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Brokers, analysts give high marks for buying second-home real estate in Punta Mita

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Buying luxury real estate in Mexico has never been more attractive, thanks to more liberal lending policies from U.S. companies, competitive pricing and healthy appreciation in luxury developments like Punta Mita, say brokers and analysts. Punta Mita, a 1,500-acre, master-planned, luxury second-home resort community on Mexico's West Coast, experienced a 26 percent increase in sales from 2004 to 2006 and at full build-out will have a real estate value of approximately $2 billion. Prominent American companies including GE Capital and Wachovia Securities now offer financing for Punta Mita real estate, and Stewart Title Guaranty of Houston, Texas, the fourth largest such company in the United States, is a strong partner for the Mexican company DINE, owner/developer of Punta Mita. A number of U.S. developers are currently building additional luxury communities at Punta Mita. These include St. Regis Resort & Residences, developed by Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT); The Four Seasons Resort Punta Mita, owned by Chicago-based Strategic Hotel Capital Inc.; Porta Fortuna, developed by Inspired Resorts of Los Angeles; Las Palmas, developed by Michigan-based BW Developers; Las Terrazas Golf Villas, developed by Morash Investments based in Edgartown, Mass.; and El Encanto, developed by AIG Global Real Estate, a subsidiary of American International Group Inc. (NYSE: AIG). "Up until a few years ago, most buyers paid cash for properties in Mexico, but financing is now available for loans of up to $6 million in property value at high-end properties including Punta Mita," said Robin Reyes, sales associate with Punta Mita Properties and a pioneer in Mexican lending programs for cross-border financing. Buyers are attracted to Punta Mita's competitive pricing structure, as it currently costs an average of a third of the price to build a comparable home in more traditional U.S. destinations like Florida and Hawaii. Mexico also has a low property tax rate. Punta Mita is currently offering one-acre beachfront lots in its newest community, Kupuri, priced from $2.3 million to $7.2 million, as well as a range of single-family condo and villa products starting at $575,000. "The appreciation for property at Punta Mita has been phenomenal," said John Youden, a local real estate market expert and general director of Produciones Viva, MLS, PVR, which owns the multiple listing real estate service in the Punta Mita and Puerta Vallarta area. "The first land lots there, which were sold for $1 million, are now going for $4 million and higher." Jonathan Smart, a Punta Mita Properties sales executive, said, "The purchasing process at Punta Mita is made easy through the master trust that DINE has established. New residents can choose to stay within the master trust or create their own trust, but either way is hassle-free and legally sound." Since DINE purchased the original deed directly from the Mexican government land trust, the title at Punta Mita is clean and clear and has been insured at various levels by Stewart Title Guaranty. Title insurance is included in Punta Mita property purchases. Punta Mita's master-planned developer/owner, DINE has been at the forefront of large-scale, high-end commercial, residential and resort communities in Mexico. The company has experienced solid growth, with more than $116 million in sales closed for 2005, including a 26 percent sales increase from 2004 to 2006, thanks to Punta Mita, its newest luxury master-planned resort and residential community. DINE has invested $150 million so far in the project's infrastructure. A spear-shaped peninsula with nine miles of Pacific Coast shoreline, Punta Mita is surrounded on three sides by white-sand beaches and dramatic coves, features an 18-hole Jack Nicklaus Signature golf course, with a second Jack Nicklaus Signature golf course and a St. Regis Resort and Residences slated for completion in December 2007. The property also boasts a Four Seasons Resort, a private Residents' Beach Club as well as several other villa, condo and private home residence projects planned or under development. "The neighboring Puerta Vallarta area never had anything this upscale prior to Punta Mita. And the distance from mainland USA is hardly an issue compared to places like Hawaii," notes Barry Frank, principal of Palm Beach, Fla.-based Norton Consulting Inc., which conducts consulting services for resort communities in Mexico, the Caribbean and Central America. The majority of Punta Mita buyers are from the United States, adds Punta Mita Sales Executive Brock Squire, with the balance split between Mexico and Canada. "U.S. buyers tend to hail mostly from the Western states, followed by a smaller, but fast growing number from the Midwest, New York and New England, thanks to frequent direct flights from these areas. Buyers are generally in their mid-40s to mid-50s and are typically financially independent entrepreneurs." For more information, contact the Punta Mita Discovery Center at (888) 647-0979, visit www.puntamita.com.mx/ or e-mail info@puntamitaproperties.net.

Nichols is with Spring O'Brien & Co.

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