Just in from Conde Nast Traveller

  Just in from Condé Nast Traveler...
 
 

What is just getting underway is what many are calling the "Largest  southern migration to Mexico of people and real estate assets since  the Civil War"   A significant percentage of the Baby Boomer s have been  doing the research and are making the life changing decision to move out of the U.S.A.

 The number one retirement destination in the world is Mexico. There  are already over 2,000,000 US and Canadian property owners in Mexico. The most conservative number of American and Canadian Baby Boomers who  are on their way to owning property in Mexico for full or part time  living in the next 15 years is over 6,000,000. Do the math on  6,000,000 people buying a $300,000 house or condo and you will  understand why the U.S. Government is trying to tax this massive shift  of money to Mexico through H.R. 3056. The U.S  government calls this  "The Tax Collection Responsibility Act of 2007". Those who will haveto pay it are calling this the EXIT TAX.
 
 
Mexico: A better economic choice than China
 
Another large exodus from the U.S.A is high paying skilled jobs. The  job shift in automobile sector, both car and parts manufacturing, is  already known by most investors. In the last few months as John Deere  and Caterpillar have been laying off thousands of workers in the  U.S.A., and hiring equal numbers in Mexico.

 The most recent industry that is making the shift is the aerospace  manufacturers. In the city of Zacatecas there is currently a $210  million aerospace facility being built. With the 11 U.S. companies  moving there, it is estimated to provide over 200,000 new high paying  jobs in the coming years. One of the main factors for the shift in job  south to Mexico instead of China is realistic analysis of total  production, labor and delivery costs. While the labor costs in China  are 40%  less on average, the overall transportation costs and  inherent risks of a long distance supply chain, and quality control  issues, gives Mexico a distinct financial advantage.

Mexico's real economic future
 
Mexico has avoided completely the  subprime problem that has devastated the U.S. banking industry. The  Mexican banks are healthy and profitable. Mexico has a growing and  very healthy middle and upper middle class. The very recent  introduction of residential financing has Mexico in a unique position  of having over 90% of current homeowners owning their house outright. U .S. banks are competing for the Mexican, Canadian and American cross  border loan business. It is and will continue to be a very safe and  very profitatable business. These same banks that were loaning in a  reckless manner have learned their lesson and are loaning here the old  fashioned way. They require a minimum of a 680 credit score, 30% down  payment, and verifiable income that can support the loan. In most  areas of Mexico where Baby Boomers are moving to, with the exception  of Puerto Penasco (which did not have a national and international  base of buyers), there is no real estate bubble. The higher end markets  ($2-20 million) in many of these destinations are going through a  modest correction. The Baby Boomers market here is between $200,000  and $600,000. With the continuing demand inside the Bay of Banderas,  that price point, in the coming years, will disappear. This is the  reason the Mexican government is spending billions o f dollars on more  infrastructure north along the coast all the way up to Mazatlan.
 
The  other major area where America has become overpriced is in the field  of health care. This massive shift of revenues is estimated to add  5-7% to Mexico's GDP. The name for this "business" is Medical Tourism.  The two biggest competitors for Mexico were Thailand and India.  Thailand and India's biggest drawback is geography. Also recent  events, Thailand's inability to keep a government in place and the  recent terrorist attack in Mumbai, have helped Mexico capture close to  half of this growth industry. In Mexico today there are over  56 world class hospitals being built to keep up with this business.
 

Mexico is currently sitting on a cash surplus and an almost balanced  budget. Most Americans have never heard of Carlos Slim until he loaned  the New York Times $250 million. After that it became clear to many  investors around the world what Mexicans already knew: that Mexico had  been able to avoid the worst of the U.S. economic devastation. Mexico's resilience is to be admired. When the U.S. Federal Reserve  granted a $30 billion loan to each of the following countries Mexico,  Singapore, South Korea, and Brazil, Mexico reinvested the money in  Treasury bonds in an account in New York City.

According to oil traders, Mexico's Pemex wisely as the price of oil  shot to $147 a barrel put in place an investment strategy that hinged  on oil trading in the range of $38-$60 a barrel. Since the beginning  of 2009 Mexico has been collecting revenues on hedged positions that  give them $90-$110 per barrel today. Mexico's recent and under  reported oil discovery in the Palaeo Channels of Chicontepec has  placed it third in the world for oil reserves, right behind Canada and  Saudi Arabia.

 The following is a quote from Rosalind Wilson, President of the  Canadian Chamber of Commerce on March 19, 2009. "The strength of the  Mexican economic system makes the country a favorite destination for  Canadian investment". 
 

I would offer a word of caution for investors in Mexico. Do not be  seduced by the endless natural beauty that is everywhere, both inland   in colonial towns and along thousands of miles of beach. Apply  conservative medium and long term investment strategies without emotion.

 The demand for full and part time living by American and Canadian  Baby Boomers is evident throughout the country. The top two choice  locations are ocean front, and ocean view. The third overall choice,  which is less expensive, is inland in one of the many  beautiful  colonial towns or small cities.

 Mexico, with the world's 13th largest GDP, is no longer a "Third  World Country", but rather a fast growing, economically secure state,  as the most recent five-year history of its financial markets when  compared to the US.'s financial markets suggest.
  *DOW JONES MAY 2004 10,200 MAY 2009 8,200 20% LOSS IN 5 YEARS

 **MEXICAN BOLSA MAY 2004 10,000 MAY 2009 23,000 130% GAIN IN 5 YEARS*

 Adamarie King A Conde' Nast Traveler Magazine Top Travel Specialist