It’s the tropical boomtown that Americans are obsessed with. But buyers are realizing the dark side of paradise… and it’s too late to save them

It is the stunning vacation spot that thousands of Americans flock to and hundreds are desperate to settle down in every year.

But Mexico’s beautiful Riviera Maya has a dark secret that is driving buyers to the brink – and threatens to collapse the local economy.

Homeowners are being caught in a trap by cowboy builders who are flogging them dream houses on the cheap, but with a huge catch.

Fourteen developers have been rumbled as illegal in the popular Tulum area by the local authority, and realtors have revealed just how dodgy they are.

They warned buyers will likely never get a legitimate property title, and the homes may not be connected to electricity, sewer systems or even a road.

It comes as a blow for the tropical paradise, which has made huge leaps in modernizing its infrastructure over the last decade.

The area has grown extremely popular in recent years due to stunning all-inclusive resorts, pristine beaches and Mayan ruins.

The Secretariat of Sustainable Urban Territorial Development put out a bulletin on Tuesday warning buyers they should not buy a home, apartment or condo from 14 companies.

They include Oken, Arunte, Haciendas Coba, Lula Sanctuary, Naia Holistic Community, Cibelia, Rosela, Viventum, Uxan Tulum Bamboo Villas, Nova Tulum, Cenote Gardens, Akun, Xeelenja Tulum and 528 Tulum.

Susann Rottloff, an agent with The Agency Real Estate, told the Daily Mail that of these, she’s only heard of Xeelenja Tulum, Oken and Naia Holistic Community.

She described the rest as ‘no-name’ firms that should be avoided or treated with great caution.

SEDETUS, along with the Tulum City Council, originally identified more than two dozen development companies operating outside the laws of Quintana Roo.

The agency has since cleared many of them from the state warning list after they demonstrated full legal compliance.

Regulators said many of these developers lure in unsuspecting buyers with too good to be true deals, something Rottloff agreed with.

‘I’m assuming [these projects] might have been on the lower end of the price range, right?’ she said. ‘Having an apartment for $150,000 or a $180,000 two-bedroom is very appealing when you’re coming especially from the States, and your housing market is crazy.’

As someone who speaks with builders frequently, Rottloff speculated that the companies targeted in the enforcement action were selling without the proper authorizations because the permitting process ‘can be very lengthy and costly’.

Rottloff, originally from Germany, has been living in Mexico for seven years and said that buyers should always go through a real estate agent to buy property.

She added that it’s crucial to have a trusted, local attorney at your side that can check if the developer has the correct permits. Legitimate authorization documents will carry stamps from the municipal and state government.

And if all else fails, buyers can check the legitimacy of any development by emailing SEDETUS at atencion@sedetus.gob.mx.

Beyond the rash of shady developments, the overall real estate outlook in Tulum is a bit mixed, but Rottloff insists it is still a growing market that has the potential to someday rival Playa Del Carmen, a more mature resort town an hour’s drive north.

‘We’re undergoing a market correction, because it was very overheated after and during COVID,’ Rottloff said. ‘We had a lot of people coming from all over the world. We were one of the only countries that was open.’

Mexico indeed had some of the lightest restrictions on travelers during the pandemic. It did not require proof of vaccination or negative COVID tests to enter the country, which led to a lot of stir-crazy Americans flying south for a respite from the lockdown.

And some of those stir-crazy Americans bought property because they liked it so much in Tulum, a city bursting with jungle-like vegetation that once had a single downtown street.

‘We definitely benefited from it, but it also had its consequences because there was too much money going too fast into the market. Buyers were literally throwing money at us,’ she said. 

This led to a scenario where builders were erecting homes faster than people could buy them. The resulting oversupply has caused home values to drop this year, Rottloff said.

Another one of the byproducts was that Tulum’s city government fell behind in delivering crucial public utilities to all the newly constructed dwellings that popped up in that five-year-period.

Some homes built deep into the jungle are just now getting connected to the electricity grid or getting their dirt roads paved.

Rottloff praised the government for its efforts to catch up though, citing projects like Tulum’s international airport, built in 2023, and the Maya Train, a 14-stop passenger railroad completed in December 2024, as key infrastructure improvements that make the entire Yucatan Peninsula more desirable.

Rottloff also said that as Tulum has become more built up, her client base has changed.

‘We have a lot of people now moving to Tulum to actually live there. Before, it was more vacationers and honeymooners and party people. Now I have a lot of clients that are families with children who want to leave the states because they don’t like the system and what’s going on,’ she said.

To accommodate families, Rottloff noted that there are more schools opening up in Tulum.

However, there are a few things Americans buying in Tulum should know, Rottloff told Daily Mail.

The vast majority of home sales in the Riviera Maya region, including Tulum, are done with cash only. There are very few financial institutions that offer mortgages, and even if you were to qualify for one, interest rates are at a little over 9 percent.

Aside from Mexico’s beautiful weather, this is a reason why many homes bought in the region by foreigners are second homes. They have the means to buy it outright, or they can leverage the equity in a property they already own.

She also said Americans should realize that things are done differently in Mexico and accept that they need professionals to help ease them into the home-buying process.

‘I see that people come here and they just think it’s the way it is at home. And that’s the biggest mistake. It’s not. You need the agent, you need a good brokerage. You need a good lawyer. You cannot trust everyone here,’ she said.

Rottloff does sell more affordable homes in the $350,000-$450,000 range, but primarily works with luxury villas.

One of her most recent listings is a newly constructed nine-bedroom, 11 bath home that masterfully blends indoor spaces with the outdoor spaces. 

Complete with two pools, a 16-person Jacuzzi, an outdoor dining room and an infinity pool, the nearly 9,500-square-foot home is going for $5.2 million.

Another listing of hers is slightly more affordable at $995,000. The five-bedroom, five-and-a-half bath home is located just 5 minutes away from a beach.

It also has a 635-square-foot pool that is built in the outline of the rear of the house, which makes taking a quick dip effortless.