Great news for those considering investing in real estate in Puerto Vallarta!
In a recent study released by IMCO (The Mexican Institute of Competitiveness), Puerto Vallarta rated as one of the top of 402 municipalities in Mexico for long-term appreciation potential of housing. The study presents the very first Index of Municipal Competitiveness in Housing (INCOMUNV) in Mexico and quantitatively and objectively measures a municipality’s capacity to increase the value of housing in the long run.
The study examined hard data of 402 of the most relevant municipalities in the country – relevant because collectively they comprise 115 cities or urban areas, and together account for 66% of the population, 92% of national production, 80% of the demand for housing, 75% of housing finance and 64% of housing needs. 78 indicators grouped into 13 themes and in turn into 3 pillars (sub-indices) were used to calculate an overall competitiveness rating for the municipalities, which were then classified into 6 tiers of competitiveness: High; Adequate (Appropriate); Medium high; Medium low; Low; Very low. Across the 402 municipalities, a mere seven achieved a competitiveness rating of High; Puerto Vallarta was one of them (and was one of only two municipalities rated as High in the state of Jalisco). The other 395 municipalities were distributed as follows: Adequate, 55; Medium high, 144; Medium low, 133; Low, 50; Very low, 13.
In previous newsletters, we have touted the high quality of life in Puerto Vallarta and right here at Rivera Cuale. We also have said often that Puerto Vallarta offers great real estate investment potential. This study answers the question: How does the quality of life impact the competitiveness of housing?
Measurements based solely on income and wealth are insufficient to assess a society’s welfare. The balance between work and non-work elements of life needs to be considered to make the distinction between standard of living and quality of life, where the first is based primarily on income, and the second includes the natural environment, physical and mental health, recreation and leisure time, and sense of social belonging. Quality of life is evaluated in terms of the quality of and access to services and urban dynamics (cultural venues, sport facilities, educational institutions, etc.); therefore, the value of housing depends not only on the housing’s own attributes, but also on its effective integration into its environment and on the competitive dynamics of its urban area. (More on this in the below Appendix: The Three Pillars.)
The most competitive municipalities in terms of housing are those that present the best economic conditions and a quality of life that generates sustainable growth in the long term value of its housing. These same municipalities are implementing smart policies not only in housing and urban development, but also in areas that ensure overall long-term competitiveness of the municipality: attracting investment and talent, generating high-value jobs, properly managing natural resources (mainly water), ensuring security, and more. For example, Puerto Vallarta’s success as one of the most competitive municipalities stems from its financial competence (a high proportion of municipal revenues comes from its own sources, effective government (a modern property tax system, effective water service and public safety), and suitable levels of urban infrastructure.
By making a commitment to the well being of its residents, a municipality progressively raises inhabitants’ quality of life, thereby attracting newcomers to the area. This in turn increases the demand for housing in that area, which in turn increases the value of housing in the long term.
The ultimate goal of this study is to promote changes that will increase competitiveness in Mexican housing markets. Therefore, it makes a series of recommendations and proposals covering, in summary: implementing all policies and management planning at the metropolitan level; providing more incentives for coordination among municipalities; developing a compact urban growth strategy; bringing housing to jobs, schools and services; designing a mobility and efficient transportation strategy; giving more tools to those looking for housing so that they can make the best decisions; streamlining and making transparent the processes related to housing; and, incorporating urban development criteria with federal financing and subsidies.
In particular, the aim of INCOMUV is to become a useful tool for buyers making housing decisions, for developers, and for public officials in the implementation and improvement of public policies and urban housing development in the country so that it is aligned with a higher quality of life of its inhabitants in the medium and long term. The consequences of these changes will be beneficial to Mexico’s overall competitiveness through the strengthening of individuals’ productivity and therefore economic growth.
Appendix: The Three Pillars
The study took into account not only regulations and characteristics of the housing itself, but of the context of the housing within the municipality and of the municipality within the country.
Pillar 1. Regulations and characteristics of the housing
This sub-index rates the existence of clear rules in a municipality that are aimed at generating the construction of quality housing, from materials and technologies to its environmental sustainability and social integration. It also assesses some characteristics directly associated with housing and access to basic services, amongst other things.
Pillar 2. Context of housing within the municipality
This sub-index evaluates how well integrated the housing is within the urban context, looking beyond the attributes of the housing and its immediate context and rating the mechanisms that allow the housing (and its residents) to participate in productive and educational activities (among others) within the municipality or urban area.
Pillar 3. Context of municipality within the country
This sub-index measures the demographic and socioeconomic trends of a municipality in relation to what is happening in the rest of the country. That is, it measures the change in competitiveness that the area has been experiencing on a macro level.
Written by Leanne Smith, Rivera Cuale
Email: leanne@riveracuale.com