The Evolution of Foreign Investment in Mexican Real Estate: From Openness to the Fideicomiso

A Key Historical Perspective for Foreign Investors

The history of foreign investment in Mexican real estate has been shaped by constitutional and legislative changes that defined, restricted and later opened up access to strategic areas of the country. Below, we explain how this legal framework has evolved and why today it is possible to invest securely, even in the Riviera Maya.

 

The History of Foreign Investment in Mexican Real Estate: From 1917 to Today

Before 1917: Complete (and Risky) Openness

During the Porfiriato (1876–1911), the Mexican government actively encouraged foreign investment. Vast tracts of land were granted to companies and individuals from the United States, Europe and Canada.

• Foreign companies controlled mines, railroads, ports and agricultural land.
• Residential and commercial properties were acquired by foreigners with few restrictions.

This model led to land concentration, inequality and social conflict that eventually sparked the Mexican Revolution.

 

1917: The Constitution Protects Territorial Sovereignty

The 1917 Constitution established in its Article 27:

• The Mexican State is the original owner of all lands and waters.
• The “restricted zone” is defined: 100 km from the borders and 50 km from the coastlines.
• Foreigners cannot directly acquire property within this zone.

Read the official text of Article 27: Political Constitution of the United Mexican States  View document

 

1973: Formal Regulation of Foreign Investment

The Law to Promote Mexican Investment and Regulate Foreign Investment is enacted:

• The ban within the restricted zone is upheld.
• Investment outside that zone is permitted with government authorization.

See analysis: Source: SciELO

 

1993: Modern Legal Solutions Are Created

The Foreign Investment Law introduces two legal structures:

1. Fideicomiso (bank trust): the bank holds title to the property, while the foreigner is the beneficiary with full rights. For more information, read our article on the fideicomiso here.
2. Mexican corporation: for commercial purposes, property may be acquired through a legally incorporated company.

Read the current law: Foreign Investment Law (Ley de la Inversión Extranjera)

 

Timeline Summary

• Before 1917: free but unregulated investment.
• From 1917: foreign ownership is prohibited in strategic areas.
• 1973: foreign investment is regulated and restricted.
• From 1993: investment is permitted in any area through a fideicomiso or a Mexican corporation.

 

Frequently Asked Questions (FAQ)

What is the restricted zone in Mexico?

It is a strip extending 100 km from the borders and 50 km from the coastlines where foreigners cannot hold direct title to property. There are legal mechanisms for investing in these areas.

Can a foreigner invest in the Riviera Maya?

Yes, as long as they use a fideicomiso or set up a Mexican corporation.

What is a fideicomiso (bank trust)?

An arrangement in which a Mexican bank holds legal title and the foreign buyer is the beneficiary with full rights to the property.

Why hasn't the Constitution been amended?

Because the current mechanisms (fideicomiso and Mexican corporation) allow legal investment without the need to amend it.

Can you invest outside the restricted zone?

Yes, even before 1993, with authorization from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores).

Which option is better: a fideicomiso or a Mexican corporation?

It depends on the use: for residential or vacation use, a fideicomiso; for commercial use or institutional investment, a Mexican corporation. See our comparison article.

Ready to invest in the Riviera Maya? At L’agence by Los Socios, we guide you step by step. Contact us for personalized advice.

You may also be interested in: Real Estate Crowdfunding in Mexico: A Fractional Investment Alternative and The Complete Checklist for Buying Pre-Construction in the Riviera Maya.