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Saturday January 20 2018
Residential Real Estate in Oaxaca
Alvin Starkman

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During the first week of July, 2008, in the quaint Oaxaca suburb of Loma Linda, there were 12 new homes under construction and four building lots for sale … all within about six blocks. Colonia Loma Linda is one of the booming residential neighborhoods in the city of Oaxaca.

It was recently reported that Oaxaca has one of the five strongest markets in the country for real estate sales and investment. Initially, this might seem surprising and in fact nonsensical given the bad hit the city took in the latter half of 2006 as a consequence of the civil unrest, and its effect on the economy of the region since Oaxaca relies entirely upon tourism for its existence. It’s been suggested that misleading media reporting of two years ago has resulted in a resolve on the part of both government and residents of the city to bounce back, better than before.

The fact that residential real estate values for prime land continue to rise at the rate of approximately 20% per year suggests that something positive is afoot in the region, at least in the eyes of investors and would-be residents and business operators. Oaxaca real estate agent Fernando Lizardi can’t comprehend the phenomenal growth. During a recent interview at a local lunchtime haunt he confessed: “I can’t figure it out, but Oaxacan landowners seem to know what they’re doing. Somehow their land gets sold and houses get built. And if a piece of land or a home doesn’t get sold after a while, what does the owner do? He raises the asking price, something unheard of in the US.”

Certainly the opening of the toll-road from Mexico City to Oaxaca in 1995 has had a gradual impact on land values, with more visitors to the state capital than ever. Some believe the trend will not only continue, with a new highway currently under construction which will dramatically reduce travel time from Pacific beach resorts such as Huatulco and Puerto Escondido to Oaxaca.

More sun and sand vacationers will be heading to the city to spend their tourist dollars on the region’s diversity of crafts, renowned cuisine, accommodations, and tours taking them to Zapotec ruins, town marketplaces, Dominican churches and more. It appears that merchants in other parts of the country are anticipating the influx, buying up land with a view to embarking upon or expanding travel industry related operations.

Home-builder Joaquín Solís Altamirano is similarly surprised at the strength of prices in the residential real estate sector around the city. Solís, with an M.A. in civil engineering from London School of Economics, is a partner in a full-service design/build company known as URBIC. He works closely with architects, lawyers and notaries, and different branches of government. He’s been building homes in Oaxaca since 1992 and before then in Mexico City.

Centro Historico

Solís is building a new home for a European couple in the centro histórico (downtown), not an easy task by anyone’s estimation. From Lizardi’s perspective, there’s no shortage of American and Canadian clients, his niche market, for downtown sales and development. It’s what they’re looking for that’s the problem: “Most want to buy in the centro histórico, where there’s very little available,” Lizardi laments. “And when something does come up for sale, it’s a property that just doesn’t cut it with the tastes and lifestyles of ex-patriots. In the past, Oaxacans tended to build homes with several small rooms, low ceilings, and little concern for aesthetics which would pique the interests of non-Mexicans. Accordingly, major renovations are now invariably required.”

According to Solís, acquiring construction permits in this part of the city can be a lengthy and frustrating process, for a couple of reasons. He explains: “First, while there is only one application to be submitted, it must be approved by both federal and local governments. Second, although a regulation stating that you must respect the city’s colonial architecture might seem straightforward enough, the problem is with its application. Details are not always spelled out, and can be open to interpretation. The authorities, if they’re so inclined, can even pass judgment on your choice of colors for the interior of your home. Simply put, the rules are poor.”

Solís believes that as long as you appreciate colonial styling, and are prepared to be flexible and make relatively modest changes to your plans, you’ll be fine. He does find it curious that in old-world cities such as Paris, post-modern construction, at the vanguard, is permitted, but not in downtown Oaxaca. He concludes, however, that as confusing as the regulations are, and despite their inconsistent interpretation and application, in the end Oaxaca’s centro histórico will maintain its colonial charm, and continue to be a draw for tourists and ex-patriots alike.

Suburbs and Villages

In the suburbs and nearby villages, by contrast, it’s a different story in terms of availability of properties and building restrictions. There are several contemporary homes for sale, as well as serviced lots on the market from anywhere between $ 50 and $ 300 per square meter, depending on, of course, location. A survey of new home sale prices in Loma Linda confirms that prices are in the range of $ 200,000 – $ 250,000. According to Solís, construction costs range between $ 350 and $ 550 per square meter, depending on quality of finishes. The attraction of many ex-pats to domestically produced materials such as talavera tiles, clay and adobe bricks, and locally-mined cantera stone, tends to keep total price in the lower range of the scale.

“It’s not surprising about Loma Linda,” Lizardi notes. “It’s only a 10 – 15 minute drive from downtown, public transit is virtually at your doorstep, most lots are now serviced and on paved roads, and ownership is private.”

Any notary public worth his weight in tortillas will tell you that private ownership is the preferable way to go, all other things being equal, as opposed to buying ejidal or communally owned land. But some foreign buyers have either an unwavering confidence in the future of privatization, a belief that nothing untoward will happened to their holdings or their ability to build, rent and/or develop if not held privately, or a preference for buying larger tracts of land as economically priced as possible and then dealing with issues as they might arise. “It’s just a matter of your comfort level when your home or investment is in a country you’re not 100% familiar with, and how you view peace of mind,” Lizardi surmises.

Apart from Loma Linda, other hot residential areas around Oaxaca, especially for acquiring land and building, are Guadalupe Victoria, San Andrés Huayapan and San Felipe del Agua. There has been a recent influx of ex-pats into the latter two neighborhoods.

Solís is also building a home in San Andrés Huayapan, for an American, on communally owned land. “With relatively low land costs, improved and faster access to the city over the past several years, and an open, tranquil, clean-air environment, many continue to choose this village,” he continues.

“However, it can be a much more laborious and precarious process dealing with communal authorities in Huayapan, than in downtown Oaxaca, or in suburbs where land is held privately and restrictions are pretty well non-existent. You must know that in Huayapan, and even in parts of upscale San Felipe del Agua where land prices are extremely high, you’re effectively dealing with village elders with a great deal of control, and agrarian land holding systems which in some cases pre-date The Revolution. I always give my clients a step-by-step guide to buying land in Oaxaca which is not privately held. As long as each step is followed, and that’s the land ownership the client wants, he’ll be fine.” He concludes, almost jokingly: “And remember, if you buy communal land, your home is effectively protected from creditors.”


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