News

Baja Steels Itself For 2008

Declining U.S. housing market gives added urgency to incentives like medical tourism

What happens in 2008 will be pivotal for Baja's economy for years to come. Economic times will not be great this year, but of more importance is the potential for either holding the course steady or a reversal that will undo many of the gains made in recent years. Much depends on U.S. border policies, the second and retirement home markets, tourism and industrial output affecting Baja's maquiladora sector. Along the Tijuana to Ensenada coastal corridor, an important factor is one of visitor's personal security it will either improve or continue drawing headlines undermining tourism.

When 150 of Baja's planned community developers and real estate professionals gathered last month for Understanding Baja in 2008, a conference at the Fox Studios in Rosarito Beach, a blunt message was delivered by Hector Bustamante, chief executive of Century 21 North Baja Coast (formerly Bustamante Realty Group). I have a secret to share with you, said the first speaker on the program, we are all doing real bad. The candid assessment was greeted with giggles since it is no secret. Its truth speaks of the decline of the U.S. real estate market that now is affecting much of coastal Baja's housing industry.

If only that were the sole challenge. Additional forces are working against Baja, including unbearable border crossing delays that continue to hamper tourism in both directions with no U.S. remedial policy on any burner. Rather, there are promises of further delays and cancellations with the new cross-border identification requirements to take effect at the end of this month.

Reviewing the economic detriments Baja faces in 2008, we find:

• A U.S. real estate market in a serious slump projected to worsen.
• Increases in crime and police shakedowns of tourists.
• Continued border crossing delays.
• A possible U.S. recession cutting into consumer demand and therefore production from Baja's U.S. and Mexican factories.

The outlook, however, includes several positives. Chief among them is the continuing aging of Americans, a fact not subject to market whims. Every day 10,000 Americans enter retirement age. Studies indicate 55 percent will move from their present home, either within the U.S. or out of country.

These retirees want affordable living combined with a high quality of life, a combination their incomes often will not provide in many parts of the U.S.

As a foreign option, Baja provides proximity to family and friends. Already Baja is experiencing growth in medical tourism. Unlike those who come strictly for rest and relaxation, medical service seekers want affordable services and medicines.

Taking advantage of these two trends, Baja can position itself as the bargain region for retirement housing and a haven for low-cost medical services. Not surprisingly, many in Baja are already doing precisely that.

For the retiree looking to live on a fixed income, reducing the cost of living is not a luxury, it is a necessity. Through the sale of a home, or even reverse mortgage, many retirees can afford a fine home in Baja with ocean views at a lower cost and save thousands on annual property taxes. The availability of low cost, quality health care and savings on medicines provide additional spendable income. For retirees the border waits becomes an occasional ordeal as their crossings become infrequent.

The Tijuana Economic Development Council is on top of this trend and last month held a medical tourism conference at the Tijuana Cultural Center. The plans to promote such tourism have been ongoing for the better part of the year and should kick off during the first quarter of 2008. Here again, for people who stand to save hundreds if not thousands on medical treatments or medicines, the border crossing wait becomes bearable.

If Baja can successfully promote itself as a saving money destination, it will reap rewards not only this year, but for years to come. For San Diego, that success means Baja residents will continue crossing through San Diego, spending here a good portion of those dollars generated in Baja.

Patrick Osio Jr. can be reached at patrick@transbordercommunications.com