In Search of Mexico’s Next Real Estate Gold Mine

In Search of Mexico’s Next Real Estate Gold Mine

A golden-sand beach stretches for miles before disappearing around a headland. In front of me, a four-lane road traces the coastline. And beyond that again a huge row of high-rise buildings spreads along the seafront, all sitting in various stages of completion.

Some are old and dated, with clunky air conditioners hanging from windows. Others are new and shiny, but seemingly empty. More exist only in concept. The billboards outside their fenced-off lots tease what’s to come in the next year or two.

This is Mazatlán, a city of about 500,000 on Mexico’s Pacific coast. I’ll forgive you if you don’t know much about it or even if you haven’t heard of it…even if it’s seemingly booming as evidenced by all this construction.

Mexico is famed worldwide for its seaside resort destinations dotted along 6,000 miles of coastline on the Pacific, Caribbean, and Gulf of Mexico. But, with only 2.5% of its visitors coming from abroad, Mazatlán is not one of those.

So, what sets Mazatlán apart from those better-known beach destinations that attract millions of visitors each year in their own right, like Los Cabos, Puerto Vallarta, and the Riviera Maya?

Mazatlán is a bustling and attractive seaside city on Mexico’s Pacific coast. It’s one of the few coastal cities in Mexico with a historic center. It even has a close-knit and active expat community, including many Canadian snowbirds.Miles and miles of wide, golden-sand beach.There are a lot of reasons Mazatlán can be competitive. It has miles and miles of wide, golden-sand beach. And while it may not be as attractive as the beaches in Cabo or south of Puerto Vallarta, you’ll find no shortage of activities here, from surfing to parasailing. The town has a lively nightlife centered around the Zona Dorada district, and importantly, it feels more authentic than most Mexican resort towns.

I believe this could be one of the cities to benefit from the overflow of demand in the resort towns of Cabo San Lucas and Puerto Vallarta, which are seeing a surge in buyers. Due to its location, Mazatlán is in prime position to catch that overflow, although I’m not suggesting that it will ever have the luxury market and cachet Cabo has.

Also, in recent times deal after deal for Mazatlán properties have been crossing my desk. Some looked really attractive on paper—with good price points for true beachfront condos. I needed to see them for myself, and get a sense of the city, before making any moves.

Trips like this, where I put my boots on the ground in potential upcoming hotspots and meet with a whole host of on-the-ground contacts to get the lowdown on where Mazatlán is going in terms of development and infrastructure, are the lifeblood of my real estate investment strategy. As they say, “you’ll never know if you don’t go.”

The specific opportunity I was looking for is a chance to buy best-in-class real estate that people may be priced out of in more developed places like Cabo. A chance to get in ahead of the curve and any potential Path of Progress.

Read our Guide to Buying Real Estate in Mexico here.

Does Mazatlán have what it takes?

First off, as a place to live and spend time, I’m extremely bullish on Mazatlán.

If you’re looking for a place to live by the beach in Mexico, a pure lifestyle play, Mazatlán should be on your radar. All in all, I was charmed by the place, particularly the older part of town and the malecón, a seaside promenade perfect for evening strolls running for 13 miles along the water lined with condos, hotels, restaurants, public spaces, and more.

I was happy to spend time in Mazatlán. I could imagine expats who moved to Puerto Vallarta or Cabo, but now find them busy and touristy, would find Mazatlán very attractive.

Resort City on the Rebound?

Pacific Coast of Mexico

Known as the “Pearl of the Pacific,” for decades Mazatlán was one of Mexico’s most inviting beach destinations. In the 1950s and ‘60s, it attracted Hollywood celebrities such as John Wayne, Gary Cooper, Rock Hudson, and Robert Mitchum for sportfishing and more. But following a period of rapid growth in the ‘70s and ‘80s, it lost some of its low-key allure.

Mazatlán is popular with domestic tourists and has seen a rise in visitors since the completion of the Durango-Mazatlán Highway in 2013—a 140-mile, $2.16 billion road linking the Pacific with the Central-North of the country.

I first went to Mazatlán in 2005/2006 at the peak of the real estate bubble. The market at the time was in full swing. But then the bubble popped. I had already pulled back by then. I didn’t buy in Mazatlán in 2007, thankfully.

Tourists flock to places that are easy to get to. Expats like to live where it is easy to get home when they want. Remote workers, the kind that are driving the current rise in medium- to long-term rentals, want to be able to come and go as their whims and businesses demand.

For a market to have the potential for capital gain and rental yields that I look for, it needs to be easy to reach. Back then, Mazatlán was not. And while it is easier to get to today, there is still a serious lack of accessibility from abroad. There are only a few flights per day, from a very limited number of U.S. and Canadian cities, and many flights run only in winter.

The lack of flights has certainly had an impact on international visitor numbers, with only about 2.5% coming from outside the country. An interesting fact to note is that 69% of national tourists actually arrive by land.

These numbers highlight one of my deepest concerns about investing in Mazaltan: Without the airlift to build a strong international market, it’s not a place you can expect to get high yields or see high resale demand, nor will it be insulated from any market shocks.

As I saw condo after condo under construction in just a short stroll down the malecón, my overriding question was, who are the intended renters and buyers going to be?

Mazatlán is seemingly big with Canadian snowbirds, but from what I can see there is nowhere close to the number of international visitors needed to make all this construction viable. My feeling is that Mazatlán is a market with too much supply in the works.

What I Like Best About Mazatlán

While I’m skeptical that there is legitimate demand to meet the quantity of these new projects, Mazatlán itself was a very pleasant place to visit, especially around the Centro Historico.

The Zona Dorada is Mazatlán’s hotel zone. The Centro Historico is the old town. The 13-mile malecón runs between them.

On a Sunday, I had brunch in Olas Altas, a beach area near centro, accompanied by the melodious sounds of a street musician. Far from the all-inclusives in the Zona Dorada, this is an area attracting expats and some digital nomads. You have a nice curve of beach backed by cafés, bars, and restaurants. Keep following the road and you reach high points with views in all directions…the Pacific, along the malecón, and down to old Mazatlán and the charming Centro Historico.

The area was one of my favorite discoveries. The vibe is chill, laidback, and family-friendly. And it’s extremely affordable.

The Centro Historico, sometimes called Viejo Mazatlán (Old Mazatlán), was once run down and drab, but is currently benefitting from a big revitalization effort. The colorful neo-classical buildings have been restored and peopled by the creative class, and stylish cafés, boutiques, and hotels are opening on seemingly every corner. You’ll find a few hip restaurants, art galleries, shops, and live music.

There were lots of local tourists in Centro. Folks out for a stroll. A very pleasant and charming atmosphere. The number of families with young kids on the streets, day and night, implies relative security to me.A historic, two-bedroom home is listed for $159,000.One historic home I came across sits right in the middle of Centro, just a 12-minute walk from the beach. It’s a two-bedroom, one-story home of about 1,700 square feet, with a central courtyard, high ceilings, and cedar wood finishes. The listing price is $159,900.

Close by I found another historic home listed for $179,900. It’s a 2,239-square-foot, three-bedroom house near Plazuela Machado, a main gathering point for the neighborhood, as well as restaurants, shops, and other amenities. (I’ve not visited these properties in person so it’s important to do your due diligence.)

Lifestyle Yes, Investment No

Mazatlán is a perfectly nice city, with a charming seaside, nice beaches, marinas, golf courses. There’s a lot to like.

If the apparent sense of safety continues and air lift improves drastically, it could potentially take off and compete with Puerto Vallarta, Los Cabos, or the Riviera Maya as a destination for foreign visitors. With high enough numbers that could generate significant rental income and the potential for capital gains in a resale, it could be a place for a future RETA deal.

But I don’t think that’s going to happen anytime soon, if ever.

This makes crystal clear just how phenomenal places like Puerto Vallarta, Los Cabos, and the Riviera Maya are if you have the right deal. You not only have a strong lifestyle play, but with strong air connectivity and consistently high visitor numbers thanks to all the cool things to see and do, you also have the potential for significant returns from both rental income and capital appreciation.

Consider our last opportunity in Los Cabos, in Cabo Costa. In August 2021, RETA members locked down ocean-view condos in an incredible amenity-rich community from just $188,200. A few months later I went to Cabo Costa’s retail launch where prices were in the region of $80,000 to $100,000 up on RETA-only pricing. And I just got word the other day that the last penthouse in Cabo Costa sold for $375,000.

Our RETA price was under $250,000.

This is exactly why RETA has had so many deals in these places, why there will be many more to come…and why Mazatlán is off the table for now.

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