New developments are being built in La Paz on the Baja, but will the economy and tourism downturn slow sales? That's the big question.
Penny-pinching American tourists, a devalued peso and endless stories of drug cartel shootouts are hammering Mexico’s tourism economy at a time when new projects are searching for time-share and vacation home buyers. Old tourist haunts are missing their regular customers.
“What a lot of Americans forget,” said Steve, the American owner of the Cabo Cabanas he built six years ago in Loreto, “is you fly right over the troubles they’re having in the north.”
He laments that business was down this winter and spring, although a top rating in the new Moon tourism book helped bring in new customers. But just a block away, a recently redeveloped five-star historic hotel, La Mision, looks nearly empty, with no one sipping margaritas around its enormous pool.
April, I’ve decided from years of Baja trips, is great weather to escape south for a fishing trip and relaxing getaway. I dodge the crowds (and prices) at Cabo San Lucas in favor of smaller East Cape hotels and La Paz up the coast. Every year, I stare in amazement at new developments spreading out from Cabo.
In recent years, several projects broke ground around La Paz, a city visited more by Mexicans than gringos for its uncrowded beaches, malecón restaurants and awesome sunsets. A new marina is open, and three new golf courses are going up, including the Costa Baja Resort, Gary Player’s first course design in Mexico.
The only question right now is who’s going to buy? Sales offices were usually empty as I strolled by them in downtown La Paz.
One Colorado couple I met had been in La Paz for two months. “Sometimes we’re the only people in the restaurants when we go out,” they said.
According to the Gringo Gazette, a Cabo-based newspaper, “off the record” discussions with local Realtors say real estate sales have ground to a halt, maybe down 75 percent from a year ago.
A big part of the disconnect is the slumping peso, which tumbled about 40 percent against the dollar in the past few months, as well as the closed credit windows in the U.S. When sales prices of vacation properties are translated into pesos, sellers must pay the capital gains tax at a much higher peso price. A million-dollar sale a year ago was 10.6 million pesos, but today, it’s about 15 million pesos, with the higher tax rate eating into profits, if there are any. According to one Realtor, this is kicking an already slumping real estate market in the teeth.
Despite the gloomy news, developers are betting big on the Baja’s “desirability” factor. Entire hillsides outside La Paz are marked with white paint, showing lots for new homes. Glossy magazines still promote homes priced anywhere from $7 million in Cabo to $300,000 and less in Los Barriles, Todos Santos and La Paz.
Near our fishing spot around Isla Cerralvo, prolific for dorado, sea bass and larger sailfish and marlin in the summer, there’s now a speed bump on the dirt road and signs promoting a project with the theme “The dream is worth the drive.” From here, Mexican captains launch their pangas, sturdy but basic fishing boats, from an area called Muerto Bay in the Sea of Cortez.
But “muerto” or “death” in translation didn’t seem to fit with the developer’s desired image. So now the area has been renamed “Bay of Dreams,” or Bahia de los Sueños.
It’s a hot, dusty region where agriculture, a salt mine and fishing were the only businesses. Today, workers scoot around on golf carts, and water pipes are being laid for the GranSueño hotel, golf course and private “casitas”. A new paved road now makes the area just an hour drive through the desert and mountains from the East Cape, and an airstrip is ready for private aircraft.
One thing for certain, Mexican resorts have learned the fine art of enticing Web sites, and on the Baja, the coastal mountain and deep blue ocean views are as scenic as anywhere. For bargain hunters like myself, more pesos to the dollar make the Baja even more affordable, and our Frontier flight was packed with Coloradans heading for the sun and resorts.
Mexico is making a big investment on repaving roads and rebuilding bridges, and our four-hour drive up to Ciudad Constitución to Loreto on Highway 1 was completely safe and pleasant, passing through just one checkpoint where the military police looked in our cooler and waved us through. Walking around Loreto, police would stop traffic, smiling and waving me across. Somebody down here put the word out – be nice to visitors.
There is word that increased checkpoints, and possibly fingerprinting and digital photos, are being put in for a “Southern Baja, Safe State,” keeping out any bad guys fleeing from the north. Although an inconvenience for visitors traveling by car or camper, it’s probably better to be safe than sorry.