Mexico: New build vs. resale comparison

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THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Mexico. If you'd like to learn more about us, you can check our presentation page.

How much does a new build property in Mexico typically cost per square meter compared to a resale home?

New build properties in Mexico cost significantly more per square meter than resale homes, with new construction averaging MXN 78,037 (USD 3,851) per square meter compared to MXN 64,429 (USD 3,180) for resale properties.

This 21% price premium for new builds reflects the modern amenities, updated building standards, and contemporary designs that developers incorporate into new construction projects. The premium is most pronounced in high-demand markets like Riviera Maya, Los Cabos, and emerging neighborhoods in Mexico City and Guadalajara.

Regional variations significantly impact these averages, with luxury coastal developments in Tulum or Playa del Carmen commanding prices above MXN 100,000 per square meter for new builds, while resale properties in the same areas typically range from MXN 70,000 to MXN 85,000 per square meter. In secondary cities like Mérida or San Miguel de Allende, new builds average MXN 45,000 to MXN 65,000 per square meter, while resale properties range from MXN 35,000 to MXN 50,000 per square meter.

The finishing quality and developer reputation also influence pricing, with premium developers charging 15-30% more than mid-tier builders for comparable new construction projects.

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What are the most common closing costs, taxes, and extra fees for new builds versus resale properties?

Closing costs for both new builds and resale properties in Mexico typically range from 4% to 6% of the purchase price, though complex transactions can reach 8% to 10% of the property value.

The main closing costs include transfer tax (2% to 6% depending on the state), notary fees ranging from 0.5% to 1% of property value (approximately USD 5,000 to USD 10,000), bank trust (fideicomiso) setup fees for foreign buyers, and registry fees for title registration. Legal services, appraisals, and property inspections add another 0.5% to 1% to the total closing costs.

New builds may benefit from lower initial property tax assessments based on fresh appraisals, while resale properties use existing tax valuations that might be outdated. However, both property types follow the same basic closing cost structure mandated by Mexican law.

IVA (VAT) generally does not apply to residential property purchases but may be charged on certain services or commercial components of mixed-use developments. Foreign buyers must budget for fideicomiso renewal fees every 50 years, which apply equally to new builds and resale properties.

How long does it usually take from purchase to move-in for a new build in Mexico, compared to buying a resale home?

Resale properties offer significantly faster occupancy timelines, with buyers typically able to move in 45 to 90 days after contract signing, provided the property is vacant and all documentation is properly completed.

New build timelines vary dramatically based on construction status at purchase. Already completed new builds allow immediate occupancy similar to resale properties. Pre-construction purchases require waiting several months to over a year for project completion and handover, depending on the developer's schedule and construction phase.

Major developers in established markets like Cancún or Puerto Vallarta typically deliver projects within 12 to 18 months of groundbreaking, while smaller developers or projects in emerging areas may experience longer delays. Construction delays are not uncommon in Mexico, with weather, permit issues, and supply chain disruptions potentially extending timelines by 3 to 6 months beyond original estimates.

Smart buyers purchasing off-plan new builds should negotiate penalty clauses for delayed delivery and avoid making final payments until keys are handed over and all promised amenities are completed.

What kind of warranties or guarantees do developers in Mexico usually provide with new builds, and do resale homes offer anything similar?

How do financing options and mortgage approval timelines differ between new construction and resale properties in Mexico?

Both new builds and resale properties qualify for Mexican bank mortgages, with approval processes taking 30 to 90 days regardless of property type, though established resale properties often have more streamlined documentation requirements.

New builds in large developments frequently offer developer financing options that can provide faster approval timelines but typically require higher down payments (30% to 50%) and carry interest rates 1% to 3% above bank mortgage rates. These developer financing programs allow buyers to secure properties during pre-construction phases before traditional bank mortgages become available.

Mexican banks generally prefer financing completed properties with clear titles, making resale homes slightly easier to finance through traditional channels. Pre-construction new builds may require staged payments during construction, with final mortgage funding occurring only upon project completion and title transfer.

Foreign buyers face similar mortgage requirements for both property types, including proof of income, Mexican tax ID (RFC), and down payments typically ranging from 20% to 30% for bank financing.

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What are the main risks of construction delays or unfinished projects when buying new builds in Mexico?

Construction delays represent the primary risk when buying new builds in Mexico, with projects commonly experiencing 3 to 6 month delays beyond original completion dates due to permit issues, weather conditions, and supply chain disruptions.

• Developer Financial Difficulties: Smaller developers may struggle with cash flow during construction, potentially halting projects indefinitely or requiring additional buyer payments
• Permit and Regulatory Delays: Environmental impact studies, utility connections, and municipal approvals can extend timelines unexpectedly, particularly in coastal areas with strict development regulations
• Quality Control Issues: Rushed construction to meet deadlines may result in substandard workmanship requiring extensive repairs after handover
• Market Condition Changes: Economic downturns or oversupply can cause developers to modify project specifications or delay construction phases
• Infrastructure Dependencies: New developments may wait for government infrastructure projects like roads or utilities, creating delays beyond developer control

Buying from established developers with completed project portfolios significantly reduces these risks, as does avoiding properties in the earliest construction phases and negotiating strong penalty clauses for delayed delivery.

How do resale properties in Mexico hold their value compared to new builds over the first 5 to 10 years?

Resale properties in established neighborhoods typically demonstrate more stable value retention over 5 to 10 years, while new builds may experience initial depreciation as the "new construction premium" diminishes during the first 2 to 3 years after completion.

Properties in mature Mexico City neighborhoods like Roma Norte, Condesa, or Polanco have shown consistent 3% to 5% annual appreciation over the past decade, regardless of whether they were purchased as new builds or resale properties. However, new builds in these areas often experience a 10% to 15% value correction within 3 years as the market adjusts to realistic pricing.

Coastal markets like Playa del Carmen and Tulum present different dynamics, where new builds in prime beachfront locations can outperform resale properties due to increasing land scarcity and tourism growth. New builds in these markets have achieved 8% to 12% annual appreciation when located in areas with strong rental demand and limited new supply.

The key factor determining long-term value retention is location quality rather than property age, with both new builds and resale properties in prime locations significantly outperforming those in oversupplied or poorly connected areas.

What kind of maintenance or renovation costs should you expect with a resale property, compared to a new build?

Resale properties typically require immediate renovation budgets ranging from 10% to 30% of the purchase price, depending on the property's age and condition, while new builds generally require minimal maintenance during the first 3 to 5 years due to modern construction and warranty coverage.

Common resale property renovation costs include updating electrical systems (MXN 50,000 to MXN 150,000), plumbing repairs or replacement (MXN 40,000 to MXN 120,000), roof maintenance or waterproofing (MXN 30,000 to MXN 100,000), and cosmetic updates like paint, flooring, and fixtures (MXN 80,000 to MXN 250,000 for a 100-square-meter property).

New builds benefit from warranties covering major systems and structural elements, typically resulting in annual maintenance costs below 1% of property value during the warranty period. After warranty expiration, new builds still maintain cost advantages due to modern materials and construction techniques that require less frequent maintenance than older properties.

However, new builds in coastal areas may face accelerated wear from salt air and humidity, requiring preventive maintenance on metal fixtures, air conditioning systems, and exterior finishes starting within 2 to 3 years of completion.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

How much flexibility do you get to customize finishes, layouts, or upgrades when buying a new build in Mexico versus purchasing a resale?

New build customization flexibility depends entirely on the construction phase and developer policies, with pre-construction purchases typically offering the most options for finishes, layouts, and upgrades within the developer's available selections.

Most Mexican developers allow buyers to choose from 3 to 5 finish packages ranging from standard to luxury, with upgrade costs typically adding 15% to 40% to the base price. Layout modifications are usually limited to non-structural changes like removing walls between rooms, adding built-in storage, or relocating kitchen islands, with costs ranging from MXN 50,000 to MXN 200,000 per modification.

Resale properties offer unlimited customization possibilities after purchase, but require separate renovation contracts and permits. Major layout changes in resale properties cost MXN 150,000 to MXN 500,000 for comprehensive renovations, plus 2 to 4 months of construction time and potential temporary relocation expenses.

The timing advantage goes to new builds for buyers wanting specific finishes without construction disruption, while resale properties suit buyers seeking unique customization beyond standard developer offerings or those wanting to oversee renovation quality personally.

What neighborhoods in Mexico tend to offer better resale opportunities versus more new developments?

How do rental yields compare between brand-new units and older resale homes in Mexico's main markets?

New build properties in Mexico's coastal markets achieve rental yields of 8% to 15% annually, significantly outperforming resale properties which typically generate 5% to 10% yields in the same locations.

The yield advantage for new builds stems from higher nightly rates commanded by modern amenities, updated designs, and resort-style facilities that attract premium short-term rental guests. New builds in Tulum, Playa del Carmen, and Los Cabos consistently achieve occupancy rates 15% to 25% higher than comparable resale properties due to guest preferences for contemporary accommodations.

However, resale properties in established neighborhoods offer more stable long-term rental income with lower vacancy periods. Properties in central Mexico City, Guadalajara, or Mérida generate consistent yields of 6% to 9% annually through traditional long-term rentals, while new builds in these markets may struggle to justify premium pricing for local tenants.

The optimal choice depends on your rental strategy: new builds excel in tourist-driven short-term rental markets, while resale properties perform better in residential rental markets serving local professionals and families.

It's something we develop in our Mexico property pack.

What are the legal and paperwork differences in the buying process between new builds and resale properties in Mexico?

New build purchases require additional legal documentation including developer licenses verification, construction permits review, and warranty agreement analysis, while resale purchases focus primarily on clear title verification and ownership history examination.

The new build legal process includes reviewing the developer's legal standing, construction permits, environmental clearances, and compliance with local building codes. Buyers must also verify that the developer has proper insurance and bonding to complete the project, plus examine the purchase contract for delivery timelines, penalty clauses, and specification guarantees.

Resale property legal work concentrates on title searches, lien verification, property tax status, and examining the ownership chain to ensure clear transferable title. The process also includes reviewing homeowner association documents, utility account status, and any existing rental agreements or property management contracts.

Both property types require notarized deeds, bank trust establishment for foreign buyers, and payment of transfer taxes and registration fees. However, new builds may involve staged payment schedules and construction milestone documentation, while resale purchases typically use straightforward lump-sum transfers at closing.

Working with experienced Mexican real estate attorneys is essential for both property types but particularly critical for new builds due to the additional complexity and higher risk profile of pre-construction purchases.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Global Property Guide - Mexico Price History
2. BRNL Architecture - Cost to Build in Mexico
3. TheLatinvestor - Square Meter Merida
4. Beach Please Mexico - Closing Costs Calculator
5. Cabo Beach Realty - Closing Costs
6. Mexperience - Closing Costs and Taxes
7. Riviera Maya Cozy - Closing Costs
8. MexLife - Investment Requirements
9. CMS Law - Real Estate Finance Guide
10. International Living - Mexico Investment 2025