MEXICO: A MAJOR BOOM IS IN PROGRESS If the forces of migration and demography create pockets of real estate opportunity in the United States -- where property prices are in an overall decline -- imagine what they can do in other countries where the overall economic outlook is far more favorable. One of the areas of the world where this is the case is Latin America. Mexico has been called the South Korea of Latin America. President Salinas' free-market reforms have transformed the country from an economist's nightmare into an economic powerhouse within a matter of years. As a result of deregulation, privatization, and tax-rate reduction, Mexican inflation and interest rates have been falling steadily. For example, the consumer price index inflation rate has fallen from 30% in December 1990 to 17.3%. And in the midst of North American recession in 1991-1992, real GDP growth still pegged 3.8%. The favorable economic climate and the pioneer spirit of the new Mexico have attracted foreign investors like never before. In 1991 alone, Mexico enjoyed a foreign capital inflow of more than US$15 billion. For real estate investors, Mexico not only offers an unspoiled environment with thousands of miles of beautiful beaches and tropical vegetation but also boasts a cost of living that is substantially below that of any Western industrialized country. Many Mexicans who have been living in the U.S. for decades are now investing their money in Mexican properties and businesses. Investors also are moving to Mexico, anticipating a real estate boom of epic proportions. This boom will be fueled by two demographic developments. One involves new internal patterns of migration. The majority of Mexico's middle class lost most of their wealth during the early 1980s. This means that today the workplace and the availability of work is the determining factor of where a family will live or move. Mexico's industry is still concentrated in densely populated (and notoriously polluted) metropolitan areas, such as Mexico City. However, President Salinas' policy of economic decentralization and the electronic revolution in the workplace are powerful arguments for a new demographic trend whose force has only begun to appear. In the next 10 to 15 years, a migrational pattern will unfold that will be very much like the U.S. migration from the cities into the suburbs in the 1950s and 1960s. Young, prosperous Mexicans (like North America's so-called yuppies) who are now employed in the cities, will increasingly move to the surrounding rural areas. This movement will follow the large traffic arteries, such as the new highways currently being constructed. An example of this trend will be the new route between Mexico City and Acapulco. Centers of suburban development will include areas around Monterrey, Nuevo Leon, particularly in scenic Ciudad Mt. Aleman. Cities in the vicinity of Mexico City, such as Puebla, Jalapa, or Veracruz, will also become focal points of the new trend. Additional demand for Mexican real estate will come from north of the border, as prosperous members of the U.S. baby boom generation reach retirement age. But not only foreign retirees will drive up property values in scenic Mexico. Increasingly, professionals will take advantage of the "electronic commute" option. This implies relocating to a low- cost, semirural environment while connecting to a remote office through modems, interactive television environments, and computers. Westerners will head for unspoiled regions in Baja California, where they will increasingly encounter young Mexicans engaged in trade and commerce along the California border. Particularly La Paz, currently a small town of 20,000, will attract Mexican yuppies and retiring boomers alike. The town has all the trappings of a coming property magnet, including an excellent hospital, a university, and unlimited access to the maritime paradise of the Sea of Cortez. Other ideal locations will be in the state of Jalisco, near Lake Chapala, the country's largest lake. Guadalajara and Ajijic in particular will attract sun- hungry Americans with a taste for rural living with quick access to modern amenities and entertainment. On the Mexican High Plateau, San Miguel de Allende provides a haven for seekers of arts and culture. Article 27 of the 1917 Mexican Constitution decrees that no foreigner may be registered as the owner of real estate within the "forbidden zone." This zone consists of a 30-mile-wide strip of land along the Mexican coastlines and 50 miles along the U.S. and Guatemala/Belize borders. Unfortunately, it includes the favorite beach cities of North American and European holiday takers, such as Puerto Vallerta, Ixtapa, Acapulco, Cancun, and the entire Baja Peninsula. From 1917 to 1972, the only way to hold property in this zone was to put it in the name of a Mexican citizen. This was risky business, as the gringo investor was dependent entirely on the good will and honesty of his Mexican business partner -- who could take over the property legally at any time and kick his ex- partner out of the country. But U.S. tourist dollars soon became too important for the Mexican economy. Mexico no longer could afford scaring off potential real estate investors and retirees by the prospects of fraud and legal hassles. In 1972, The Ley de Fideicomiso, or Trust Law, was established. The title to the land could now be held by a Mexican bank for a foreign buyer who was then named beneficiary under the trust. Under this trust agreement, the beneficiary has full control of the property for 30 years. Subject only to local zoning laws, the foreign owner can build on his property, modify it, and develop it. Commercial use includes subdividing, renting, leasing, and even selling at any time. This situation is nearly as good as having direct ownership. A variety of business opportunities are also available in Mexico, and Mexican law has recently been changed to allow foreign franchises to open. A number of major shopping malls are under construction, so this type of retailing is expected to boom. Tourism-related franchises, in such fields as hotels and car rentals are particularly likely to succeed, since this will be the first time that names with world recognition can be used in Mexico. A good starting point for information on business opportunities and franchising in Mexico is The Mexican Opportunities Report, available for $18 postpaid from Eden Press, P. O. Box 8410, Fountain Valley CA 92728, or request their free catalog. The report covers the nature of the Mexican market, foreign investment regulations, tourism, franchise opportunities, the maquiladora program, and specifics about NAFTA.