The Gran Bahia Principe is located on Mexico’s stunning Maya Riviera, 35 minutes from Playa del Carmen
Last month I told members of Real Estate Trend Alert about an exciting opportunity in the Gran Bahia Principe Resort on Mexico’s Riviera Maya. Buy a unit here and the resort operator will pay you a fixed and guaranteed rent of just over 6%. I’m bullish about this deal. Not because the headline number of 6% gets my attention, but because this deal offers the potential for capital appreciation. This, combined with leverage, could mean a far higher annualized return.
When investing in international real estate, your return is a function of rental income, capital appreciation, leverage, carrying costs, and other expenses. The Gran Bahia Principe Resort deal offers the potential of generating annualized returns of 25% on your investment over a seven-year period.
Let me explain how 6% could become an annualized 25% by way of sample numbers.
A 130-square-meter (phase 3) garden condo at the Gran Bahia Principe Resort is selling for $199,000. During the three-year build period your monthly payments and balloon payments will total $55,020. Financing the balance at 7.5% would mean monthly payments of $1,077…roughly equal to your fixed monthly income of $1,085. If values were to rise by 12% each year over the next seven years you would be left with a profit of $192,086, having paid sales expenses, repaid your mortgage, and repaid yourself your initial investment of $55,020. This equates to a compounded annual return of 25.52%. These numbers are just for illustrative purposes. You should run your own numbers to estimate expected returns.
Prices at this development are at a substantial discount to what you would pay in resorts 35 minutes down the road in Playa del Carmen, where beachfront units cost $4,000 to $5,000 per square meter. Units back from the beach are in the $2,650 to $2,700 per square meter range. These units don’t come with the range or quality of amenities available at the Gran Bahia Principe Resort, where prices start at less than $1,600 per square meter.
A golf course, expected to open later this year, will be the finest in the area and will make these condos even more desirable. Plus, accessibility to the area is set to improve. The nearest airport right now is Cancun Airport, which is stretched to capacity. Visitor numbers and demand are rising. Hotel occupancy in both Cancun and the Riviera Maya is also up…hitting 89% and 90% respectively this February.
The Riviera Maya needs its own airport…and it’s getting one. The land is ready and last month the government announced the bidding process for construction. The new airport will be 15 minutes from the Gran Bahia Principe Resort and will service the entire Riviera Maya. In 10 years time it is expected to rival Cancun in size and the destinations it accepts flights from.
As an IL reader, you are invited to visit the Gran Bahia Principe Resort to see the fantastic opportunities it offers you. For more details, e-mail: info@bahiaprincipecondohotel.com.
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Ronan McMahon
Executive Director, Pathfinder Ltd.
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