Tulum: The Next El Dorado for Investors
Mexico is one of the most prized destinations in the world. Its year-round temperate climate, turquoise waters, vibrant culture, and heavenly cuisine have made it a renowned vacation spot. Before the pandemic, the country welcomed more than 8 million tourists each month. Whilst all vacation spots have suffered from the travel restrictions imposed during the health crisis, one Mexican coastal town has recovered faster than others: Tulum. This article explains why and what it means for investors.
Located at the heart of the Mexican Caribbean shore, Tulum has grown from a hidden gem to a global hotspot for travellers in search of exclusive experiences. Two years ago, Forbes qualified it as “one of the best cities to live in Mexico”. At the time, it received more than 2 million visitors each year. Tulum is built around an ancient Mayan walled city, which makes it a culturally rich location and a unique area of the Riviera Maya. Tranquil white-sand beaches, crystal-clear waters, and tropical vegetation add to its historical charm. However, it is Tulum’s greater ecological awareness and spiritual sense which differentiate it from other luxurious destinations of Mexico.
Tulum’s dawn originates in its small bucolic seashore, connecting the Mayan ruins on one end and the Sian Ka’an nature reserve on the other. “Tulum’s isolated and breathtakingly beautiful environment also makes it the perfect place for those craving a deeper connection with themselves, others, and nature.” wrote Condé Nast Traveller contributor Julia Chaplin in her book Tulum Gypset. The town has become a hub for avant-gardistes and trend-setters pursuing alternative approaches to life – whether they are glamorous, closer to nature, or tech-savvy. As a result, wellness activities have become mainstream in Tulum. Yoga, breathwork, massages, cacao dance, meditation, women’s workshops, and temazcal ceremonies are some of the activities organised each week at IKAL, a bohemian beach club on the shore of Tulum.
When most countries restricted travel and social activities, many globetrotters chose to halt in Tulum. “If I have to be stuck somewhere, I would rather be stuck in paradise!” said Sophie, a recent European expat in Tulum. Given the town’s open architecture, it did not suffer from pandemic-induced restrictions, but thrived instead. “Everything’s outdoors, everyone follows protocols; it’s just a different way of dealing with it,” said a real estate agent at Engel & Völkers. Tulum has seen its hotel zone expand, featuring many new high-end venues such as IT, Bonbonniere, and Bagatelle – also present in other top destinations worldwide. In the past ten years, Tulum’s population has grown by over 65%. Within the state of Quintana Roo, it has the second highest population growth rate. In 2021, Tulum’s nearest airport Cancun became the second most visited airport in the world. The government has started building a high speed rail link from Cancun to Tulum and Tulum International Airport, both set to open in 2023.
What does this mean for investors? Tulum is “a buyer’s market” according to the Financial Times. The local office of Sotheby’s International Realty commented that they sold more homes in 2020 compared to 2019, and that Tulum is indeed “the current hotspot of activity”. Many go-getters have thus invested in Tulum’s booming real estate, which promises to turn into a profitable business due to its constant flow of tourists. In comparison to pre-pandemic times, tourists now visit Tulum not only during the holiday season, but all year round. In addition, a growing community of expats and digital nomads has found ground in Tulum, which has increased local demand for goods and services. Thanks to a generous visa policy, it has become particularly easy to start a new life in this Caribbean paradise.
The Forbes Council Members recently recommended Tulum within their “top tips for buying your first investment property”, as its vacation rentals offer juridic certainty and warrantied investment. Property prices range from $252 to $552 per square foot, which is twice cheaper than in nearby town Playa del Carmen. In Tulum, you may find one-bedroom apartments starting from $125,000, which is three times cheaper than the median property price in Miami Beach. Furthermore, local real estate agents estimate the average annual return on investment (ROI) in Tulum to be between 8 and 15%. In comparison, the average 10-year stock market return is 9.2%. Buying property in Tulum therefore not only guarantees access to a wonderful Caribbean escape, but also a safe and profitable investment. For this reason, Tulum reminds us of the legendary lost city of El Dorado, where precious stones and gold were found in abundance by explorers.
With US and Mexican inflation rates growing at a steady pace, Tulum promises to also see its property prices appreciate in the next few years. In the US, the annual inflation rate reached 7.5% in January of 2022, the highest since February of 1982. Mexico’s inflation rate, which follows US trends due to the high interdependence between the two countries, hit a 20-year high this Winter. According to Bloomberg, real estate is becoming “a hedge against roaring inflation” as investors seeking alternatives from stocks and bonds turn to the housing market. Indeed, in the long term, inflation and housing prices tend to move in the same direction according to Colin Lizieri, economist and professor at the University of Cambridge. “People invest in [real estate] for the same reason that they invest in cryptocurrencies. They’re worried about the current economic system and they want options.” said Benjamin Miller, CEO of real estate investment platform Fundrise.
In conclusion, Tulum has become the next hotspot for investors. Tulum’s tourism has grown during the pandemic and is set to continue expanding. Tulum features all the qualities of a tropical paradise with the added touch of spiritual and ecological awareness, giving it a unique charm, relentlessly inspiring global dreamers to discover what makes this magical town so special. In the face of increasing inflation, the unbeatable prices and guaranteed ROI of properties make Tulum any investor’s dream.
Email jeremy@tulumlandandproperty.com for more information.
