Los Cabos or Cancun? Which is the best place to own a rental?

Can you compare Los Cabos to Cancun and the Riviera Maya? Is it fair to ask which is the better vacation destination? In my opinion, no. Both are world class destinations but also very different from each other. The two areas are located almost 1500 miles from each other by plane. For this reason, they attract two entirely different tourist markets geographically. Cancun is a giant tourist destination, by far the largest in the country. Cancun receives 25 million passengers a year to the international airport which ranks 2nd in the country only to Mexico City. Many major cities in the United States, especially on the east coast, have daily direct flights to Cancun. The Rivera Maya also adds quite a bit of tourism from Europe due to its east coast location. It is a top notch destination, especially when you include areas like Playa del Carmen, Tulum and Akumal. Los Cabos on the other hand receives 6 million passengers, or about 25% of the air traffic that Cancun receives. Cabo’s continued growth has steadily increased its presence as the most exclusive destination market in Mexico. Los Cabos hotels have the highest average daily rate (ADR) in the country, surpassing Cancun, Playa del Carmen and Tulum. Cabos two largest markets within the United States are California and Texas.

While both locations are known for world class beaches, they are very different in terms of geography and weather. Cabo has an arid, dry climate mixed in with a constant fresh breeze while the Riviera Maya has a lot more rain and humidity. Cancun down to the Tulum can be described as an exotic and lush green that receives a lot of rainfall. Conversely, Cabo receives rain only 10-15 days a year on average. Cancun, Tulum and Akumal are also all very flat compared to the mountainous and rocky terrain of Baja California Sur. The waters in the Rivera Maya are much shallower than in Cabo, where you can have a steep drop of 1,000 feet in depth right off the beach. This allows for completely different ocean ecosystems as well. Surfing and sport fishing are a lot better in Cabo than the Rivera Maya. However, some beaches in Cabo are very dangerous and closed to swimming year round on the Pacific. All the beaches on Cancun’s east coast are calm and great for swimming just like on the Sea of Cortez side of Los Cabos. Rivera Maya has quite a few historic ruins and pyramids to visit as well as world class cenotes to swim in. Both destinations offer vacationers tons to do outdoors so it’s really a toss-up.

Cancun has become overly saturated with hotels. If Cabo isn’t careful, I see it getting this way soon. The Los Cabos area is adding 1,000 hotel rooms a year for the next 4 years. Cancun currently has 35,000 hotel rooms. FONATUR, the government agency responsible for tourism infrastructure is going to stop investing in the Rivera Maya to put more tourism dollars into other markets like Huatulco. Investment from FONATUR is drying up in Cancun as they acknowledge the area already has an abundance of hotel rooms. They specifically identify areas of the country on the west coast like Huatulco and Puerto Escondido in Oaxaca that will begin to receive funding for hotel and infrastructure development.

Cabo also has much stricter regulations to build than Cancun. Cancun is a textbook example of letting development run rampant with high rise hotel and condo buildings right on the beach. While Cabo can claim some backward thinking development as well, most of Cabo is zoned for 2 or 3 story buildings. This has preserved the view from most parts of city outside of Centro. The local government in Cancun also did a terrible job of preserving some of the most beautiful beaches in the world, letting tourism permanently damage fragile ecosystem like reefs, sand dunes and turtle nesting grounds. Other restrictions Cabo has in place include prohibiting billboard advertisement while this advertising system is widely utilized all over the Riviera Maya. This provides most of Los Cabos unobstructed views to the water and increases home values.

When it comes to the real estate market, both places have vast differences. As a resident and investor in Cabo, I really like long term rental market here. It’s a solid, income producing option without the headaches of short term rentals. I don’t claim to know the Riviera Maya as well, but in places like Playa del Carmen, there seemed to be a lot more places for rent than compared to Los Cabos, when I last visited 6 months ago. Cabos real estate market is not as mature as Cancun and has room to grow from a supply perspective. Los Cabos also has a very loyal repeat vacationer base which speaks volumes to its uniqueness. I feel very comfortable investing in real estate in Los Cabos right now and believe that the coronavirus situation will translate into cheaper prices for patient buyers.

By: Fletcher Wheaton