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Go Back (to archives)During the last week of September, I had the opportunity to physically inspect the existing and proposed major developments affecting the marketplace in Puerto Peñasco. I had the opportunity to meet and interview approximately thirty individuals from the real estate industry actively participating in the growth of Puerto Peñasco, including owners, developers, builders, engineers, real estate sales agents, mortgage and title insurance executives, and hotel managers. Unequivocally, Rocky Point continues to grow and is considered by some to be in a "boom" economy.
A tremendous amount of new home construction continues, with local builders placing homes specifically in Las Conchas, Playa Encanto, and Playa La Jolla. Furthermore, new model homes have been constructed within Costa Diamante, and within the Mayan Palace, two of the four "mega" developments which are being brought into the marketplace this season. Development of single family homes could also occur shortly in the two additional mega-projects of Laguna del Mar and Playa Norte (North Beach), according to porject managers. Additionally, the Playa La Jolla group has proposed a second smaller (30-acre±) Playa La Jolla development located on Playa Encanto.
The existing For Sale listing inventory is at the lowest point witnessed during my five years of appraisal experience in Rocky Point. Local real estate agents noted that owners have put their For Sale properties on hold and are observing the development of the mega-projects in anticipation of the appreciation within the resale marketplace due to this factor.
The existing supply of homesites ready for construction within Las Conchas, Playa Encanto, and Playa La Jolla along the beach is quickly diminishing. Development is now common on the second, third, and fourth rows away from the beach solely with ocean "blue" views. I would estimate less than one thousand homesites are available For Sale within what I would call the subdivisions which enjoy existing infrastructure and legal bank trust title. Over the next several years as many as twenty thousand homesites could be available within the mega-developments of Mayan Palace, Playa Norte, Laguna del Mar, Costa Diamante, and other Playa La Jolla/Brown joint venture projects. These projects are still acquiring required infrastructure, title requirements and/or other required governmental regulations prior to sales. Hopefully, the twenty thousand anticipated homesites will be staged based upon demand characteristics. This appraiser observed the beginning construction stage of hotel and golf courses in a number of the mega-projects. Strong communication and cooperation among the mega-developers would be warranted to keep the Puerto Peñasco economy stabilized. Sales prices of homesites within the mega-projects are being quoted between $20,000 to up to $500,000 based upon size, location, and adjoining amenities.
There is strong demand from U.S. citizens to acquire condominiums/townhouses/villas within the Rocky Point marketplace. Once again limited listings exist with local real estate agents. Prices are anticipated to increase as the change of the characteristics of Rocky Point from a weekend to a resort community occur. The Princesa de Peñasco condominium project within Costa Diamante has demonstrated the demand for reasonably priced condominiums in the marketplace. Two additional sites are in the planning stage, with architectural and engineering plans to add to the condominium inventory in and around the Old Port and/or Sandy Beach. This is in addition to the "proposed" condominiums planned within the mega-projects.
Rocky Point continues to grow due to affordability and the benefit of being only four to eight hours driving time for individuals in West Texas, New Mexico, Arizona and Southern California. Metrociti Mortgage and Bank United (formerly Irwin/Inland Mortgage) are assisting sellers to acquire U.S. standard loans throughout Mexico and are active lending participants in Puerto Peñasco. One developer estimated that over $50 million dollars of sales occurred in the real estate marketplace during the past 12 months. It is predicted that this amount could double annually for the next several years.
This appraiser would caution any buyer to make sure there is a legal bank trust title in place. Again, this is a stringent requirement for a loan by Metrociti and/or Bank United. A concern of the local developers, real estate agents, and engineers is the continual need for water, sewer, electric, and proper road infrastruction systems. One developer felt that at some point the mega-developers may need to get together and cooperate to help implement a city-wide effort to assist in the delivery of these instead of the individual systems currently in place. Furthermore, due to the proposed vast development, proper housing will be required to entice a quality labor force to enter the Puerto Peñasco marketplace.
Locals are talking about the construction of an international airport. The airport has to be strategically built within close proximity to the mega-developments. Some developers feel that prior to the construction of the airport, hotel development is essential to support such an endeavor. Local hotel officials report close to 100% occupancy on weeekends, holidays, and spring break. Less than a 25% occupancy factor was noted generally for the balance of the time. Local developers feel that the proposed development of numerous hotels within the mega-projects will require an airport. The question is which is the chicken and which is the egg?
Historically, over the past four years single family and condominium units have been generally selling between $100,000 to $500,000, with $200,000 being a typical price. With the new mega-developments, this benchmark of prices could go higher. I feel we will see prices between $200,000 and $1,000,000, with the typical price being around $300,000. Yet this appraiser would caution the marketplace as to affordability! Over the last five years there has been a tremendously strong United States economy which has fueled the second home marketplace, due to a greater amount of disposable income. In essence, the stronger the economy, the stronger the second home marketplace; yet, conversely the real estate community knows the market fluctuates. In addition to Rocky Point, there has been a strong competitive marketplace within four to eight driving hours from Tucson and/or Phoenix, including Northern Arizona, the Rim portion of Arizona, and the communities along the Colorado River. Additionally the retiree marketplace is not strong within Rocky Point due to the lack of medical services and availability of other amenities required by active older individuals.
In closing, all parties interviewed and I thoroughly agree with and applaud the efforts of Governors Armando Lopez Nogales and Jane Dee Hull with their understanding that the stronger Arizona is, the stronger Sonora will be. Unequivocally this is noted specifically through the efforts of the Arizona Mexico Commission and their various committee achievements.
Bruce Greenberg, an appraiser in Tucson, AZ and in San Jose de Cabo, B.C.S., is a member of the Business/Finance Committee of the Arizona Mexico Commission and a member of the National Law Center.
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