Tulum’s Real Estate Boom Crashes Amid Oversupply

Tulum, Mexico — The once-promising real estate market in Tulum is facing a sharp slowdown following its pandemic-era boom. Between 2020 and 2021, the city sold over 1,000 vertical housing units per quarter, an unprecedented figure for an area without consolidated urban infrastructure. Today, more than 400 active projects have become difficult-to-move inventory.

Declining Sales and Saturated Market

A detailed report by Obras Expansión documented that new home sales have fallen between 32% and 35% since 2023, primarily in the residential, plus, and premium segments. Oversupply has been compounded by low occupancy rates in vacation rentals and constant pressure on pricing.

An estimated 10,000 units are currently listed for resale, reflecting a market destabilized by saturation and declining profitability. Nightly rates on platforms like Airbnb have steadily decreased, with average occupancy now below 50%. During the low season, permanent discounts reach up to 30%.

Meanwhile, average property prices continue to rise—from 4.5 million pesos during the boom to 6.2 million pesos in 2024. However, the increase in land value has not been matched by more space. The average home size shrank from 125 square meters in 2015 to 82.8 square meters in 2024. While the price per square meter rose from 279 to 308 pesos, the total monthly rental cost slightly decreased from 25,897 pesos to 25,509 pesos.

Infrastructure Fails to Keep Pace

Urban infrastructure has not grown at the same rate as development. In urbanized areas, the lack of drainage forces reliance on septic tanks, which contaminate the subsoil. The electrical grid is deficient, and roadways are congested, with only one main thoroughfare and high traffic levels. Additional challenges include sargassum seaweed influx and wastewater discharges on beaches.

Foreign investment, predominantly from the U.S., has also slowed. External factors such as economic uncertainty and global tensions have impacted market confidence, particularly in vacation rental models. Unlike Playa del Carmen or Cancún, Tulum’s downturn has been more severe.

Lack of Urban Regulation Worsens Crisis

The absence of urban planning regulations exacerbates the problem. Developments targeting high-income buyers fail to address the needs of local residents and workers. As a result, the local population is excluded from the existing housing supply, creating a mismatch between real estate growth and actual demand.

Experts urge immediate planning measures, including zoning regulations, infrastructure investment, and affordable housing solutions for residents. Another concern is Tulum’s limited local capacity despite connectivity via the airport and the Maya Train.