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Saturday, May 16, 2009

Selling Mexico’s Coast to Foreigners

Selling Mexico’s Coast to Foreigners
by Christa Thomas

On March 5, 2009, Senator Mario López Valdez introduced legislation that would remove restrictions on foreigners from directly acquiring property on Mexico’s coasts.

The bill seeks to modify Article 27 of Mexico’s Constitution, to grant foreigners the ability to acquire land near Mexican beaches without intermediaries.

Article 27 was put in place for reasons of national security, in response to numerous historic foreign invasions. Currently, foreigners who wish to acquire lands situated within 50 kilometers (31 miles) of Mexico’s coast must do so indirectly through trusts administered by a Mexican bank, or, in limited circumstances, through a Mexican corporation.

The Constitutional prohibition does not impede foreigners from owning land in the coastal zone. It only imposes procedures that make the purchase more costly and complicated, and the investment more uncertain. This can reduce the incentive for foreigners to invest in Mexico.

Senator Valdez, a member of the Partido Revolucionario Institucional (PRI), argues that current international economic and political conditions favor removing ownership restrictions. In particular, international investors are looking for cost-effective alternatives to the high cost of housing in their local markets.

In Mexico, tourism is an important economic activity that contributes 8 percent to the nation’s GDP, and employs 6 percent of the population. In 2007 there were over 4.3 million vacation properties (including timeshare units) within the coastal regions, with nearly 70 percent of those belonging to foreigners.

Senator Valdez contends that offering simplified coastal land ownership to non-Mexicans will further boost Mexico’s economic growth.

This legislation to amend the Constitution is now with a Committee of the Senate for analysis and official opinion.

Source: www.pan.senado.gob.mx