Property Appreciation: Why Invest in the Riviera Maya?

What is appreciation (plusvalía)?

Appreciation is the added value a property gains over time, increasing its purchase and sale price on the market. It is calculated as an annual percentage.

Figures for the state of Quintana Roo:

The Riviera Maya, and Tulum above all, has seen exponential economic growth in recent years, driven by the influx of tourism since the pandemic, when it was one of the only vacation destinations in the world that remained open. Not to mention the incredible attractions — cenotes, turquoise beaches and more — that people are discovering in Mexico. Demand for properties has never stopped rising, and as a result prices tend to climb faster than anywhere else in Mexico.

The national average appreciation rate was 7.90% in 2022, and Quintana Roo was the state with the highest appreciation, averaging 12.90%.

Appreciation factors:

Many factors influence changes in a property's price. Chief among them are location and concept: creating an innovative project that breaks the mold and draws attention will undoubtedly have a positive effect on the price of those properties. It's important to analyze the area where the property is located and see which commercial projects are planned, such as shopping centers, restaurants, gyms, and sports and cultural venues.

The advantage of buying pre-construction:

Buying a property that hasn't been built yet — that is, a pre-construction purchase — gives the buyer a more affordable price than a move-in-ready property, and it's very common in the Riviera Maya. Entering a project at an early stage allows the buyer to benefit from the property's increase in value as construction progresses, on top of the real estate market's annual growth.

Capital gains tax:

When you resell a property for more than its purchase price, you generate a considerable gain, and a tax applies to the amount of appreciation. This tax is ISR (income tax) and amounts to 35% of the gain. However, deductions are possible: for example, if the property has been renovated or features have been added, such as a pool or an extra bedroom, the cost of these improvements — which contributed to the property's increase in value — can be deducted.

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.