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Riviera Maya Real Estate Success

Many people believe that the reason for Cancun and Riviera Maya’s growth is the blue of its waters and although this is a great attraction for the millions of people that come here, there are political and economic forces that drove these destinations to be amongst the most coveted in the world.

The History of Success Behind Riviera Maya Real Estate

Beginning in 1940, ruling elites in Mexico accelerated the process of shaping an internal market through the support of agroindustry and manufacturing. In that period, the Gross Domestic Product (GDP) grew at an average annual rate of 6%. Thus, between 1940 and 1955 agriculture grew by 7.4% per annum, while manufactures did 6.9%, and electricity and oil by 6.8%. Although initially the agricultural sector was highly dynamic, it was displaced by an industrial apparatus reflected in the years from 1955 to 1970, where agriculture decreased its growth rate to 3% per annum, while manufacturing increased to 8.6% and electricity and oil rose to 11.6% and 9.2% respectively. This led the country to a deficit in the trade balance which was a problem of great concern to the officials of the administration of President Gustavo Díaz Ordaz (1964-1970).

Mexico's deficit in trade balance of public sector between 1960 and 1987
Graph of Mexico’s deficit of public sector as GDP percentage between 1960-1987

The Birth of the Cancun Project

Officials from the Bank of Mexico were looking for a strategy that would solve the balance of payments deficit​. Senior officials of the bank, who eventually would lead this institution, Rodrigo Gómez (1952-1970) and Ernesto Fernández Hurtado (1970-1976), together with Antonio Ortiz Mena, back then head of the Ministry of Finance and Public Credit, would convince the president of the Republic, Gustavo Díaz Ordaz, to begin the construction of Cancún, the first of five tourist resorts on the Mexican coast. The president announced that policy in his speech of government report in 1969. In the 60’s, the main productive activities of the territory and nowadays state of Quintana Roo were in a critical situation. There was a significant decline in timber production, a reduction in the external demand for chewing gum and a decrease in the production of ‘henequen’, an important base of the region’s economy. The promotion of tourism in this marginalized region of the country could alleviate the social tension caused by the impoverishment of peasants. The situation of the international tourist market was decisive in the birth of the Cancun project. At that time the tourist basins of the Mediterranean, the Caribbean and the Pacific, especially Hawaii, recorded high growth rates. Mexico responded by creating five planned centers: Cancun, located on the Caribbean coast would compete with the islands of this basin, in addition to Ixtapa, Huatulco, Los Cabos and Loreto, on the Pacific coast. The support of international agencies such as the Inter-American Development Bank (IDB) facilitated the plans, since, like the World Bank, saw tourism as a tool to promote the growth and development of the so-called Third World nations. In 1970 the IDB granted the Mexican government a first loan of $17 million dollars for the construction of the Cancun Center. With this, the increase of the attraction of a greater flow of tourists coming from abroad and with this the​ ​income​ ​of​ ​the​ ​balance​ ​of​ ​payments​.

In 1970, constructions began in Cancun, and over the years a practically uninhabited coastal strip would become, along with the Riviera Maya, a favorite destination in the taste of millions of domestic and foreign tourists. In terms of accommodation infrastructure, Cancun exceeded expectations. According to the credit application submitted to the IDB in 1969, by 1980 there would be 3000 hotel rooms, and in 1984 the number of rooms totaled 6106. Between 1970 and 1985, the first 15 years of life of this Planned Center, the GDP of Quintana Roo grew almost triple (2.8 times) than the national GDP. These factors, coupled with the devaluation of the Mexican peso in 1982 (see an interesting article on this subject and its impact on the Riviera Maya here HYPERLINK), created the perfect scenario for the region’s enormous growth in recent years.

Development of Cancun Riviera Maya real estate from 1970 to 2015
Development of Cancun from 1970 to 2015

It is clear that the purposes outlined in the Cancun Plan were achieved by creating jobs, generating foreign exchange and starting a city in a practically uninhabited area of the national territory. This eventually led the world to discover more destinations in the region like Playa del Carmen and Tulum. Knowing what happened in Cancun a few decades ago, what do you think is currently happening and will happen in the Riviera Maya?