By Diane Lindquist
High-rise condos are altering the skyline of Tijuana, transforming its image from a bustling border city to an urban metropolis that offers residents lofty living with vistas of the city and the Pacific Ocean beyond.
A vertical building boom over the past decade has resulted in the construction of numerous residential high-rises. At least 30 vertical projects with 700 condominiums reportedly were under construction at the end of 2017.
“We are building more condos now than in the last 126 years,” said Hector Bustamante, director of the Bustamante Group, a leading real estate company in the region. “By 2018, there will be more condo buildings in the city than there has been in all its history.”
The skyward push has been driven by a lack of land for single-family housing projects, the arrival of Mexico City developers seeking less saturated markets and the changing demographics of Tijuana with a growing and affluent middle class. Developers say there is pent up demand from years of meager construction during the recession.
As a result, the city has benefitted from permits and additional property tax revenue and the creation of thousands of construction jobs. Tijuana officials have enacted exemptions to allow higher-density concentrations for the projects and are trying to persuade the federal government to make permanent allowances.
While the boom has shown no signs of slowing currently, there are concerns about what the election of Donald Trump as U.S. president means for Tijuana’s high-end condo market.
In the wake of his election, the peso has plummeted, making the luxury units much less affordable. His threats of imposing a “border tax” on the city’s foreign-owned factories might give pause to maquiladora executives contemplating purchasing a condo. And Trump’s border wall could make already frustrating crossings even more onerous, thus discouraging potential U.S. buyers who are seeking lower prices.
Reversals in a booming real-estate market are nothing new to Baja California. The recent recession left multi-story steel girder skeletons and scraped land dotting the coastline south of Tijuana.
Among the abandoned projects was the Trump Ocean Resort, a 526-unit, three-tower resort with 26-story penthouse suites. The project died five years ago with a slew of lawsuits subsequently filed against Trump. The site 10 miles south of Tijuana now has been put up sale at $7.5 mm, with the broker seeking to attract senior housing developers.
While those projects, aimed mainly at U.S. retirees and second-home buyers, clung to the coast, the new wave of high-rise condos are more integrated in the life of the city.
Less than a kilometer from the U.S.-Mexico border crossing in the Rio Tijuana region rises the NewCity Residential complex planned with five towers. Its Diamond Tower, 27 stories at 334 feet, is now the tallest building in Tijuana. Begun in 2006, it was the first of the high-rise, all-amenities projects. The development also will include NewCity Medical Plaza, a 26-story tower with doctor’s offices, a medical lab, a surgery center and a 140-room hotel.
Despite its and other projects’ proximity to the border, developers and brokers say Americans make up few buyers — 2% at one estimate. Prices range from $200,000 to $300,000, but some penthouses have reached $700,000.
Foreigners, says NewCity developer Isaac Abadi, are “not buying here because financing is not attractive. In the United States, the (interest) rate is 3 or 4% per year and here it is 8 to 12%.”
Most of the condo projects are in Tijuana’s exclusive “Golden Zone” and represent an average investment of $100 million.
Some of the projects involve teams from both sides of the border, but for the most part, the developers, designers and financial underwriters are Mexican.
“There’s a lot of capital in Mexico right now,” said Bustamante. “The difference (from before) is we have experienced developers and we are doing our due diligence.”
Considered the crown jewel of the city’s residential high-rise building boom is one of the most recent projects announced, Alta Baja, a 63-acre development in the center of the city with 400 condominiums. The development will have four residential towers, an office tower, a hotel and a mall. The first residential units and retail components are expected to be finished by 2019.
The flashiest new project is Adamant Tijuana, a 32-story tower near Estadio Caliente, a multi-use stadium that is the host of the Xoloitzcuintles professional futbol team. Aimed at millennials, developer Milk Life Investments is using flashy videos and glossy promotional materials with fashionable young people driving sports cars and drinking champagne.
Another closely watched project is Cosmopolitan Residences, which is aiming to become LEED certified. Its 42 units will range from 1,450 to 7,200 square feet and cost from $400,00 to $700,000, making them the most expensive condos in the city.
The challenges for the continuing boom in Tijuana high-rise condos appears uncertain, even beyond the impact of Trump’s presidency.
Topping the list is the affordability of the new condos, especially with the peso plummeting to record lows.
Another possibility is that, especially as buyers diminish, the market will become oversaturated as competition heats up. With an absence of contact information and websites, it’s difficult to predict how sellers will respond. One resource is the Mexican website Vivanuncios, similar to Redfin or Zillow.
Perhaps the biggest challenge, however, is that Tijuana might not be able to accommodate such large population densities. An urban infrastructure that can support the high-rise boom is lacking.
Quality of life and infrastructure go hand in hand, said Maricarmen Castellanos, a director of Exclusive Real Probien. Those in the industry are calling for the Metropolitan Planning Institute of Tijuana (IMPLAN) to address the issue immediately.
“We need to invest in sidewalks, pedestrian mobility, a functional transport system,” she said. “We are going to a vertical growth without public infrastructure.