Is it still a good time to buy in Tulum?
Determining whether it’s a good time to buy real estate in Tulum, or any location, depends on various factors, and the real estate market can be influenced by economic conditions, local developments, and personal investment goals. Here are some considerations that may help you assess whether it’s a good time to buy in Tulum.
Of course, many people are kicking themselves for not buying land in Tulum 10-15 years ago. This does not mean that you completely missed the boat. Tulum continues to grow, change, and present new opportunities. A few years ago, ROI in Tulum was going gangbusters and even outpacing returns in Playa Del Carmen. So how are things now in Tulum? Is it still a good time to invest in Tulum? Here are some facts to consider when making your own decision.
But first we want to say, we don’t sell real estate! So, we can give you information without much bias (we do live here after all). We don’t care if you buy or not, we only give our readers information and we point people towards people that can help our readers if they want it. So, we don’t want you to feel that we are pushing you in one direction or another, we just want to provide you with relevant information based on our findings and talking with locals and professionals in the area.
Infrastructure Development in Tulum Now
Infrastructure Development: Improved infrastructure often contributes to increased property values and demand. For 2024, Tulum has three large infrastructure projects coming to fruition.
- The Felipe Carrillo Puerto International Airport (Aka Tulum Airport). The Tulum Airport opened December 1, 2023, and is already in use. More flights are added each month and by April of 2024 there will be a full schedule of flights arriving in Tulum.
- Tren Maya. This 3 billion USD investment is changing the way the southeast of Mexico is connected and transits. The Tren Maya is already running on two sections of the project. The rest of the segments are scheduled to be ready by February 2024. This project will change how people move and open up connections with 5 states.
- Jaguar Park. This huge park on the north end of Tulum will change Tulum. the park extends from one Tren Maya station to the beach and included Tulum ruins. This new park will organize how people arrive top Tulum and how people visit the Tulum ruins.
What are the Current Market Trends for Tulum?
Market Trends: Market trends in Tulum means one of two things: How is the tourism market and how is the overall housing market? Unlike many cities where people live, tourism and Tulum are intricately intertwined, so the two go hand in hand when it comes to the housing market.
What are the Current Trends for Tourism in Tulum?
Tourism Trends: Tulum is a popular tourist destination, and the health of its tourism industry impacts directly the real estate market. By analyzing tourism trends, hotel occupancy rates, and any new developments that may attract visitors you will see what current trends are. A really good tool to use is AirDNA (not an Airbnb company). This tool scans rental sites and can give you occupancy rates, average price per night and a lot of other important information. We have an article and video about AirDNA here. It is a paid service, but depending on what realtor you use, they might be able to share the professional version with you.
Besides looking at the data, what are the current predictions for tourism for Tulum in 2024? After 2023, which was a slower year for tourism, the feeling is that 2024 will be a better year since there is a lot of energy going into the year with new projects opening and others planned. National tourism is rising because of the direct flights to Tulum and the beaches are helping since they are very clear of seaweed now.
Housing Market in Tulum
What are the things that affect the housing market in Tulum? Well, that has a lot of factors, but some of the largest are:
- Currency rates: This is mainly between the Mexican Peso, the US Dolar and the Canadian Dolar. Americans and Canadians are two big groups of buyers in Mexico. When, for example, the Canadian Dolar trades less than 13 to the Mexican Peso, this is big deterrent for Canadian buyers. We have seen this trend when the Mexican Peso and Canadian Dolar dance. In the past decade the Canadian Dolar has fluctuated from 11.98-17.32 to the Mexican Pesos. For Americans it is the interest rates to watch. The lower the interest rates, the easier it is to access cash to buy. Currently the Canadian market is tightening as the exchange rate does not favor them. Americans are coming back to the market now as the credit tightening has eased.
- Construction prices: In the past few years, construction costs have going up some 20%-30% on some materials. Prices of condos are not rising as fast, but sizes are in general getting smaller. This small shift in the market is making some older condos more attractive in price. The higher construction costs are not really dampening the market, just tempering expectations.
- Supply vs. Demand: The basics of any market are the factors of supply and demand. Supply has been rising. This has given buyers more options to consider. The market has started to favor buyers a little more starting mid 2023 until early 2024. However, as we go into 2024, we see demand rising again. While there is still a lot of projects breaking ground now, many of the projects are known. Beyond what is already announced, it is still unseen what comes online for late 2025 into 2026. Currently at the beginning of 2024 there is a decent supply, but demand is rising again. Normally November to April is high season for buyers since more people come in the winter months to look around and buy.
What is the average ROI now in Tulum?
If you are looking to invest in a property, the return on your investment is important. In height of the ROI in Tulum many owners made between 7%-25% returns. The peak was between years 2018-2022 (Note: it is hard to say exactly when the peak was since different property types peaked at different times). There is no question that many made very good ROI and paid for condos in a short time with just the rental income.
What can you make now with ROI in Tulum? We are coming off a slower tourism year (2023) where most owners experienced a downturn in rentals. Now returns are 4%-15% with a majority of rentals in the 4%-8% range.
So, what properties have the best returns? There are a lot of studios and one bedrooms in Tulum. This means that there is a lot more competition for renters and lower returns. There are far fewer penthouses, three-bedroom+ units, beachfront properties, villas and houses in Tulum. These often rent at higher rates. Groups and families like the value of renting from a nonhotel with lots of space. People tend to splurge on vacation and will pay for good accommodations. Another factor is good design both in the architecture but also the interior design. Most condos in Tulum are in a building with similar units. Making your unit standout will help with ROI and make guests feel like they are somewhere special.
What Local Regulations Will Affect Buying in Tulum?
Local Regulations: Stay informed about any changes in local regulations or zoning laws that may affect real estate investments. This includes understanding foreign ownership regulations. For those of us that have live in Mexico a while, we know there are changes to requirements and tweaking of laws often. It feels like very couple of years there are changes to important laws that affect foreigners in Mexico.
Back in the day, people would buy a condo, put it on Airbnb and start collecting the money. The Mexican government started worked with Airbnb to collect taxes and in 2020 owners started to pay taxes in Mexico for the Airbnb’s here. Most owners saw fees rise, this cut into profits, but the move further regulated the rental market in Mexico. We mention this because it is an example on how Mexico is modernizing, and taxes and regulations are becoming more in line with other places. Many times, these changes make the market a little fairer for those playing.
Can You Afford to Buy in Tulum Now?
Personal Finances: Evaluate your own financial situation and investment goals. Consider factors such as your budget, financing options, and whether you’re looking for a short-term or long-term investment. As you probably know by now, most real estate transactions are in cash in Tulum and in Mexico for that matter. It is not that attractive to get a loan in Mexico because of the high interest rates, so this means finding financing in other ways.
There are some options in Mexico to make payments or have some financing. Here is an article about financial options available in the Tulum area. Options are limited for financing. This is actually a good thing because it keeps riskier investors and investments out of the Tulum real estate market.
What Does the Future of Tulum Look Like?
Future Growth Potential: Research the potential for future growth in Tulum. Look for signs of emerging neighborhoods, upcoming amenities, and any plans for increased connectivity.
The trajectory of Tulum’s expansion is undeniable, with some foreseeing its surpassing of Playa Del Carmen in size. Bolstering this outlook are the presence of its international airport and two Tren Maya stations. Even without additional developments, the city is currently witnessing a substantial amount of ongoing construction that is set to transform its landscape. Remarkably, Tulum distinguishes itself through its unparalleled architecture and design, evident in everything from avant-garde shopping centers to modern condominiums. As Tulum approaches completion on some projects, it is poised to emerge as an extraordinary city. However, navigating the growth cycle entails contending with elements such as dust, ongoing construction, and increased truck traffic. Despite these considerations, Tulum promises to be an unparalleled destination, not only architecturally but also in its distinctive vibe. The city’s magnetic allure has attracted a community of like-minded individuals, fostering the evolution of Tulum into the remarkable place it is today.
Our Video About the Tulum Real Estate Market in 2024
A lot of the information we gather is from real estate agents and people that we know working in the related fields. Recently were in Tulum and made this lengthy video with a lot of information in it. We talked to a realtor, visited developments and toured condos. This is the current conditions of the Tulum real estate market. We hope you find this video helpful.
Consult Local Experts about Real Estate in Tulum
Consult Local Experts: Seek advice from local real estate agents, property managers, or consultants who have a deep understanding of the Tulum market. They can provide valuable insights into the current conditions and potential future developments.
It’s crucial to note that real estate markets are dynamic, and conditions can change. While Tulum has been a hotspot for real estate investment, it’s essential to conduct thorough due diligence and consider both short-term and long-term factors.
Before making any investment decisions, consider consulting with a financial advisor or real estate professional who can provide personalized advice based on your specific situation and goals. Additionally, staying updated on the latest market trends and developments in Tulum will help you make informed decisions about whether it’s the right time to buy.
If you need someone knowledgeable about real estate in Tulum and the surrounding area and would like to talk with Sebastian (from our video above) or someone from his team, below is his direct email. As you see in the video, he is very knowledgeable about the area and what is planned for Tulum. He comes well recommended from our readers, so we do not have a problem referring readers to him.
Tip: If you include information like what you are looking for, time frame, budget and a phone number and best time to talk, this helps them to send all pertinent information to you in a timely fashion.