A Piece of Paradise: Purchasing property in Los Cabos
By Mike Schaible
Los Cabos is unquestionably distinct. It is watched over by the mountains of the Sierra de la Laguna that rise through three environmental biospheres from sea level to its highest peak, Picacho, at 2,200 meters. Home to a cornucopia of indigenous desert vegetation, Los Cabos is a thriving desert with an important distinction as a tropical paradise positioned below the 20th parallel (the Tropic of Cancer) and, as the gods would have it, is enclosed by the Pacific Ocean and the Sea of Cortés.
Diversity is what makes Los Cabos appeal to so many. There are six different areas throughout its 200 square miles, all of which deserve exploring — since each offers a character all its own and a multitude of real estate opportunities.
Cabo San Lucas is where you will most likely find yourself fishing, dancing and enjoying fine dining and unique shopping. One of the most impressive new properties in Cabo San Lucas is the redevelopment of the historic Hacienda Hotel. More than 90 villas and resort residences have been purchased — totaling over $220 million in sales and making Hacienda one of the most successful real estate projects in Mexico's history.
Accessed via a private mountain tunnel linking downtown Cabo San Lucas is Capella Pedregal. The 66-room Capella Resort & Spa will serve as the flagship beach resort and will be complemented by 31 shared-ownership Capella Residences and 20 private, full-ownership Capella Casonas. The highlight of Capella Pedregal will be the resort's 10,000-square-foot, sea-to-summit Auriga Spa and fitness facility.
The beaches of the Pacific Ocean from Cabo San Lucas to Todos Santos can be called the Pacific Corridor. Whales frolic and a fiery sun sets in amber glory; this is where the Baja boom is headed. Mega Resort developments include Cabo Pacífica, which is well beyond the planning stages for the proposed 15 new hotels and condominiums, a mall and up to eight new golf courses on a 5,750-acre tract of land. A new four-lane highway, expanding the Corridor between San José International Airport and Cabo San Lucas, will provide greater access to the Pacific Corridor along with another new four-lane highway from Cabo San Lucas to La Paz.
The end of the Pacific Corridor is Todos Santos. Recently named as one of only 24 Magic Towns in Mexico for its historic and cultural importance, the government will now invest funds for preservation of its history and development of its infrastructure. A drive along the Pacific Corridor is about an hour each way, but should time permit, spend the night in Todos Santos. The Hotel California, The Todos Santos Inn and Posada La Poza are truly unique and special places to visit.
In San José del Cabo, you will find a quieter atmosphere with a historic downtown appeal offering a gourmet's palate many choices for intimate meals and art collecting. The town is protecting its charm by investing in the redevelopment of the downtown area, creating a pedestrian village. World-class golfing is no longer exclusive to the Corridor; with the opening of the all-inclusive community at Club Campestre, golfers can now play on the newest 18-hole Jack Nicklaus golf course in San José. The golf courses at Puerto Los Cabos, designed by Jack Nicklaus and Greg Norman, will be playable in 2008. Buyers now have more choices than ever to own individual building sites as well as luxurious new homes, condominiums and fractional ownership along the magnificent new courses.
The condominium market is exciting in and around San José, with many new developments offering spectacular views from the hills of the Mayan Golf Course. The expansive beaches of San José have witnessed the demolition of the Aquamarina Hotel, and the area is now complete with the opening of the upscale privately owned condominiums and villas at Tortuga Bay. The elegant property's first phase was 95 percent sold out within the first few months of pre-sales, giving testimony to the demands of luxury real estate buyers in Los Cabos.
Locals called the area between San José del Cabo and Cabo San Lucas the Corridor. Its humble beginnings gave no warning of its current opulence. Palmilla, Cabo Real and Cabo Del Sol are the world-class resorts that have made the Corridor famous for golf and luxury. But it was more than 40 years ago when luxury on the beaches began at the Hotel Cabo San Lucas in Chileno Bay and the Twin Dolphin Hotel at Santa María Bay. Today these unique properties are being developed into modern-day resorts befitting their spectacular environments. A private marina and yacht club will be featured at Chileno Bay, along with its two Tom Fazio-designed golf courses. At Santa María Bay, the developers have included 36 holes of golf, which will undoubtedly put Los Cabos at the top of the list of any golfer's dream vacation.
The two newest communities within Palmilla, developed by Del Mar Developments, include Oasis Palmilla and Espíritu Del Mar. Oasis Palmilla is the first gated community in Los Cabos to offer expansive home sites of approximately one acre or larger. The home sites are situated on a 240-acre slope overlooking a Jack Nicklaus 27-hole championship golf course. Espíritu Del Mar, a private mountain escape with beach access and sweeping ocean views, boasts a family fitness and activities complex, 28 acres of open space, 3.3 miles of walking trails and a hilltop meditation sanctuary.
The East Cape region from San José del Cabo to Los Barriles is idyllic. With the Coral Reef at Cabo Pulmo setting the stage for the cape, it is a nirvana for the lucky few. The demand for individual lots is at an all-time high — and that's not going to change. It's just that nice on the cape. Investors who have acquired the largest parcels, and developers who have bought more than 25,000 acres, are planning on sharing the beauty of the area with exclusive beach and golf resorts. The East Cape will be home to the newest and most luxurious real estate on the beaches of Los Cabos.
Los Barriles is unlike Cabo San Lucas or San José del Cabo — or anywhere in between. It is a sandy, laid-back beach town nestled in a calm bay, with a tremendous array of outdoor activities at your doorstep. It is ideal for the adventurous, families and passionate fishermen. The real estate market is explosive in Los Barriles. The unprecedented demand for properties shows no sign of slowing down. With prices a fraction of those in the Corridor, beachfront and residential land is in high demand, and if there were more finished homes, those would be too! Developers and smart investors are taking advantage of the land prices, and it won't be long before the options for real estate in Los Barriles will include new condominiums and hotels.
It is without a doubt that Los Cabos offers something for everyone. It is an opportune time to invest in Los Cabos. Should you wish to explore the possibilities, be sure to visit with a local real estate agent. Smart questions to ask are if they are members of the Los Cabos MLS and AMPI, our regulatory agencies that have access to all available properties throughout Los Cabos.
Baja's Boom — East and West
Twenty years ago, when the Los Cabos Airport was emerging, the visitors to the area numbered less than 100,000 annually and were almost all first-timers. That's when the Baja boom began. Of course, it started slowly — too slow for some and not slowly enough for others. Soon the demand far outweighed the availability of marketable properties.
Of course, back then, those who could see the potential of Los Cabos could only purchase land. Many folks, who just wanted their place in the sun, chose from very few preconstruction condominiums and homes, as there were no finished properties to speak of.
Properties were generally in the heart of the towns of Cabo San Lucas and San José del Cabo, with a few properties in the Corridor joining the two. The Corridor offered only a few residential sites before the arrival of the resort communities of Cabo Real, Palmilla, Cabo del Sol, Punta Ballena, Querencia and El Dorado. It was only the investors with foresight, or the adventurous looking for solitude, who purchased land closer to Todos Santos to the west or Los Barriles to the east. For the most part, on the East Cape, it was the surfers who purchased beachfront properties that provided the perfect waves.
As landowners sold to upscale developers and hoteliers, Los Cabos was transformed into more than just a beautiful place to visit. Developers of the highest caliber began investing millions and millions of dollars — creating what today is one of the most sought-after vacation destinations in the world, providing the most luxurious real estate in all of Mexico.
Today the demand is ever increasing. Los Cabos is maturing as its stunning natural beauty continues to lure. Visitors to the area, now numbering 2 million annually, are finding the perfect property in Baja to call their own. The availability of properties continues to try to meet the demands of the increasing vacation and luxury real estate market. The new path of progress for future developments is along the eastern and western coastlines of Los Cabos.
People who have seen it for themselves will agree that some of the most spectacular properties in Los Cabos can be found along the Pacific Ocean to the west of Cabo San Lucas toward Todos Santos, and to the east along the Sea of Cortés from San José del Cabo to Los Barriles. Each area is dramatically different in character and landscape. On the Pacific Corridor, with its brilliant sunsets, you will encounter California-like coastlines, sloping hills along the mountains and lush vegetation. The East Cape is known for its truly amazing sunrises, calm waters and endless sandy beaches. The only similarity between the East Cape and the Pacific Corridor is that developers are acquiring properties and planning upscale golf and beach communities that will rival any existing property in Los Cabos today.
It's easy to see the growth from the marina in Cabo San Lucas stretching beyond the hills of the Pedregal along the Pacific Ocean. What you may not see is what is happening between Cabo San Lucas and Todos Santos — about an hour's drive to the west. The airport in Cabo is expanding. There are new highways approved between Cabo San Lucas and La Paz, as well as from the Los Cabos International Airport and the Pacific Corridor. The largest desalinization plant in Mexico is open, and developers are acquiring properties and master-planning communities that will finally give eager buyers the opportunity to own a vacation home, condominium, play golf or stay in a luxurious hotel on the shores of the Pacific.
The opening of the sophisticated Puerto Los Cabos Marina in San José has fueled the interest on the East Cape and paved the way for upscale developers who are planning ultra-exclusive beach and golf resort communities. The amount of property that has been purchased on the Cape within the last 24 months is unprecedented. Conservative estimates are that over 25,000 acres have been sold in excess of US$200 million. The biggest developments on the Cape will be the Mayan Resorts, just beyond Puerto Los Cabos; El Rincón, just beyond Cabo Pulmo's coral reefs; La Ribera, the site of the next biggest marina development on the Cape; and La Capilla in Los Barriles. These names may sound strange to you now, but they will be the future homes to the newest resort communities in Los Cabos.
Property values continue to increase while the availability of properties becomes more diverse. Within the next 10 years, vacation homeowners can expect a Los Cabos with modern infrastructure, new roads and airport expansion improvements to both the San José del Cabo and Cabo San Lucas airports, and a secure future as a world-class destination resort. If you want to be a part of the Baja boom, look to the west in the Pacific Corridor and to the east along the Cape; you are sure to find spectacular properties that will be right for you and your family. The investment in your future may just be in Los Cabos.
Owning Property in Mexico: A Historical Look Into the Future
The magic of Baja is a combination of its unsurpassed natural beauty and the lure of its long history. We are all here to enjoy and appreciate Baja's beauty — and knowing a bit about the amazing history of property ownership will transform your curiosity into knowledge and confidence in buying property in Los Cabos.
In 1533, Spanish galleons sent by Hernan Cortés accidentally discovered the lower Baja peninsula and made contact with the Indians of the region. There were three major tribes living in Baja at that time. The southern tribe was the Pericú, the Guaycura inhabited the central region and the Cochimí roamed the northern region.
Spain soon set up the Manila galleon route from Acapulco to the Philippines. Pirates under the command of buccaneers such as Francis Drake and Thomas Cavendish lay in ambush waiting for the Spanish treasure ships that entered these waters.
While adventure and bloody confrontation continued at sea, fortunes were won and lost with the explosion of cannon fire and the strike of the sword. Throughout this time the interior of Baja remained virtually undisturbed, with the exception of the pirates coming ashore to pillage the Indians. That all changed in 1697, when Jesuit priests and soldiers decided to civilize the natives. The Spanish Franciscan priests wanted the privilege of saving the Indians, so Spain kicked out the Jesuits and the Franciscans moved in.
In 1821, Mexico, having had its fill of Spanish rule, declared its independence. Spain gave in and the Baja became part of Mexico. The Mexican-American War began over the annexation of Texas to the United States in 1846. The war ended after two years with the signing of a treaty of peace, friendship, limits and settlements between the United States and Mexico — known as the Treaty of Guadalupe Hidalgo. In the limits of land, it was established that Baja remained a part of Mexico and the United States gained the rest of the California territories. The settlements included about $300 million (today's value) paid by the U.S. to Mexico.
In 1914, during the revolutionary war in Mexico, a new constitution was established. It included Article 27, which prohibited foreign ownership of land within 31 miles of any coastline and 62 miles of any border. This resulted in more than 6,300 miles of coastline that was off limits to foreigners. It might seem that the Mexican government wanted to keep its most valuable land out of foreign hands, but historians argue that the real reason Article 27 was included in the constitution was to keep hostile nations from building naval bases in Mexico and so close to the U.S. But the lure of this beautiful land drew people to it like a hummingbird to a succulent flower. With so much land available and at rock-bottom prices, people found ways to get around Article 27. Leasing from a Mexican owner, or buying in a national's name and paying him a small fee, were the most common methods utilized. These methods were abused to a great extent and foreign buyers had no real security for their investments. This is what gave owning property in Mexico a bad name.
In a time of rising debt and low oil prices, an enlightened Mexican government desperately needed to find additional sources of revenue. With coveted land in the Baja and other coastal areas, and prospects of tremendous tourism dollars, it started looking into amendments for Article 27 to encourage foreign investment. In 1971, President Luis Echeverría Álvarez wrote a presidential decree allowing Mexican banks to hold property in trust for foreigners.
The Fideicomiso is the name for the Beneficial Trust, and you can consider it as ironclad as the deed to your home in the United States or Canada. As the sole beneficiary of the Bank Trust Deed, you have all the rights associated with property ownership. You may use and enjoy, build, rent, will or sell at any time, conforming only to the general laws established for all persons in the country. The term of the Trust is 50 years, and it is automatically renewable for successive 50-year periods. In other words, title to the property may rest in one beneficiary indefinitely, provided that it's renewed within the terms established by the law.
In 1994, with the signing of the NAFTA treaty, the U.S. and Mexico entered into a new era of respect and cooperation. These agreements further liberated the laws for investments by foreigners. Los Cabos quickly became the place for developers to get busy and take advantage of this unique opportunity and tremendous demand. In the 1990s, U.S.-based title insurance companies, including Stewart International Title, Fidelity and First American, began offering title insurance for Trust Deed ownership in Mexico. This monumental event in the history of property ownership continues to have a huge impact in the number of sales taking place in Los Cabos by giving buyers more confidence then ever regarding the security of their purchase.
Shortly after, long-term, U.S.-based mortgage financing became available in Los Cabos. This relatively new chapter in Baja's history (imagine how long mortgage financing has been available in the U.S.) is launching Los Cabos into the future. It is now possible for those who could have only dreamed of owning a vacation home on Baja's beaches to make that dream a reality.
If your curiosity has been piqued, take the time to visit a local real estate office. Remember to ask the staff if they are members of the Los Cabos MLS, which follows strict guidelines and has access to all of the wonderful properties available throughout Los Cabos. Owning property is safe, affordable and provides a wonderful experience for your family. In life, timing is everything. Perhaps your time is now.
Mike Schaible is a Los Cabos resident and owner of Baja Properties Real Estate Company. Celebrating 21 years of business, the Baja Properties team of professionals offers the best in service, knowledge and reputation. They can be reached at 142-0988.
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