          
          
          
                    MEXICO: A MAJOR BOOM IS IN PROGRESS
          
               If the forces of migration and demography create
          pockets of real estate opportunity in the United States
          -- where property prices are in an overall decline --
          imagine what they can do in other countries where the
          overall economic outlook is far more favorable.  One of
          the areas of the world where this is the case is Latin
          America.
               Mexico has been called the South Korea of Latin
          America. President Salinas' free-market reforms have
          transformed the country from an economist's nightmare
          into an economic powerhouse within a matter of years.
               As a result of deregulation, privatization, and
          tax-rate reduction, Mexican inflation and interest
          rates have been falling steadily.  For example, the
          consumer price index inflation rate has fallen from 30%
          in December 1990 to 17.3%.  And in the midst of North
          American recession in 1991-1992, real GDP growth still
          pegged 3.8%.
               The favorable economic climate and the pioneer
          spirit of the new Mexico have attracted foreign
          investors like never before.  In 1991 alone, Mexico
          enjoyed a foreign capital inflow of more than US$15
          billion.
               For real estate investors, Mexico not only offers
          an unspoiled environment with thousands of miles of
          beautiful beaches and tropical vegetation but also
          boasts a cost of living that is substantially below
          that of any Western industrialized country.
               Many Mexicans who have been living in the U.S. for
          decades are now investing their money in Mexican
          properties and businesses.  Investors also are moving
          to Mexico, anticipating a real estate boom of epic
          proportions.  This boom will be fueled by two
          demographic developments.  
               One involves new internal patterns of migration. 
          The majority of Mexico's middle class lost most of
          their wealth during the early 1980s.  This means that
          today the workplace and the availability of work is the
          determining factor of where a family will live or move.
               Mexico's industry is still concentrated in densely
          populated (and notoriously polluted) metropolitan
          areas, such as Mexico City.  However, President
          Salinas' policy of economic decentralization and the
          electronic revolution in the workplace are powerful
          arguments for a new demographic trend whose force has
          only begun to appear.
               In the next 10 to 15 years, a migrational pattern
          will unfold that will be very much like the U.S.
          migration from the cities into the suburbs in the 1950s
          and 1960s. 
               Young, prosperous Mexicans (like North America's
          so-called yuppies) who are now employed in the cities,
          will increasingly move to the surrounding rural areas.
               This movement will follow the large traffic
          arteries, such as the new highways currently being
          constructed.  An example of this trend will be the new
          route between Mexico City and Acapulco.
               Centers of suburban development will include areas
          around Monterrey, Nuevo Leon, particularly in scenic
          Ciudad Mt. Aleman.  Cities in the vicinity of Mexico
          City, such as Puebla, Jalapa, or  Veracruz, will also
          become focal points of the new trend.
               Additional demand for Mexican real estate will
          come from north of the border, as prosperous members of
          the U.S. baby boom generation reach retirement age. 
               But not only foreign retirees will drive up
          property values in scenic Mexico.  Increasingly,
          professionals will take advantage of the "electronic
          commute" option.  This implies relocating to a low-
          cost, semirural environment while connecting to a
          remote office through modems, interactive television
          environments, and computers.
               Westerners will head for unspoiled regions in Baja
          California, where they will increasingly encounter
          young Mexicans engaged in trade and commerce along the
          California border.  Particularly La Paz, currently a
          small town of 20,000, will attract Mexican yuppies and
          retiring boomers alike.  The town has all the trappings
          of a coming property magnet, including an excellent
          hospital, a university, and unlimited access to the
          maritime paradise of the Sea of Cortez.
               Other ideal locations will be in the state of
          Jalisco, near Lake Chapala, the country's largest lake. 
          Guadalajara and Ajijic in particular will attract sun-
          hungry Americans with a taste for rural living with
          quick access to modern amenities and entertainment.  On
          the Mexican High Plateau, San Miguel de Allende
          provides a haven for seekers of arts and culture.
               Article 27 of the 1917 Mexican Constitution
          decrees that no foreigner may be registered as the
          owner of real estate within the "forbidden zone."  This
          zone consists of a 30-mile-wide strip of land along the
          Mexican coastlines and 50 miles along the U.S. and
          Guatemala/Belize borders.  Unfortunately, it includes
          the favorite beach cities of North American and
          European holiday takers, such as Puerto Vallerta,
          Ixtapa, Acapulco, Cancun, and the entire Baja Peninsula.
               From 1917 to 1972, the only way to hold property
          in this zone was to put it in the name of a Mexican
          citizen.  This was risky business, as the gringo
          investor was dependent entirely on the good will and
          honesty of his Mexican business partner -- who could
          take over the property legally at any time and kick his
          ex- partner out of the country.
               But U.S. tourist dollars soon became too important
          for the Mexican economy.  Mexico no longer could afford
          scaring off potential real estate investors and
          retirees by the prospects of fraud and legal hassles. 
          In 1972, The Ley de Fideicomiso, or Trust Law, was
          established.  The title to the land could now be held
          by a Mexican bank for a foreign buyer who was then
          named beneficiary under the trust.
               Under this trust agreement, the beneficiary has
          full control of the property for 30 years.  Subject
          only to local zoning laws, the foreign owner can build
          on his property, modify it, and develop it.  Commercial
          use includes subdividing, renting, leasing, and even
          selling at any time.  This situation is nearly as good
          as having direct ownership.
               A variety of business opportunities are also
          available in Mexico, and Mexican law has recently been
          changed to allow foreign franchises to open.  A number
          of major shopping malls are under construction, so this
          type of retailing is expected to boom.  Tourism-related
          franchises, in such fields as hotels and car rentals
          are particularly likely to succeed, since this will be
          the first time that names with world recognition can be
          used in Mexico.  A good starting point for information
          on business opportunities and franchising in Mexico is
          The Mexican Opportunities Report, available for $18
          postpaid from Eden Press, P. O. Box 8410, Fountain
          Valley CA 92728, or request their free catalog.  The
          report covers the nature of the Mexican market, foreign
          investment regulations, tourism, franchise
          opportunities, the maquiladora program, and specifics
          about NAFTA.
          
          
          
