25/05/2024
Puerto Vallarta Rental Prices, Gentrification and
a Possible Solution
Expert real estate agent provides insights and a possible solution for
raising rental prices in Puerto Vallarta, Mexico
PUERTO VALLARTA, JALISCO, MEXICO (May 22, 2024) – More than 50 years ago,
director John Houston filmed The Night of the Iguana with Richard Burton and Ava
Gardner, which was set on a picturesque beach in Mismaloya, located a few kilometers
south of downtown Puerto Vallarta. This popular American film made the world fall in
love with Puerto Vallarta, and visitors and tourist flocked to a sleepy fishing village on
Mexico’s Pacific Coast.
The popularity of The Night of the Iguana in the 1960s propelled Puerto Vallarta into a
vacation mecca for Baby Boomers, a generation with great purchasing power with larger
families. As Baby Boomers started retiring, they found themselves staying weeks,
months and many times transitioning to expat life. With the average flight from the
United States around three hours and the cost of food and rent so low, the tradition of
vacationing and retiring in Puerto Vallarta is passed from generation to generation.
The popularity of being an expat escalated due to the pandemic (Coronavirus or COVID)
that shut down the world in 2020. During COVID, many companies closed their physical
offices and transitioned to home offices. This made it possible for anyone to work from
anywhere if they have an internet connection. With this new-found freedom, many
foreigners flocked to destinations like Puerto Vallarta, renting long-term properties that
are generally lower in cost than rentals in the United States and Canada.
With so many foreigners coming to the area, Puerto Vallarta has been experiencing
gentrification, which is the transformation of a neighborhood from low to high value,
usually caused by the influx of more affluent residents and investors. It’s a process of
urban development where a neighborhood or area develops rapidly in a short period of
time, which increases the value of properties in the area but also results in rising rent
and property values.
About 20 years ago, experts predicted that Puerto Vallarta would become the most
expensive city in Latin America in terms of rentals and in terms of price per square meter
of sale. Today, Puerto Vallarta is a tourist rental market with a proven track record, which
is consistent due to several factors, including its geographical situation, the welcoming
people, the beaches, rivers and mountains, the safe environment, the warm climate and
the overwhelming gay-friendly community.
Due to gentrification, COVID and many other factors, rental prices have been rising
exponentially by about 30% every year. And, unfortunately, some real estate agents
influenced the current prices by erroneously promising future property owners an illusion
of up to 20% of the total cost of their property. While prices in all areas continue to rise,
Zona Romantica, in the heart of Puerto Vallarta, and Punta de Mita, located about 30-45
minutes north in the state of Nayarit, are two of the most expensive places to purchase
or rent, and they continue to grow in popularity among expats.
If you are thinking about purchasing property in Puerto Vallarta, Ernesto Flores, Puerto
Vallarta Property Rentals founder and owner, provides some advice and guidance to
help make the right decisions about location, price and investment.
Flores conducts an annual Rental Analysis study for prospective buyers for different
areas around the Puerto Vallarta Bay, which shows how the total income of a condo-type
property with a purchase price between $300,000 and $600,000 USD result in an
average annual rental income of approximately 8%-15% in popular areas like 5 de
Diciembre, Conchas Chinas, Amapas and Versalles. These estimates are based on
long-term or vacation rentals with seasonal or agreed upon rates.
“The main dilemma is what to do at this very moment,” says Flores. “It seems that the
long-term rental market is stagnant and only properties renting for $1,000 US dollars or
less are the ones showing the most movement.”
He goes on to advise property owners to adjust to the current market, which means that
if the market does not move enough because properties have reached their maximum
cost—then Flores advises the best thing to do is lower the price. On average, he advises
to start by reducing the cost by 10% and then consider reducing the cost by up to 25%.
This advice is based on the statistics showing that approximately 80% of visitors to sites
like www.puertovallartapropertyrentals.com are non-Mexican residents.
According to statistics, the American currency is 25% lower now compared to May 2020.
With a majority of American clients, Flores says it is good business practice to lower the
prices to the bubble that has been created by people believing their property is worth
more than it is, greediness or misinformation.
“I want owners to understand that the market is down and that we have to adjust,”
continues Flores. “Having these studies and concrete information will help sellers and
buyers make better decisions.”
Finally, Flores says that it’s important for owners not to charge more rent for their
property than they would be willing to pay, and when helping potential clients find a
rental, he suggests that they counter with a reasonable offer when an initial rental
amount may be a little over their budget.
“I am just trying to do my part to help improve the rising rental and property costs in
Puerto Vallarta,” Flores concluded. “Puerto Vallarta’s economy relies on tourism. We
want people to continue to come, feel safe and enjoy the area as much as the locals.
That’s not going to continue if we are known as the most expensive city in Mexico.”
About Puerto Vallarta Property Rentals
Puerto Vallarta Property Rentals has been one of the leading vacation rental agencies in
Puerto Vallarta for more than 15 years. With over 200 vacation and long-term rentals
available in Puerto Vallarta and in the Bay of Banderas, the agents carefully select and
personally visit each property so you can trust that you’ll have a good rental experience.
If you are thinking about purchasing property in Puerto Vallarta, as your tropical home or
as a rental income investment, please use the company’s real estate listings pages to
browse exclusive villas, homes, condos and building lots.
Ernesto Flores is the founder and owner of Puerto Vallarta Property Rentals. To learn
more or find a property, visit www.puertovallartapropertyrentals.com/ or email at [email protected]
