Real estate executive Luis Bustamante on "Who’s Responsible for Baja's Real Estate Boom?"

Who’s Responsible for Baja
California’s Real Estate Boom?

Americans and Mexicans, of course!
San Diego Metropolitan
September 2005

Along the scenic coastal corridor from Tijuana to Rosarito and on to Ensenada, professional developers and real estate executives have created an array of different residential properties, condominiums and single-family homes, some that are oceanfront and others that are removed from the beach, but still with ocean views, ranging from $70,000 to $1.3 million.

Making these developments and new neighborhoods even more affordable is the skyrocketing price of urban living in San Diego County. Suddenly, living in Baja California while working in San Diego seems more affordable than ever. Likewise, investing in a resort or weekend getaway home has become more attractive than just
a few years ago.

Compared to urban San Diego, where one can buy a small condo or a loft starting in the $200,000s, and where ample room for family and guests may require an investment of as much as $2 million, in Baja you’ll find beautiful new ocean-view homes from the low $80,000s, and fabulous oceanfront condos from the $190,000s to the low $200,000s. Larger and more luxurious condos are available from the mid $300,000 to the low $1 million vicinity, while the most dramatic oceanfront residences and “mini-mansions” range from $800,000 to $5 million.

At the moment, some 1,300 units are available, and about 700 more units are coming on line in the next six to nine months, reports Gustavo Torres, a member of the prominent Torres family of Rosarito Beach.

Because Rosarito and Ensenada have become a “drive-to destination” for Southern Californians, many buyers are making their Baja purchases now while prices are relatively low. They are able to enjoy their properties now as a second home, while planning their future in Baja as a retirement home.

Just a couple of years ago, buyers of property in Baja were often senior citizens. Now a younger generation is discovering the area for recreation, residence and future retirement with a potentially high return on investment.

The U.S. Consulate counts more than 170,000 U.S. citizens who have filed as residents of Baja. Real estate executive Luis Bustamante estimates the real number of Americans living in the area surpasses 400,000.

And no wonder. With a lower cost of living, the quality of life improves. Americans’ favorite retailers, including Costco, Walmart and Home Depot, already have discovered coastal Northern Baja California, as have Mexican supermarkets and retailers, of course. Among the economic benefits, residents and businesses alike enjoy lower property taxes.

Time and distance have become motivators for San Diegans moving to Baja California, too. Hard-working couples who cannot afford San Diego’s homes ranging from $500,000 and up are looking for $350,000 alternatives in the Inland Empire or the Imperial Valley, but have to tolerate routine commutes up to two hours to San Diego’s employment centers. While crossing the international border may seem a drag to the uninitiated, a one-hour commute from the beaches of Tijuana to Downtown San Diego, including the wait at the border, becomes an attractive alternative to southern Riverside County. And if your timing is right, or a Sentri pass is purchased, that commute from Playas de Tijuana to San Diego’s Central Business District can be cut down to 30 minutes. Or 20 minutes from Playas to Chula Vista. Or 40 minutes from Playas to UCSD.

(The Sentri pass equips your car with a transponder to pass through three specially designated gates at the border, taking minutes when the regular border wait is an hour. Plus, good cell-phone service and a fine sound system can also make time in one’s car enjoyable, even productive.)

Nowadays, the commute from your home at Rosarito Beach to your office in San Diego would be the envy of most commuters trying to get around Los Angeles or Orange County.

Besides, many of the new Baja Californians enjoy home offices with unlimited access to the Internet, thanks to the broadband connections offered in most of the new condos and houses along Baja’s oceanfront. Telecommuting from a Baja beach has never been more doable.

The Legalities

At this point, we are beyond the myth that “no foreign citizen can own Mexican property.” Yes, there were frauds and schemes reported in the San Diego press. In most cases, problems arose when the foreign buyer did not use the legal resources that are readily available and systematically in place to protect them. Like buying property in San Diego, purchasing real estate in Baja requires some sophistication.

First, you should assure yourself that the one who is selling the property is a real estate professional. Of course, buyers must not just request, but actually read and understand the property title, project papers, development plans and condo administration rules. Using an attorney licensed to practice in Baja, called a notario (or notary) in Mexico, is a good idea, says Rafael Liceaga, the director of Interbac and president of the Baja State Council of Real Estate Developers. Following the right procedures includes submitting certain documents from the buyer and the seller to the notary for his final review and approval of the transaction

The notary in Mexico is unlike a notary in the U.S. Notaries in Mexico are held in high esteem, have their law degrees and are required to meet the government’s continuing education requirements. The notary is the only entity that has the right to use the seal of Mexico other than government officials. If a buyer is buying from an individual owner rather than a developer, all the same documentation applies and individuals should still work directly with a notary. The purchasing process should take four to six weeks.

Rafael Liceaga, president of the Baja State Council of Real Estate Developers, recommends the use of an attorney licensed to practice in Baja, called a notario (or notary).

To give buyers safety in the acquisition and ownership, developers and real estate executives are making sure buyers buy title insurance as part of the transaction. U.S.-based Stewart Title is prolific in Baja. As in the U.S., title insurance guarantees the buyer that he or she is the rightful new owner and that nothing in the past ownership will cloud the new ownership. In addition, some real estate professionals offer seminars in which prospective buyers learn about the rules of acquisition and ownership, and tips about living in Baja.

Why Baja?

Santiago Gil is the commercial director of Cimas del Parque, a six-tower, 13-story condo project in Playas de Tijuana. Two of the towers are ‘presold,’ even though the initial tower is still under construction.

As Santiago Gil says, there are many reasons to choose Baja. “You are very close to the San Ysidro border crossing… In some zones, U.S. cell phones work even without roaming. Many of the real estate developments are within Playas de Tijuana, the securest neighborhood of the city, and located in the best part of Playas, within walking distance to movie theatres, gyms, spas, supermarkets, churches, and restaurants; and a short driving distance to golf courses and all the Baja attractions.”

For these and many other reasons, Gustavo Torres advises, this is definitely the best time to invest in the Baja California area. “It is a secured investment, and a great investment. Mexican people and mostly Rosaritans love Americans here, as they help us a lot supporting the Red Cross, Fire Department, DIF, and many more places, and they welcome you with arms wide open.”