Los Cabos is attractive to home buyers for many of the same reasons it is attractive as a vacation destination. The weather is warm year-round, the beaches and ocean views are spectacular, and lifestyle amenities are abundant, from world-class golf courses and a wealth of exceptional restaurants to soothing day spas and water-based activities options.
For prospective investors, however, there’s even more to like. For starters, buying a home in Los Cabos offers the same benefits as buying real estate anywhere: a chance to build equity and diversify one’s portfolio while establishing a hedge against inflation, and also opening up a potential new avenue of cash flow via rentals. Last summer, for instance, MND reported that Los Cabos had surpassed Mexico City as the premier short-term rental market in México.
But there’s more. Ocean view properties in Los Cabos typically sell at lower prices than comparably vantaged properties in the U.S. and offer lower property tax rates, too. Of course, there are some exceptions. In 2022, for instance, the Wall Street Journal confirmed that a yet-to-be-completed luxury villa on Cabo San Lucas’ Pacific Coast had sold for over US $15 million. There are properties here as spectacular as any in the world and priced accordingly.
The evolution of the Los Cabos real estate market
Twenty years ago, The New York Times referred to Cabo San Lucas’ hillside Pedregal neighborhood as “the Beverly Hills of Los Cabos.” At the time, residential developments at Palmilla, El Dorado, and Pedregal were the real estate gold standard In the area, with each noted for its luxury homes and villas, and an exclusivity attested to by the number of A-list celebrities and big-name athletes who bought property there.
In the decades since, however, there has been a flurry of new residential developments throughout Los Cabos. Not merely in cape cities Cabo San Lucas and San José del Cabo, either, but along lengthy stretches of previously undeveloped coastline. The Pacific Coast north of Cabo San Lucas, for example, has been the area of most explosive growth.
In many cases, a golf course from a legendary player-designer (Jack Nicklaus and Tiger Woods have stayed busy in Los Cabos) was attached to spur interest in the development. As a knowledgeable local wag has noted, “Golf in Los Cabos is always a real estate play.” How else to explain a region with only 350,000 residents but a whopping 18 acclaimed golf courses? Four more, by the way, are currently in development.
Just as the geography of available properties expanded, so, too, has the type of properties on the market. Luxury homes and villas are still plentiful, but so now are condos and family-oriented residences. The condo market, in particular, has seen remarkable growth in recent years.
The reason, of course, is demographics. The population of Los Cabos has surged in recent years. In Cabo San Lucas, the number of residents nearly tripled between 2010 and 2020, jumping from almost 70,000 to over 200,000. The influx of new residents continued during the COVID-19 pandemic when Los Cabos became a popular landing spot for digital nomads. They joined retirees and seasonal residents among the groups most interested in purchasing secondary homes.
Where are the best places to buy right now?
Pacific Coast developments north of Cabo San Lucas – Diamante, Rancho San Lucas, Quivira, and Oleada, notably – are among the most popular home and condo sites at present, although Cabo del Sol – which like the other developments, boasts world-class golf access – is also attracting interest for its exclusive Cove Club property offerings in the Tourist Corridor that connects cape cities Cabo San Lucas and San José del Cabo.
This three-bedroom, three-bath pre-construction home at Diamante, currently lists for $2,225,000. When completed it will feature amenities such as a swimming pool and hot tub, as well as access to world-class golf courses and other features of the 1,500-acre gated development.
This two-bedroom, two-bath condo at Mavila Towers in Quivira is listed for US $625,000, including resort amenities courtesy of nearby Pueblo Bonito properties and golf access.
A three-bedroom condo at Cabo Peninsula Residences, a boutique development on Cabo San Lucas’ Pacific Coast featuring only 22 properties, lists for $795,000. Amenities include an infinity pool and an onsite gym.
The condo market, it should be noted, remains active throughout Los Cabos, with new properties available from about $300,000 to $1 million and up.
A two-bedroom condo at Blanc de Mar in La Playita, just outside of San José del Cabo, lists for $625,000, below the average list price in January 2024 of $722,748. The accompanying image is a rendering of the design.
Homes are typically more affordable outside of Cabo San Lucas and San José del Cabo. On the region’s less populated East Cape, in the Buenos Aires neighborhood of Los Barriles, the four-bedroom, three-bathroom Villa Blanca (with a main house and two rentable casitas) lists for only $429,000.
That’s well below the average home sale price in Los Cabos in January: $872,907.
What you should know before buying
“Unless you really understand the Los Cabos market, don´t rush to make a purchase,” advises Michael Mattos, Marketing Director at Cabo Properties. “Although the real estate market during the past few years has seen a 20% growth, you have to remember Los Cabos is a vacation / secondary real estate market. Flips or quick profits are risky and not recommended. Los Cabos is a lifestyle and a vacation paradise. A person’s investment in Los Cabos should be considered long-term with the ability to pass real estate on to the children.”
The latter point is a good one. A fideicomiso (or bank trust) is the only way for foreigners to buy property in certain areas designated crucial for México’s national defense (aka “the restricted zone) – meaning, close to the border (within 60 miles) and coastlines (up to 31 miles). Despite the bank’s trustee status, however, it bears noting that purchasers retain every right of ownership. Meaning they can sell their property or rent it out as they wish, and will it to heirs after their death. Buyers enter into the trust with a bank and must renew it every 50 years. Renewals may continue indefinitely.
The costs associated with the trust are quite reasonable. It’s about $450 per year after an initial opening cost of around $2,500. In Los Cabos, naturally, every property of interest is close to the coastline, so finding a local real estate broker knowledgeable in the ins and outs of the fideicomiso process is highly recommended.
Property taxes in Los Cabos
Property taxes (called the predial in Spanish) are assessed but at much lower rates than in the U.S. In Los Cabos, for example, properties are taxed at 0.1% annually based on the property’s value when it was purchased. Compare that to Florida, where the rate is 0.91%, or California, where it is 1% – and the assessed value increases based on inflation – and Los Cabos’ favorable conditions are further highlighted. The purchaser of a $500,000 condominium with ocean views, for example, can expect to pay $500 (or less) in property taxes each year.
Property taxes are due at the same time each year (March 31) and discounts of up to 20% are offered to those who pay early.
Chris Sands is the Cabo San Lucas local expert for the USA Today travel website 10 Best, writer of Fodor’s Los Cabos travel guidebook, and a contributor to numerous websites and publications, including Tasting Table, Marriott Bonvoy Traveler, Forbes Travel Guide, Porthole Cruise, Cabo Living and Mexico News Daily. His specialty is travel-related content and lifestyle features focused on food, wine and golf.
Source: Mexico News Daily
