We know what you’re probably thinking…“Move to Mexico now? Invest in Mexico now? What about the recession…the drug war…the swine flu, for heavens’ sake?”

Yes, the news on Mexico that’s been reported in the world media the last year or more has not been good. So let’s repeat our statement: There may not be a better time than right now to invest in real estate in Mexico and to set up a new life there.

That’s because many of the fundamentals that have made Mexico a top destination for foreign retirees, second-home owners, and investors remain unchanged. The government is a stable democracy, the economy—though heavily dependent on the U.S. and in recession right now—is taking the necessary steps for recovery. And despite what you hear in the media about violence, most of Mexico remains the safe, beautiful, exciting country it’s always been. We rated it the number one spot in International Living’s Global Retirement Index two years running.

And the negative media coverage and the worldwide recession—which have kept many tourists and investors away from Mexico—spell opportunity. Until the economic climate improves and visitors return en masse, Mexico is rolling out the red carpet for those who do come to visit and invest. Vacation packages offer incredible deals, flights are cheap, and hotel rates are negotiable. Best of all, real estate prices are extremely favorable for those who can buy now.

Whether you’re purchasing as an investment or looking for a retirement or second home in the sun, right now you’ll get more bang for your buck—lower prices, better incentives, and sellers willing to negotiate to make a deal happen—than you may see in…well, years.

Let’s take a look at the elephant in the room: Mexico’s drug-related violence. In the last 18 months, most of the worldwide news reports on Mexico have ranged from bad to appalling. Reports of thousands killed in Mexico’s war against the drug cartels have caused many tourists and prospective retirees to avoid Mexico.
And much of the coverage is exaggeration. Here are a few facts:

• An estimated 12,000 lives have been lost to drug-related violence between December 2006, when President Calderón took office, and mid-2009.
• Only a small number of these deaths—probably under 200—have been civilians. Most have been drug cartel members, on the one hand, or law enforcement officers—police or military— on the other.
• Most of the drug-related violence continues to occur where crime has always been most frequent along the U.S./Mexico border that have a strong cartel presence.
• Most of Mexico remains extremely safe, especially Huatulco. It’s very unlikely that you will see, much less be affected by, drug violence.

The incidence of non-drug crime in Mexico is very low. In most of Mexico, including vast parts of the colonial highlands and the Bays of Huatulco, you are much safer than in U.S. cities of comparable size.

Like the U.S. and many other countries, Mexico is in the grip of a recession. In Mexico’s case, it is widely considered the most serious contraction of its economy since 1994-95, when the government cut three zeros off the currency and created the “new peso.” Mexico remains heavily dependent on the U.S. economy—over 80% of Mexican exports go to the U.S., for instance, and U.S. tourists are the mainstay of Mexico’s important tourism industry. The current recession has shown the government that its efforts to diversify the economy, through trade agreements with other countries, have had only limited success. The government is now working to mitigate these weaknesses through its public policy.

The recession has also cooled Mexico’s real estate market. This had heated up in part because of the steady stream of foreign buyers entering the market, but also due to increased domestic demand as Mexico’s prosperity enabled more people to buy homes. With the recession, both foreign and domestic demand has dropped.

By and large, however, real estate prices have not plummeted. Rather, they’ve simply stopped their heady, year-over-year increases. Overall, the Mexican real estate market has retained its value, and there are few “fire sales.” Those who do need to sell their properties have tended to offer incentives, such as upgrades to furniture or appliances, or covering condo association fees for several years, to attract the few buyers in the market.

As of now the recession looks as though it will last the rest of this year. Some analysts predict that Mexico’s economy will then pick up slowly during 2010 before gaining momentum again in 2011 and beyond. Challenges the government must face include a sharp drop in revenues—two major sources of funds, remittances from the U.S. and oil revenues, have both dropped dramatically. But foreign investment is likely to continue to grow, thanks to Mexico’s strong internal demand and the free trade agreements it has in place with other major economies (including the European Union and Japan). In addition, the recovery of the U.S. economy will help pull Mexico along with it.

Huatulco is a development planned by FONATUR, the Mexican government’s national trust fund for tourism development. One of five destinations picked by FONATUR 30 years ago as having world-class potential (the others included Cancún and Los Cabos), the Bahía de Huatulco—Huatulco Bay— consists of nine pristine bays and 36 beaches.

In 2008 President Felipe Calderón, who used to vacation in Huatulco, outlined a $1.4 billion, four-year investment program for the area. Investors are pouring into Huatulco, new hotels and condominium complexes are going up and so are property values.

In many ways Huatulco is a small town still emerging as a major destination. There are only about 16,000 residents, with about 1,000 being expats or pre-retirement, part-time visitors who own property. Even during rush hour, you can drive from one side of town to the other in about six minutes. Many places are within walking distance.

Huatulco doesn’t yet have many of the warehouse and chain stores that most expats expect—no Wal-Mart, Sam’s Club, Costco, Office Depot, or Home Depot. Still there are three local options for groceries: Coco Solo, is sort of a 7-Eleven with an upscale twist; La Fuente, a small, conventional grocery store; and a Super Che. A cross between a warehouse store and a grocery store, Super Che is part of the Mexico-wide Chedraui supermarket chain. It’s not quite as big as most Wal-Marts, but it has comparatively good pricing, volume, and depth on the products that it offers. Super Che has a good gourmet section that caters to expats, with small but interesting selections for U.S., Canadians, British, Italians, and French. It has the widest selection of dairy products locally. There is also the specialty shop Tresele, where you can get pre-packaged, vacuum-sealed steaks; boneless, skinless, marinated chicken breasts; and a wide variety of prosciuttos and cheeses.

For Home Depot-type items that you might need for a house or condo, check out the industrial neighborhood of Huatulco. Here you can find just about everything you might need…just not under one roof. Instead, there are dozens of little businesses, each with its own specialty. If you don’t feel like cooking, Huatulco has plenty of restaurant options and a variety of cuisines. These include Cafe Vienna/Austríaco, an Austrian restaurant; Los Vaqueros, a cowboy beef-and-pork restaurant; the Krystal Rose, which is Continental beef and fish with an unusually tasty Caesar salad; and at an excellent Italian restaurant, Il Giardino del Papa. You’ll need to pay cash in many of these restaurants—but there’s good access to banks in Huatulco. Scotiabank, HSBC, Banamex, Bancomer, Santander Serfin, and several other banks provide good services.

The $1.4 billion government investment in Huatulco will include more than the super highway connecting it with Oaxaca. It includes infrastructure like expanded public water and electricity services, improvements to the marina area to attract mega-yachts, improvements in sanitation, a new hospital (as well as opening the local naval hospital to the public), and development of a master plan for increasing hotel capacity.

FONATUR, Mexico’s tourism development agency, is the force behind the master plan. The agency says that the Huatulco area will be developed with the strictest respect for the environment.

Since 2004 Huatulco has been the only destination in Mexico—and one of only seven in the world—to have Green Globe21 Certification as an environmentally sustainable tourist destination. FONATUR intends to ensure that Huatulco maintains the designation—only 30% of the area, it says, will ever be developed.