We are on the second of a three-part blog journey, focusing on what makes a real estate investment in Tulum such a great diversification tool for your investment portfolio. In the first post, I went through the history of Cancun and the Riviera Maya’s growth, specifically looking at how Tulum’s current rapid development was foreseen and has taken place with a lot more planning than in previous areas.
If you have not read that last blog, here’s a link: PART 1
This week we look at the contributing factors to the significant revenues that vacation properties generate and why they are possible. The first thing to remember is that, in an effort to preserve their pristine beachfront and not become another Cancun, Tulum does not allow multi-family development on the beach. The “eco-chic” hotels that do exist on the beach are all off-grid and fairly minimalist in nature. In the past decade, the rates of these hotels have skyrocketed. To give you an example, for years after we first moved to the Riviera Maya in 2009, we would always get last-minute bookings at what is now Papaya Playa Project for about $20 at the end of August or early September. The same room now starts at $350 per night during the lowest of low seasons (which, by the way, no longer exist). This trend continues down the beachfront, and it is not uncommon for rooms to go over $1,000 per night. Bear in mind that while some of these hotels do offer air conditioning, many are simply a bed, bathroom, and mosquito net. So, if you are traveling with children or additional family or friends, that nightly rate can double or triple, if you can find availability. Herein lies the opportunity for a vacation rental off the beach.
The popularity of Tulum’s beachfront has strongly correlated with the development that has taken place in the area between the beach and town. The first example which actually continues to be the best is the Aldea Zama community. Real estate developers from Merida, Yucatan created a master planned community, complete with a mixed-use commercial center, designated green areas, and subterranean infrastructure. Selling these single-family, multi-family, and mixed-use lots off, individual developers are constructing some of the most luxurious and best-located inventory in Tulum for vacation rentals. An example of one of the first real estate developments in Aldea Zama that has had continued success in the rental market is Arthouse Tulum. While Tulum beachfront hotels will continue to garner higher rates per bedroom, we have found that visitors have, are, and will continue to pay competitive prices for more space, and easier access to off-beach destinations in Tulum. This is especially the case when the property is located inside of Aldea Zama, and boasts that “eco-chic” decor that people love so much.
Having discussed Tulum’s growth and the rental revenue that can be generated, next time we will look at the attractiveness of ownership expenses in Tulum real estate, allowing investors to take home as much income as possible.
By: Andrew Schisler
