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| Feature |
Southern Exposure
Michelle Seaton
01/01/2008
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DINE has several other projects in Punta Mita, including the
Las Palmas condos, which list for $1.175 million and up and offer access to a
golf course designed by Jack Nicklaus. Another effort, El Encanto, features
single-level condos that have only a sliver of ocean view, but boast plasma TVs,
tricked-out kitchens and more bathrooms than bedrooms. These cost $1.45 million,
and have been sold and resold. The St. Regis hotel will open in Punta Mita this
year, and a third hotel will open in 2010. A private airstrip and a small
planned village in the hills are also on the drawing board.
 The flow of money seems endless. As long as there is a bit of
land to sell, there is money to be made. There is so much construction here that
every morning at 8:15, 1,500 workers from Puerto Vallarta show up in the backs
of flatbed trucks, waiting to clear the security gates to begin gardening,
building and cleaning for the day. Most of the laborers earn about $7 a day.
In five years, when the build-out on Punta Mita is expected to
be finished, this once-sleepy peninsula will feature 800 residential units in a
mixture of four-star hotel suites, luxury villas, golf homes and beachfront
mansions. The least expensive hotel room will cost more than $1,200 a night in
low season, and the largest villa will cost tens of millions of dollars.
Beach Bubble?
Investors funding and building developments like Punta Mita
have, to date, enjoyed a strong run. The dramatic appreciation that has defined
this gold rush, however, leads one to wonder whether a bubble is about to burst.
Some investors, especially those who have lived and worked in these nations for
years, think the peak may have been reached. Jeff Vance, who owns property
in Panama, says that Panamanian builders are no longer buying new plots of land
to develop because they think prices are too high. "They are saying, ‘This piece
of land was $10,000 a few years ago and now it’s $100,000. It’s too much.’"
 | TOURISM OFFICIALS cheer the planned Trump Ocean Resort in Baja
California, Mexico, but some developers worry about profits. |
Additionally, what was once a niche real estate opportunity has
now blossomed into a full-blown land rush, attracting both legitimate and
not-so-legitimate developers. "Costa Rica is done already," Vance says. "The
relaxed surfer guys from Laguna Beach [Calif.] have moved down there, and
everyone is calling himself a developer."
The niche opportunity now runs the risk of becoming
overexposed. For example, there is the arrival of Donald Trump. In 2004, the
real estate development company Irongate, based in Los Angeles, purchased
property on Rosarito Beach in Baja California, Mexico. Then Trump signed onto
the project as a brand name, and Irongate held sales events in the area to
attract buyers interested in the residences, which range in size from studio
condominiums to units with two bedrooms. "We’ve sold $115 million in one day,"
says Trump, who, with characteristic modesty, labels it "the biggest sale in
Mexican history."
The arrival of Trump on the investment scene means one of two
things, depending on one’s perspective: Either the land rush in Latin America is
solid, or it has peaked and is in decline. Tourism officials are thrilled that Trump has brought his name and publicity machine to the real estate scene in
Mexico, but some developers believe too much publicity and development all at
once will threaten the steady profits they hope to reap over a period of many
years.
Letvia Arza-Goderich, a member of the Mexican Tourism
Development Association and a lawyer with the Los Angeles firm Ballard Spahr
Andrews & Ingersoll, is betting on the side of a solid land rush. "The fact
that Trump is investing in these properties means that this is not a reckless
investment," she says. "It’s a phenomenon. Whenever Trump comes near a place,
not only does he facilitate sales there, but the neighboring properties benefit.
Their sales improve as well."
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