For us, it’s very simple: it’s all about arming yourself with knowledge. Tulum has long been a destination coveted by tourists and investors alike. The latter saw it as the new destination where they could grow their wealth and generate high returns on investment. As time went by, we could see how the city was rapidly filling up with residential projects that promised excellent investment returns to investors. This situation seemed to worry a sector of investors that a real estate bubble was being created.
Is Tulum in a real estate bubble?
To understand this complex issue, it is crucial to examine several factors that are influencing the Tulum real estate market. One of the key elements is building density. As our experts point out, one thing is building density per se and another is neighbor density. This involves the number of units being built in a given area and how this affects the experience of living in that location.
In this regard, it is essential to understand the difference between building density and population or occupancy density. While the former refers to aspects such as how many floors are built, what footage is used and how many units are built, the latter relates to the number of people living in those units and how this impacts the quality of life and the environment.
In the early years, we saw an increase in the construction of high-density projects in Tulum, which raised concerns about the preservation of the natural environment and the quality of life for residents. However, as the Tulum real estate market evolves, so do the preferences of buyers and developers. Increasingly, we are seeing a movement toward projects that prioritize low density and respect for the natural environment. Developers are adopting new styles and approaches to create larger, more exclusive spaces that align with buyers’ changing needs and care for the environment.
Tulum’s best amenity is the jungle.
At the end of the day, the market always sets the tone. As a result of the pandemic, we saw how people wanted and were looking for larger spaces, they wanted to have this freedom that they didn’t have in confinement. So, the market itself has been realizing that these over-densified projects with hundreds of small studios are no longer feasible. Really, the luxury that we have in Tulum and that we have to take care of is definitely the low density.
Low density comes not only with how much you are going to enjoy a low density environment, it comes with taking care of the natural resources. And for many investors interested exclusively in monetary return, we must explain to them why opting for low density projects is to guarantee their return. Betting on projects with ecological differentiators will help to have better returns, from competition when reselling your unit, to prolonging the life of Tulum as a tourist destination.
Finally, the non-existent bubble is left without arguments when we go to facts. We have foreign investment, government financing and population growth. We talk about a bubble when the growth is virtual, but in the case of Tulum, we are facing real growth, with real people moving in, from nationals to foreigners, and perhaps where we can see it most clearly is with the new airport.
As we get closer to March, we will start to have foreign airlines coming in. We have Canada, the U.S., possibly Japan, all the major ones! So, did these countries really decide to offer themselves in Tulum if there was no demand? The more access you have to something, the more people will come.
In conclusion, while Tulum faces challenges in terms of density, real estate speculation and over densification, it also presents opportunities for sustainable development and innovation in the real estate market. With a focus on careful planning, preservation of the natural environment and respect for the local community, Tulum can remain a desirable destination for living, vacationing and investing.
If you prefer to watch the video where our advisors talk more extensively about the subject, click here.
