Americans make move on Baja Peninsula

Mexico wants investment as much as U.S. citizens covet beachfront homes


NOPALO, Mexico - Slowly but surely, acre by acre, Mexico's Baja Peninsula is becoming more American.

"For Sale" signs are sprouting throughout the 800-mile-long peninsula, offering thousands of beachfront properties. Americans are snapping them up. They have created communities where the dollar is the local currency, English is the main language and Americans are the new immigrants transforming an old culture.

"Everything's for sale, every lot you can imagine," said Alfonso Gavito, director of a cultural institute in La Paz, the capital of Baja California Sur, a state with 400,000 residents and some of the last undeveloped beaches in North America. "It's like 20 years of changes have happened in three months."

This new land rush, involving billions of dollars, tens of thousands of Americans and hundreds of miles of coastline, is gaining speed even though Mexico's Constitution bars foreigners from directly owning land by the sea.

Mexico's government wants foreign capital as much as Americans want houses on the beach - maybe more. So it worked around the Constitution. In 1997, it changed the law to allow foreign ownership through locally administered land trusts.

It took about four years before the new system worked smoothly. But now, most often, it does. The result has been a boom in migration, speculation and permanent vacation.

"It's human greed - it's human nature," said David Halliburton, who owns a hotel outside Cabo San Lucas, on Baja's southern tip, where uncontrolled growth is straining the social fabric. "The amount of money coming in here through overzealous developers and buyers is staggering."

Baja is closer by land and air to the United States than it is to the rest of Mexico; state officials recorded more than 30 million trips by Americans who spent well over $1 billion last year. They say they have no idea how many Americans are living in Baja because a certain number are illegal immigrants who never register their presence.

Evidence suggests the number is more than 100,000, probably far more, and growing fast since the Sept. 11 attacks and the souring of the economy in the United States two years ago.

"Since 2001, we have seen a boom in real estate sales, and the full-time population of Americans is growing rapidly," said Tony Colleraine, an American in San Felipe, about 160 miles southeast of San Diego. He said about a quarter of the town's 30,000 residents are Americans, many of whom want to "get away from the regulations and rhetoric, and get out of the bull's-eye" in the United States.

In Rosarito, an hour's drive south of the U.S. border, about a quarter of the 55,000 residents are Americans.

"An increasing number of Americans are moving here to escape their government's policies and the costs of living," said Herb Kinsey, a Rosarito resident with roots in the United States, Canada and Germany. "They find a higher standard of living and a greater degree of freedom."

At least 600,000 Americans - again, an acknowledged undercount based on government records - are permanent residents of Mexico. That is by far the largest number of U.S. citizens living in a foreign country.

Americans living throughout Baja say their new neighbors include professionals in their 30s and 40s putting down roots, not only retirees in recreational vehicles.

In Rosarito, the homebuyers include lawyers and members of the military who commute across the border to San Diego, where housing costs are about five times higher. A pleasant house by the Pacific in Rosarito can cost less than $150,000; property taxes are about $75 a year.

Baja's future, Mexican officials say, lies in American land investment. The government strongly promotes any kind of foreign direct investment, which is the only reliable source of economic growth in Mexico, where more than half of the 100 million people live in poverty.

Here in the empty streets of Nopalo, the future is coming on fast. A totally American town is about to be built.

The site of a failed government-backed tourist development, Nopalo, which means "place of vipers," lies just outside the town of Loreto, founded in 1697, population 11,000. U.S. and Canadian developers plan to build 5,000 new homes for 12,000 fellow citizens.

Their master plan depicts a particularly affluent suburb, with houses selling for up to $2 million each. The developers plan to break ground in January. They envision a $2 billion investment over 15 years.

"People will come by the hundreds of thousands" to Baja, said one of the developers, David Butterfield. "Mexico gives you an opportunity to build something you cannot build in the U.S. or Canada today. You cannot build great things in America today. Regulations and litigation prevent change."

There are limits to change in Baja, too. They are set by nature. It rains 5 inches a year or less in many parts of the peninsula. A barrel of water here is effectively worth more than a barrel of oil, and it takes many millions of gallons to sustain a golf course, much less a suburb.

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