Will This Under-the-Radar Town Be the Next Cabo?

Loreto Mexico Hidden Bay
Loreto’s protected islands boast calm waters and beaches where you can hike, kayak, and snorkel.|©iStock/CampPhoto

In the nearby bay, the calm, azure waters of the Sea of Cortez lap onto untouched beaches.

Behind me, the jagged foothills of the Sierra de la Giganta rise out of the desert. I’m nestled between the mountains and sea… on a green oasis of pristine fairway.

This dramatic setting comes courtesy of TPC Danzante Bay, a golf course just south of the town of Loreto, on Mexico’s Baja California Sur. The course, voted the country’s best in the 2022 World Golf Awards, sweeps through arroyos and dunes, valleys and peaks. The 17th hole is perched high on the edge of coastal cliffs, 250 feet above the waves.

It is, in a word, spectacular… though the course, and the adjoining Villa del Palmar hotel, are outliers along this stretch of coast.

While Los Cabos, the municipality containing the city of Cabo San Lucas, has boomed, this area of Baja California Sur has flown under the radar. You won’t see high-rise developments or private pay-toplay beaches. There are no massive cruise ships or sprawling all-inclusive resorts. And the area is difficult to get to, being a six-hour drive from the Cabo airport; Loreto receives only a handful of direct flights from the US.

But the folks who’ve already made it to Loreto are the same trailblazers who moved to Cabo two decades ago. Indeed, the area looks like Cabo… before billions poured in and turned it into the mega-destination it is today.

Which is why I’m so bullish about the future of Loreto…

The Hidden Gem of Baja California

Earlier this year, I drove north from Cabo to Loreto on a scouting trip.

I’ve long had my eye on this market. I first toured the town in 2005, almost a decade before I ever visited Cabo. Even back then, its potential was apparent.

Founded in 1697, Loreto was the first Spanish settlement on the Baja California peninsula. Its historic downtown is a "Pueblo Magico," meaning it boasts cultural heritage and charm. At its heart is a quaint square, awash in colorful family-run restaurants decked out in local artisan décor, plus a handful of boutique hotels.

Out-of-this-world beaches… and perfect weather.

The area is best known for the five Islands of Loreto—Santa Catalina, Danzante, Carmen, Coronado, and Montserrat—part of the 790-square-mile Bahía de Loreto National Park. Several of the islands boast the kind of postcard-perfect white-sand beaches that people fly halfway around the world to enjoy.

Small boats called pangas shuttle tourists back and forth to the islands for sunbathing, hiking, kayaking, and snorkeling among the coral reefs. Sea turtles, angel fish, and parrot fish can be seen up close year-round. Blue and humpback whales are frequently spotted offshore.

In a nutshell, Loreto has virtually every natural advantage a destination could want: soaring mountains, glistening waters, out-of-this-world beaches on protected islands, and perfect weather, with temperatures that average between the high 60s and high 80s F.

Indeed, when I first visited almost two decades ago, Loreto seemed ready to break out. Visitor numbers were increasing and, crucially, more flights were coming to the local airport (Loreto International, located just a few minutes’ drive from town.)

Then the 2008–2009 global financial crisis struck in the middle of what was almost Loreto’s breakout year.

Accessibility has always been Loreto’s Achilles’ heel. The route north from Cabo is among the most breathtaking I’ve ever driven, with the Pacific coast in the west and the stunning mountains of the Baja California peninsula in the east.

But the journey is lengthy, making it prohibitive for most. That means air connections are vital.

When flights were scaled back in the wake of the Great Recession, Loreto’s development stalled. But now, the planes are returning in greater numbers, and word is getting out about Loreto. As Cabo gets maxed out, I see this market as a potential usurper…

A Replay of the Cabo Boom?

The pattern I’m seeing in Loreto today is reminiscent of what happened in Cabo. It, too, was once a small town on a spectacular yet difficult-to-access stretch of coastline. In fact, that was part of its appeal…

Cabo’s first-ever resort was built by Mexican entrepreneur Abelardo Luis Rodriguez, the son of a past Mexican president. The resort was designed to be exclusive—the only way to reach it was by private plane or boat.

Rodriguez had married a Hollywood actress named Lucille Bremer. She spread the word about the resort among her movie star friends. Soon the likes of John Wayne and Bing Crosby were flocking there for sport fishing and other fun in what was essentially a private enclave.

In time, access to Cabo opened up, with direct flights from all over North America arriving at the international airport. And as access improved, the real estate market boomed.

Cabo has been an upscale destination, a hideaway for the wealthy and celebrities. But in recent years, it has broadened its appeal and attracted what I call the "ordinary rich"… the doctors, the lawyers, the tech-wealthy, and many other entrepreneurs.

The ever-growing volume of flight connections has been crucial in this transformation. Today, Los Cabos has over 500 weekly flights connecting it to more than two dozen cities in the US and Canada.

I’ve been tracking this trend closely since I first visited Cabo in 2014, right when the region was starting to bounce back from the 2008 downturn. And I realized it represented a historic investment opportunity…

A major factor has been the rise of remote work…

Even before the pandemic I met plenty of folks—especially from the West Coast and Texas—who would spend a few weeks or months working from Cabo. It’s not hard to understand why. The lifestyle in Cabo is enviable, with perfect weather, fine dining, and world-class beaches.

Post-pandemic, this trend has really taken off. Cabo has become a satellite of the Californian market, and this is contributing to a serious shortage of accommodation, particularly for long-term rentals. In the Quivira luxury resort where I have my winter base, my neighbors are making upwards of $3,500 per month renting out two-bedroom condos on six-month or year-long contracts. The Cabo market is close to being maxed out.

I see Loreto as the next big destination on the Baja California peninsula. It’s already drawing folks in the know… those for whom booming Cabo is getting too busy.

If flight connections improve, as is likely, I expect Loreto to experience a Cabo-style boom.

Loreto, Baja Map

A Short Flight From Major U.S. Markets

Right now, you can fly direct to Loreto via Alaska Airlines from Los Angeles, or via American Airlines from Phoenix, in about two hours. There’s also one weekly flight from Dallas Fort Worth. From Calgary, Westjet flies to Loreto, too. And a few Mexican airlines have connections through Tijuana.

That’s pretty much it, and some of the routes are seasonal.

More flights are coming, however. Alaska is adding a route from San Francisco in December and the Phoenix flight was launched only in October.

Both are positive signs. With frequent flight connections, Loreto is a short, easy trip from some of the biggest markets in the US.

I have strong confidence in the future of Loreto. It will take time, maybe a few years or more, for these trends to play out. But the opportunities will be similar to those I’ve brought to Real Estate Trend Alert (RETA) members in Cabo: best-in-class condos in master-planned communities with outstanding amenities.

Those communities will come… and the demand for them will be significant. Two decades ago, Loreto almost broke out before external events undermined its rise. This time will be different. Once access is improved, Loreto will be the next hot destination in Baja California Sur.

Loreto Could be as Profitable as Cabo

We had our first Cabo Real Estate Trend Alert (RETA) deal in April 2015, when I bought my two-bed, two-bath condo in the five-star Quivira resort.

  • The RETA price was $336,156. In 2022, a local broker offered me $600,000. Then, in January 2023, an identical condo two floors above me listed for $725,000.

  • In May 2018, RETA members could buy condos in the Quivira master-planned gated golf community for $259,800. In October 2022, one of these condos was listed at $410,000.

  • I brought RETA members our Cabo Costa deal in August 2021. In July 2022, a condo that had the RETA-only price of $249,000 was sold for $425,000.

  • In January 2023, RETA members could buy ocean-view condos starting at $258,600 in El Mirador at Cabo Costa. As I write, local brokers estimate similar condos would retail in the range of $350,000 to $400,000.

As these RETA deals attest, Cabo has kicked up to a whole new level… and Loreto might be next.

Editor's Note: Ronan McMahon is IL’s international real estate expert. If you’ve been thinking of buying a rental property overseas, but could use help with your search, consider joining Ronan’s Real Estate Trend Alert. Thanks to group buying power, members get access to best-in-class pre-construction properties in the right locations—at below-market pricing.

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