PGUS - CBRE gives a very positive assessment of the Cielo Mar land, as well as the market outlook and opportunities for lot/home/condo sales AND the demand from tourism for hotels and condo/home rentals. This is reflected in the Cielo Mar property "As Is" market valuation of $42M.
1. Cielo Mar land is ranked by CBRE to be 7% above average compared to typical Mexico resort development sites
2. CBRE reports positive market conditions and outlook for Cielo Mar:- Overall, second home sales volume is on the rise and supply is concentrated largely in oceanfront condominiums. With border crossings and hotel arrivals increasing annually in the area,
future demand should continue to grow at a healthy rate.
The physical settings of Mexico that have attracted foreign tourism will continue to strengthen. Tourism will continue to be a significant driver to the Mexican economy.NOTE: in the following notes compiled from the CBRE report on the Cielo Mar land, "the subject area" refers to "the location of Cielo Mar."
From the CBRE report - Market Conditions and Outlook for Cielo Mar: MEXICO TOURISM Tourism is Mexico's largest employment source.... WTTC stated that they "expect the growth in Mexican travel and tourism economy GDP over the next 10 years to average close to 5% per annum...
SECTUR reports that the number of international travelers have increased over 9% annually for the past three years.
These indications illustrate the continued improvements in the Mexico resort markets. According to SECTUR, Americans are the primary tourists, being 56% to 61% of the total international arrivals over the past five years.
In the past, Mexico has successfully been able to attract tourists to its cultural and natural attractions to promote
investment in tourist properties. Mexico is long known as an attractive destination for
Americans looking to purchase real estate abroad. CONCLUSION ... The physical settings of Mexico that have attracted foreign tourism will continue to strengthen. Tourism will continue to be a significant driver to the Mexican economy.
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BAJA CALIFORNIA ENSENADA Ensenada is located approximately 55 miles south of the international border and is widely recognized because of its natural and tourist attractions. Ensenada features many national parks, cave paintings... is also a popular whale-watching destination. Many come to Ensenada to observe thousands of gray whales coming from the north seas, destined for Baja California Sur, where they will give birth (
right into and through the Bay of Rosario, right where Cielo Mar is situated). Many competitions take place in Ensenada, such as sport fishing, surfing, regattas, as well as the famous Baja 1,000 race. With this many activities, it is easy to understand why
Ensenada has historically welcomed 33% of the total cruise ship arrivals to Mexico. In fact, until recently 350,000 tourists arrive annually by cruise ship,
a number surpassed only Cancun in the Mexican Carribbean. While cruise ships incomings have slowed over the past year, cruise ships dock about 4 to 5 days a week.
TOURISM Foreign visitors to the State [Baja California] coming from the U.S., come mainly from California, Oregon, Washington, and Arizona. The most important destinations in the State for leisure and business travelers include Rosarito, Tijuana, and Ensenada, with beach destinations preferred by most leisure travelers. Leisure visitors from the U.S. tend to be between 40 and 65 years of age, married or in a relationship, educated at the university level or higher, with about thirty days of vacation time, and they primarily research travel options on the internet. Most visit to relax and experience another culture. Most
domestic visitors also use the Internet, with about half having a university education or higher and about half are married or with a partner. Most domestic visitors are on vacation with their families.
International tourist arrivals to hotels in the Tijuana-Rosarito-Ensenada corridor have increased overall by about 23% from 2015 to 2017.
Since 2013, arrivals to hotels to the corridor have nearly doubled. Historically, tourism has been a strong and growing segment in the local industry. Tourists from the U.S. have been visiting the area since the early 1900's. Most international visitors come from the United States. Travel to the area has generally increased substantially over the past fifteen years and is due to the expansion of development in and around the corridor. Once largely visited by people from California and Sonora, more and more visitors are from U.S. states surrounding California and even as far north as Canada.
Historically, the success of the Rosarito/Ensenada market has been directly linked with the economics of Southern California. Within a four hour drive of the Rosarito/Ensenada corridor, there are approximately 5.76 million households, encompassing over 17.7 million people. Of these households, nearly 32% or about 1,825,000 households, have annual incomes more than $100,000 per year (
all good prospects for vacationers renting hotel rooms, condos, time-sharing homes?). Nearly 17%, or about 950,000 households, representing 2.9 people, have annual incomes over $150,000 (
all good prospects for home/condo buyers?). This income threshold is viewed as the lower limit of those buyers who can afford a second residence.
In addition, consumer confidence is on the rise in California. As the index rises, consumers are more apt to make large purchases, such as a second home...
This bodes well for second home demand in the subject area.
Primary research indicates that more and more visitors to Mexico beach resort destinations are families who are looking for family oriented experiences. Due to its geography and proximity to the subject area, California is, and historically has been, a primary target market to the Rosarito/Ensenada corridor. Again, primary research indicates that the reach of visitors to the subject area is to other western states.
Further, the draw of California visitors is the relatively inexpensive real estate and hospitality along the beach compared with Southern California. This expands the target market to even more population and potential buyers.
In addition, the subject area has the ability to capture both foreign
AND national visitors. A majority of arrivals to hotels in the subject area are Mexican Nationals. There is a large population of wealthy Mexican nationals that can afford a second home, expanding the potential buyer draw. Additionally, more established resort areas of Los Cabos, Puerto Vallarta, and Cancun are seeing increases in tourism by Mexican Nationals. Therefore, with the Mexican National visitor being a backbone to Mexico tourism, additional demand is projected by both foreign and national visitors in the future.
Most developments along the Rosarito-Ensenada corridor are reporting increasing sales further adding to the trend of a recovering and growing market. Bajamar, one of the oldest developments along the corridor, reports poperty tours have increased to about 3-4 per day... This increasing demand bodes well for the entire area.
AREA CONDOMINIUM PROJECTS From our sources, we have inferred that there are a significant number of planned condominium projects in the area... They have... Prices range from $160,000 to $1,100,000 with an average of about $300,000.
CONCLUSION Overall, second home sales volume is on the rise and supply is concentrated largely in oceanfront condominiums. With border crossings and hotel arrivals increasing annually in the area, future demand should continue to grow at a healthy rate. -------------------------------------------------
LOCATION ANALYSIS (Cielo Mar land) The subject site is compared to a typical quality development site in order to gauge its potential to attract end user buyers. The higher the ranking in comparison with sites of other established developments, equates to the more likelihood of success of a development at the subject's location.
For the comparison, a development with high ratings would be El Dorado Golf and Beach Resort in Los Cabos, a development that has most home/condo prices from $3 to $20 million and is a private community with Hollywood stars, professional athletes, and other well-known entertainers as owners. In contrast, the lowest rating would be given to an ill-planned subdivision that lacks paved roads or utilities located on the mainland coast of the Gulf of Mexico which is prone to hurricanes and crime.
CONCLUSION Overall, the subject is gauged to be slightly superior to the typical Mexico resort development site due primarily to its oceanfront location and good topography offering good ocean views, yet offset by its further location south of existing developments and amenities.
Cielo Mar land rank/score, relative to typical Mexico resort development sites
Cielo Mar land rank/score: 59
Average rank/score: 55
Percentage above average: 7%
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