light, and drama with mesmerizing views of the city, jungle, and the bay. The condo has spacious and generous spaces, an upper terrace provides an additional entertaining area complete with a private pool.

5. Amapas, 4 bed, 4 baths, $1’050,000 USD: Avalon 703 704

This Avalon unit could be the perfect tropical condo with a large private pool, extra large living spaces, complete service area, and decor in every room that allow to feel it more like a private residence than a condominium.

Look for other condos for sale in Amapas

6. Punta de Mita, 6 bed, 6.5 baths, $994,000 USD: Bolongo 4O

Beautiful condominium with world class finishings, fully equipped kitchen, laundry area, and ample terrace with spectacular view of the bay. Common areas include beach club, pool, gym, and more!.

7. Punta de Mita, 3 bed, 3.5 baths, $993,000 USD: Punta Vista I, PH 602

This luxury beachfront penthouse on two storey has unobstructed views of the ocean, mountains, and the Marietas islands. The pool and hot tub of Punta Vista are only shared by 12 units, private access to the beach right in front of the pool. This condo has marble floors throughout, kitchen with granite countertops and stainless steel state of the art appliances, and a huge roof terrace with sitting palapa area.

Look for other condos for sale in Punta de Mita

8. Romantic Zone, 3 bed, 3 baths, $979,000 USD: Molino de Agua 906

Luxurious beachfront development in Downtown Puerto Vallarta. This condo is a single level unit which includes over 3000 square feet of living spaces with grand finishings such as marble floors throughout, granite countertops, hand-crafted cabinetry, and stainless steel appliances. You can take a walk on the Malecon or to the Romantic Zone where art, nightlife and shopping come together to complete an exciting lifestyle. Stunning town and ocean views.

Look for other condos for sale in the Romantic Zone

MLSVallarta has more nearly 1,500 properties listed for sale in or near Puerto Vallarta, Riviera Nayarit, and Costalegre.

You also may be interested in:

Which Puerto Vallarta-Riviera Nayarit million dollars condo would you choose? Share your picks in the comments below!

7 Puerto Vallarta Beachfront Condos for Under $150K

Looking for a beachfront condominium for under $150,000? Well, it is possible in Mexico, and more specifically, in Puerto Vallarta.

MLSVallarta, a MLS service for Puerto Vallarta, Riviera Nayarit and Costalegre real estate agencies and developments, currently lists seven condominiums for this price (or less) that are situated on the beach. So if your budget is tight but you want to enjoy ocean views, the sound of waves breaking, cooling sea breezes as well as easy access to the beach, check out these properties!

Sea River, Puerto Vallarta Hotel Zone

Sea River features amazing views of the Banderas Bay, Puerto Vallarta’s downtown, and beach.

The building offers all of a resort amenities, with restaurants on site, common pool, tennis courts, gym and 24 hours security. Conveniently located, this complex is only 10 minutes from downtown and the airport. All kind of shops and services are around it.

Sea River has one bedroom one bath turn-key apartments, ideal for a vacation or investment/rental property.

Current Sea River condos for sale:

Look for other condos for sale in Puerto Vallarta Hotel Zone

Girasol Sur, Playas Gemelas

Girasol Sur is located in the middle of Playas Gemelas, one of the most beautiful beaches in Puerto Vallarta. The complex features great views of the ocean, where you will enjoy magnificent and stunning sunsets.

This traditional Mexican building is the option for those who want to be surrounded by jungle and the sea but out of the hustle of the town. 15 minutes away from Puerto Vallarta Old Town, Girasol Sur has a swimming pool, gym, game room, library, laundry, deli shop and a restaurant-bar in front of the ocean.

In this place, you will find some fully furnished studio units ready to move in or use it as a vacation property.

Current units for sale in Girasol Sur:

Look for other condos for sale in Playas Gemelas

MLSVallarta has more nearly 1,500 properties listed for sale in or near Puerto Vallarta, Riviera Nayarit and Costalegre.

You also may be interested in:

Which affordable Puerto Vallarta beachfront apartment would you choose? Share your picks in the comments below!

Costalegre: So close and yet so far…

There has been quite a bit in the news lately about Costalegre, the area south of Banderas Bay and still within the state of Jalisco, that runs from the southern tip of Banderas Bay (Cabo Corrientes) southeasterly to Barra de Navidad (and Jalisco’s border with the state of Colima). It is, for the most part, a spectacular coastline that has avoided major real estate development, comprised of just a few, small beachside towns scattered along its coastline, interspersed with a number of very high-end, quite private, luxury resorts. But some of the recent news reports have been rather vague as to where these new, proposed developments may be located and what they may entail. And that is understandable, not many are familiar with this rather unpopulated region of Mexico and good information is not always forthcoming.

Why the absence of development? Primarily because of the lack of infrastructure, such as adequate highways linking Costalegre to potential national visitors in major Mexican cities, and little-to-no access via air to attract international visitors. Costalegre is simply hard to get to. And secondly, there are some people who would prefer that it remains just as it is.

Costalegre begins with the coastal mountain peaks of Cabo Corrientes, lavishly covered in lush-green tropical forest, that quite precipitously falls to a rocky coastline interspersed with small coves and picturesque beaches. As the terrain slopes downward and southward it becomes flatter and dryer, more arid, nearly dessert-like. This continues on for miles, nothing but beach and saltwater lagoons, with just a few outbreaks of rock until reaching Chamela where the coast once again becomes rugged and the foliage more lush, extending right down to Barra de Navidad, the southern border of Costalegre.

Costalegre encompasses nearly 200 km of coastline but the largest coastal community (Barra de Navidad) has only about 8,000 residents. There are, however, portions of it that are not conducive to development. About 50 km of its coast consists mostly of estuaries and arid land networked with manmade waterways so it can be useful for farming. Another 40 km are privately owned, with owners who seem to have little or no intention of selling or developing, at least not anytime soon. Even so, this still makes Costalegre’s developable land bank similar in size to that of Banderas Bay.

Information regarding Costalegre is hard to come by. The principal players and landowners in the region tend to keep anything concerning the region to themselves, partly to protect their privacy and also, to some degree, inhibit development. It is very much like a private club that few are privy to and that’s the principal reason it has remained as it is for so long. There are a handful of very large landowners who are quite content to see things remain as they are. They have established their own urban plans that involve very low-density development, and prioritize protecting the ecology and natural environment. Many of their self-imposed regulations have been adopted by the local municipalities (which, actually, are more like large counties) and are now part of their “Plan de Desarollo,” or ordinance plan.

As the government works on infrastructure and better access, some real estate development is underway — at differing stages — by a few “players” in the region. There are six to eight major ones with parcels of around 1000 hectares along Costalegre. To put that in perspective, Punta Mita, probably the most well-known mega-development near Vallarta, has 600 hectares. These owners dominate the region and have considerable influence regarding the region’s development. A number of them have created a businessmen’s association for the region (Asociacion de Empresarios de Costalegre) to work with the government to improve regional infrastructure and assure that there are strong, enforceable rules in place regarding development. There also are probably another 10 smaller players with 200 to 500 hectares, interspersed with ejidatario communities along this whole coastline.

With these plans in place and the land, still mostly ejido, in the process of being regularized, change is taking place, although slowly. It seems that whenever the real estate market heats up in Vallarta, talk also starts up about Costalegre. But when the markets slows down, talk virtually grounds to a halt.

Costalegre, for the most part, is a long-term investment. There are a few new players who want to see growth, and seem to share a common local vision for low-density, high-value real estate development. The Jalisco state government now seems to be more motivated, envious of all the attention Riviera Nayarit has received in recent years, to see more development taking place within Costalegre. But in the past they’ve been held back by a lack of funding for infrastructure projects, and concerns of ejido property owners and environmental groups active in the region.

Current Status of Costalegre Infrastructure

The two closest international airports are in Puerto Vallarta and Manzanillo, meaning that a two-plus-hour drive is still necessary to reach much of Costalegre. The government has committed to a number of projects — the first being the construction of a new international airport near Chamela and located just behind the development of Xala. It is slated to be ready in 2017, and capable of receiving aircraft with up to 170 passengers. The only marina along this coastline is located near Barra de Navidad within the development of Isla Navidad, although there are proposed plans for one eventually in Chamela.

But plans are in place and work has begun to improve existing infrastructure such as the existing highway system. The first step involves widening the stretch of highway from Boca de Tomatlan to El Tuito, the most difficult part of the whole Costalegre highway as it winds south of Vallarta through the mountains to the coastal plains. Work has been on and off over the years, and when completed it could cut at least a half hour of driving time to principal destinations in Costalegre from the north. But that doesn’t solve the biggest bottleneck, which is the Vallarta airport traffic that has to first to get around and through Vallarta, and then over the coastal mountains of the Sierra Madre. That alone can take well over an hour.

In the south, a second phase involves improving and widening the highway from La Huerta to Melaque, which would give faster access to Costalegre from Guadalajara, and cut access time to about three or three and a half hours for most destinations in Costalegre.

Popular Coastal Communities

Along the coastline of Costalegre real estate inventory seems to be situated either at the low end or the very high end of the market, with not a lot in between. Lower-to-moderately priced properties can be found primarily in Barra de Navidad, (Costalegre’s largest coastal community), Melaque, and La Manzanilla, where there are good-size expat communities, primarily American and Canadian, living either full- or part-time.

Real Estate and Hotel Developments

The most recognizable development within Costalegre is Careyes, a high-end luxury home development with an anchor boutique hotel. There is also Las Alamandas to the north of Careyes, to the south is Cuixmala and Tamarindo, while at the southern most point of Costalegre, is Isla Navidad.

Careyes, popular with American celebrities and European royalty, was founded in 1968 by Gan Franco Brignone and continues today under the guidance of his son Giorgio. It is built around a beachfront hotel with 40 luxury homes and assorted bungalows perched on the cliffs surrounding it. The Brignone family, in building and owning a number of these homes themselves, created what has become known today as the “Careyes style” of architecture, where the Mediterranean meets Mexico. For years its elite visitors have stayed in these homes, or “casitas,” or the Careyes boutique hotel. Development has been slow, but purposeful. The result is one of the most coveted coastlines in the world.

Las Alamandas, situated in the northern region of Chamela, is owned by Isabel Goldsmith, where she has her home and a small boutique hotel with only 16 suites accommodating up to 42 guests, all located on 600 hectares of private land. It is a self-contained, ecological reserve with four pristine beaches and lagoons, but she does not offer any real estate purchase opportunities.

Cuixmala, just 10 minutes south of Careyes, was the private estate of British financier James Goldsmith. The resort consists of over 1,000 hectares and is set within 13,000 hectares of the Cuixmala Biosphere Reserve made up of tropical forest, lagoons and spectacular beaches. Today it is owned and managed as a very high end luxury resort hotel by his family. Goldsmith donated much of his land for the Chamela-Cuixmala Biosphere Reserve, forming a foundation in cooperation with the National University of Mexico, and the family remains committed to protecting the ecology and environment in this region.

Isla Navidad At the southernmost point of Costalegre within the region of Barra de Navidad, is Isla Navidad, which features two hotels, a full-service marina with 200 slips capable of accommodating boats up to 150 ft. There is also 27-holes of golf designed by Robert von Hagge and real estate opportunities such as golf, beach, and marina homes and condominiums. Isla Navidad is situated on 500 hectares across a small lagoon from Barra de Navidad.

New Projects Under Development

The developments that most of the news stories have focused on recently are The One & Only Santa María in Xala, the Cheval Blanc in Chamela, and a Four Seasons hotel in Tamarindo.

Xala is a large peninsula of land within the coastal region of Majahuas, that has 8 km of beach on its western border and a very large lagoon along its eastern length, totaling 1,200 hectares. It is located just north of Las Alamandas, and when fully developed will consist of a luxury resort hotel (One & Only), residences and condos with amenities such as spas, beach clubs and possibly a golf course. It will be based around a “Hacienda Lifestyle by the Sea” with the master plan designed to incorporate the social and cultural elements of the region including a town “Pueblo” and an incorporated Fisherman’s Village. The proposed One & Only Santa María de Xala resort hotel will consist of seventy-five luxury villas and suites with private pools and the new One & Only Residences. Construction is scheduled to commence this year on the hotel. The new Chamela airport under construction is situated just east of Xala.

South of Xala and north of Careyes, within the region of Chamela, the Moët Hennessy Louis Vuitton (LVMH) Group is developing The Cheval Blanc, a large hotel and residential project that will be part of their luxury hotel collection under the same name. This is a collection of boutique hotels that can be found in places such as the Courchevel French Alps, the Maldives and Saint Barth Isle of France. The master plan consists of 910 hectares of land and will include an 18-hole Robert von Hagge golf course, 68-room Cheval Blanc Hotel and eventually up to 525 real estate units, all either oceanfront or ocean view. The hotel is slated to be complete by 2017 with real estate opportunities to soon follow.

Tamarindo is a 150-hectare development within the region of Tenacatita that is owned by businessman/banker Roberto Hernandez, and was originally developed by Grupo Situr in the late 90s. There were to be 52 estate lots, a golf course and a boutique hotel. The hotel and golf course were built, and while the hotel was in operation it was spectacular, consisting of individual casitas either along the beach or in the lush tropical jungle behind. The golf course is still operational, but few homesites were ever sold and fewer homes were ever built. The hotel shut down a few years ago and is re-opening now as the Four Seasons Tamarindo resort hotel. Whether the original hotel casitas will remain is uncertain, but it will certain be larger, increasing up to 160 rooms. It is expected to begin renovations and construction this year.

With the new airport now a certainty, and these new projects under development, perhaps Costalegre’s time has finally come.

You’ll find more information, and a better map showing the locations of these projects, at MLSVallarta.com. You’ll also find additional information about some of the real estate that is currently listed for sale along this coastline.