Escrow Provides a Sense of Security for Investors in Mexico
- Oct 02, 2009
Jack Perlman is a real estate developer in Playa del Carmen (main beach town in the Riviera Maya region, by the Caribbean Sea) and owner of Condo Hotels Playa del Carmen. Perlman influenced the transformation of this sleepy fishing village into the Mexican Caribbean’s hot spot. He was instrumental in introducing American-style title insurance in Playa, and led the charge in encouraging the use of escrow services and engaging in transparent business practices. Perlman is opening a fifth luxury condo called El Taj Condo Hotel (pictured) this January, as well as an upscale beach club.
MHN: Why do you think it’s a good idea to invest in Playa Del Carmen? Aren’t there enough condos and hotels there already?
Perlman: First of all, Playa del Carmen’s proximity to many U.S. gateway cities enables investors to actually use their place for vacation getaways. It is only 1.5 hours from Miami and Houston, for example. In addition, Playa del Carmen has magnificent white sand beaches, the world’s second-largest barrier reef and Mayan culture. The weather is warm and pleasant year round. These are the reasons why Playa del Carmen has seen an ongoing increase in real estate investments during the last decade or so. I myself got stranded in Playa del Carmen by mistake over 15 years ago and have been there ever since, buying and developing real estate. # #It’s also important to keep in mind that because the region’s density is low, it might appear as though there is an abundance of condos. But the truth is that Playa has become one of the top 10 resort destinations in the world, and with its four miles of the beach there are only about 500 luxury condos available. Luxury condos in all of Playa can fit into two high-rise buildings. In size comparison to Miami Beach or San Juan, we’re a tiny jewel. Therefore, the demand will always be there.
MHN: How has swine flu impacted this region?
Perlman: Of course it was a problem here, just like it has impacted the rest of the world. The H1N1 virus was originally thought to be a Mexican problem when it was first reported almost nine months ago. Now we have recovered from the negative publicity and tourists are coming back more than ever because there are some great vacation deals and especially some great real estate investment opportunities.
MHN: Has the use of escrow changed the profile of investors in this region?
Perlman: It has certainly added a sense of security especially since the laws are very different from the U.S. For example, in the U.S., builders are not permitted to use deposits for purchases towards construction and expenses. It is regulated by the legal authorities. In Mexico, it is basically the opposite, and developers can use the deposit any way they want and even use it for personal needs.
MHN: When will your new condo property be ready?
Perlman: We expect to start providing occupancy in late December, and we are accepting reservations starting January 12 through our property management company. Owners can include their units in a hotel-style operation and start receiving income from rentals beginning January 12.
MHN: In this market, how did you finance it?
Perlman: We used the profits from our other projects. This is our fifth condo project. We have no debt!
MHN: When do you anticipate a full recovery in real estate values in Mexico?
Perlman: It appears that there is a break in the clouds that have surrounded the economic turmoil and we are starting to see much more interest. Just last week we sold seven units to a hedge fund group. This is a very good sign for recovery. Certainly, in order to make a full recovery, the American public has to feel more confident in making investments. I personally believe that this will begin to happen during the first couple months of 2010, and this is one of the reasons I am opening the new property this winter.