Why Foreign Investors are Opting for Homes in East Cape over the U.S.

Wednesday, September 18, 2019

Foreign investors are straying away from the American housing market. Research shows a 36% decline in the number of homes purchased by foreigners between April 2018 and March 2019, according to the National Association of Realtors.

Foreigners bought 183,100 properties with a total value of $77.9 billion, but that’s down from 266,800 properties valued at $121 billion a year earlier, says CNBC.

While overseas buyers aren’t flocking to the states, they’re turning their interest to other destination locations like East Cape Baja.

Why is East Cape real estate a hot commodity?

There are many reasons East Cape real estate is in demand, but here are a few specific reasons:

  • Amazing scenery

East Cape sits just northeast of Cabo San Lucas on the southern tip of Mexico’s famed Baja peninsula. The scenery looks like a postcard. With emerald water glistening under the sun and mountains rising in the background, the scenery – and year-round sunshine – are a big draw for foreign investors.

  • Luxury housing options

Many foreign investors aren’t looking for cookie-cutter homes in the suburbs. They’re looking for extravagant, elegant homes that complement a certain lifestyle.

New developments in East Cape cater to investors looking for luxurious homes with amenities that are unparalleled. At some properties, like Four Seasons Residences,  investors can even design and build their own customized home along the Sea of Cortez.

  • On-site amenities

The recent creation of luxury properties with on-site amenities is also a draw for those abroad. Home buying isn’t just about finding a nice home with an ocean view, it’s also about access to modern conveniences. Many pieces of East Cape real estate were built with this idea in mind.

At Costa Palmas, for example, the 1000-acre development offers ocean-view, luxury homes with access to a beach and yacht club, an adventure center to plan excursions, and an 18-hole golf course designed by Robert Trent Jones Jr.

  • Celebrity buzz

Recently, several celebrities purchased homes in East Cape or spent some time vacationing there. Celine Dion, Sean Penn, and Robert Redford have been spotted in town.

Sienna Miller and Demi Moore enjoy the quaint shops just outside of East Cape, while other celebrities like Leann Rimes opt for a little fun-in-the-sun at Playa del Amor, a beach known for celebrity sightings.

Since East Cape real estate has become a celebrity hot spot, it has created a lot of buzz and seems to generate word-of-mouth advertising to those looking to invest in a luxury home.

Why is foreign investment in U.S. real estate declining?

Real estate markets can shift heavily based on location, so it’s not uncommon for real estate to be hot in one spot and cold in another. But, the dramatic decline in foreign investment of this size is rare.

“The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.,” National Association of Realtors Chief Economist Lawrence Yun told CNBC.

What’s causing the investment slump in American homes? Yun believes there are several factors at play, including:

  • Lack of economic growth abroad

Slow economic growth in foreign countries like China means a lack of funds to invest. Several countries experienced economic slowdowns, which trickled down to the U.S. housing market.

  • Home prices are climbing

Home prices have climbed across the board, not just in the luxury sector. The U.S. economy is running strong and the housing inventory is fairly low, both of which contributed to rising home prices that likely deterred some buyers.

  • Chinese restrictions

Chinese investors are the leading foreign buyers in the U.S., but the Chinese government put new restrictions on the purchase of foreign property. This coupled with a delicate political climate between China and the U.S. could also contribute to the national housing slump.

What should foreign buyers expect from the East Cape housing market?

Foreign investors are now house hunting in different locations. Rather than purchase a home in the U.S., many are exploring opportunities in more exotic locations like Mexico.

For investors considering East Cape real estate, there are a few things you should know:

  • East Cape is Cabo’s calm, quiet sister

Investors like East Cape real estate because it’s the opposite of housing choice in Cabo. Cab San Lucas is an amazing spot, full of tourists, activities, and a rowdy night life. East Cape is different. It’s about an hour away from Cabo and offers a calmer, quieter atmosphere that most affluent buyers are looking for.

  • Swimmable beachfront is rare

The Sea of Cortez is breathtaking, but there aren’t many homes in Cabo that offer a swimmable beach outside the door. Homes are built in the hills or along the oceanfront with rough seas. There are few East Cape real estate options that offer swimmable beaches, which is something investors should know about.

However, one of the newer developments, Costa Palmas, does offer a two-mile long swimmable beach with luxury property available.

  • Luxury accommodations are available

For affluent buyers, there are luxury accommodations available in East Cape. Existing inventory for high-end buyers is a bit low, but there are new developments and resorts with VIP homes that are equipped with every amenity possible. For example, take a look at this piece of luxury East Cape real estate:

  • Strike early for the best deals

Several new developments are in the works in East Cape. Getting in on the ground floor is a wise move for foreign investors to capitalize on the best price for luxury homes. When shopping for East Cape real estate, look for pre-opening pricing to get the most bank for your buck.

Wrap up

The real estate market is always changing. Right now, the appetite for American homes is fading for foreign investors, but their appetite for destination locations like East Cape Baja is almost unquenchable.

East Cape real estate has become a popular market for many affluent buyers both domestic and abroad. The area’s natural beauty combined with modern, luxurious homes makes the East Cape region a desirable spot for many high-end buyers.