Two years ago, 100 projects were under construction or in the planning stages along the Pacific Ocean in Baja California. Now only 20 remain.
Last month, real estate mogul Donald Trump pulled his name from the Trump Ocean Resort project in southern Tijuana because the developer failed to comply with terms of a licensing agreement, including meeting a deadline to obtain $200 million-plus in construction financing.
But the Los Angeles-based Irongate is not the only developer suspending construction or canceling projects in Baja.
Construction has slowed, if not stopped, at numerous residential sites along the main coastal highway between Tijuana and Ensenada.
Some developers have slowed construction schedules, while others have shuttered projects and returned deposits.
Developers of El Milagro, a 500-unit project in Rosarito, have stopped construction and returned deposits.
The developer of Las Olas Grand and Mar y Sol reportedly is transferring deposits from Mar y Sol into Las Olas Grand and scrapping a second project.
Abandoned Development
San Diego-based Baja Resort Advisors, developers of The Falls at Puerto Nuevo, a 92-unit condo project on the coast, gave buyers credit at La Elegancia when it decided to abandon development.
La Elegancia is a 19-story, 107-unit condo project under way in Rosarito by Mexican developer GJL.
“The credit crisis in the United States affected Mexico because many Mexican banks and funding companies are funded through Wall Street,” said Guillermo Martinez de Castro with Real Estate Development International, a Mexican developer with three projects in Baja.
Gardenhaus, Garden Homes and Terra Sur are all self-funded.
The residential real estate market in Baja mirrors what’s happening in the San Diego market.
In San Diego, median prices of existing attached homes was down 36.6 percent to $190,000 and down 31.4 percent to $327,000 for detached homes in January compared to January 2007, according to the San Diego Association of Realtors.
Calculating media prices and sales volume is a bit more difficult south of the border. Median prices are down 20 percent to 30 percent, according to industry experts.
Larry French, an agent with Baja Real Estate Group in Rosarito, called the price reductions a “price correction.”
“I think we have seen a similar price correction that you have seen in Southern California, but we didn’t have as far to fall,” said French.
Another agent said projects started before the slowdown are continuing, but said projects that were not “out of the ground” are struggling because of financing.
“The world is in an economic tsunami and we are all wondering if the water is finished rising,” said David Biodolillo, an agent with Baja123 in Rosarito.
Biodolillo said despite the turmoil, buyers will eventually return to Baja because of its proximity to the United States, the nice weather, and the comparative low cost of property.
A buyer can find a three-bedroom, three-bath condo at Gardenhaus, a townhome development in Rosarito, for $120,000.
“We started to see traffic trend up in January. Lookers are starting to buy. Not in the quantities we like, but it is better than it was last year,” said Biodolillo.
Biodolillo said his team sold 50 properties in 2008 compared to 100 in 2006.
