LUXURY REAL ESTATE IN LOS CABOS IS COMING BACK
“Developers of some of the world’s most luxurious resorts are moving in, while resort concepts that have been stalled for years are back to building.”
(First Published by Wall Street Journal, Katy McLaughlin August 13, 2015)
Los Cabos, also known simply as Cabo, lies at the southern tip of Mexico’s Baja California peninsula. It consists of two towns—Cabo San Lucas to the west and San José del Cabo to the east—and a 20-mile corridor between them, where most of the beaches, resorts and high-end residential developments are located. Until the 1980s, the area was mainly undeveloped desert and fishing villages. Then, drawn by sport fishing, golf and nearly year-round sunshine, U.S. and Canadian visitors helped build the area’s current tourist-oriented economy.
Prices at the top end are now $1,300 to $1,400 a square foot—30% to 40% higher than during the crash years of 2009 and 2010, said Chris Snell, a veteran real-estate agent in the area. These figures include prime land costs and top-end construction of “air-conditioned space” (excluding terraces and patios). During the peak years from 2004 to 2007, top-end prices were a bit higher, at about $1,400 to $1,500 a square foot, Mr. Snell said.
Chileno Bay Club, a 1,200-acre area with 2 miles of beachfront on Chileno Bay, where development has started and stopped for years, has already sold $50 million worth of property since launching a year ago, said Mr. Snell, a former brokerage owner who is now director of development for Chileno Bay Club.
Like Maravilla, Chileno Bay Club is eschewing a traditional Mexican look for modern lines and finishes. It will also have a kids’ club with a burger restaurant and videogame room, two movie theaters, an 18-hole, Tom Fazio-designed, members-only golf course and a network of bike paths.
The modern design was a draw for Joel and Terry Ray from Dallas. The couple bought a four-bedroom house for $2.3 million in Villas del Mar two years ago, and spent an additional $300,000 to $500,000 to modernize the interior, Mr. Ray said. They now plan to list that property for about $3 million, after they build a five-bedroom house in Chileno Bay Club. They start construction this fall.
“One of the things that attracted me was that we could custom-build our own home and we’re right on the water,” said Mr. Ray, 63, who owns a company that provides medical benefits. Mr. Ray said the fact that Chileno Bay Club houses have solar panels is also a big draw, because he can sell energy back to the grid when they are not in the home, reducing energy costs.
Chileno Bay Club’s beachfront lots have sold for $7 million to almost $9 million, while elevated lots are $7 million to $15 million, said David Michonski, executive vice president at Snell Real Estate, now an affiliate of Engel & Völkers, a Germany-based international brokerage. Construction—whether buyers use their own architect or ask the developer to build the house—is additional, and costs roughly $500 a square foot, Mr. Michonski said. Chileno Point Villas, the type of oceanfront home the developer is building for the Rays, cost $6 million to $10 million for both the land and construction. Mr. Ray declined to say what he paid.
Developers and real-estate agents say that the typical buyers 10 to 20 years ago were retirement-age couples looking to get away from it all. Today, by contrast, there are more young families and more retirees who are catering to the needs of their children and grandchildren. “In the olden days it was two guys with a fishing cabin raising hell,” said Mr. Snell. Today, “the profile of our buyer has become more family oriented.”
“We’re building more meeting places, a club house, places where people sit together, places to watch a movie together at night,” said developer Mark Cooley of SV Capital, based in Englewood, Colo.