market_report

6.1 Market

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Solara Cove
Market & Demand
Why Baja, and why now.
MK 01 / 10
Market & demand
A deep, supply-constrained market for branded coastal resort real estate
MarketCorridorSolara
$12.0BLos Cabos resort & residence market
Annual transaction value across the corridor, growing about 6% a year
San Jose del Cabo, Cabo San Lucas, the East Cape and the Pacific corridor
$3.2BBranded, operator-run segment
The reachable, operator-branded coastal pool, growing about 7% a year
Where Solara competes, faster than the market around it
$180MSolara Cove
An $85M stabilized resort plus $95M of forward-sold residences
90 keys at a 7.5% cap and 40 villas at about $2.375M each
MK 02 / 10
Why now
Why Baja California Sur, and why now
01
US buyers are next door
The Los Cabos corridor draws US second-home buyers on direct flights. Proximity and easy access drive steady, dollar-based demand.
02
Branded residences absorb fast
Operator-branded villas in the corridor sell ahead of new supply and command a premium over unbranded coastal stock.
03
Coastal supply is constrained
Entitled beachfront land is scarce and slow to permit. Institutional buyers compete for stabilized, operator-branded resort assets that rarely come to market.
MK 03 / 10
Deal economics
Two income streams: stabilized resort NOI and residence sell-out
Main income
Stabilized resort NOI per year
90 keys at $620 ADR and 60% occupancy produce about $19.3M revenue and a 36% GOP margin. After the operator fee, stabilized NOI is $6.37M, worth $85M at a 7.5% cap.
Development margin
Development margin
40 villas forward-sold at about $2.375M each generate $95M of sales against build cost, the core of the $52M development profit.
MK 04 / 10
Annual corridor transaction value
Transaction activity by Los Cabos submarket Annual resort and branded-residence transaction value, summed across the corridor's submarkets Submarket by submarket across the Los Cabos corridor unit a = annual resort and branded-residence transactions; unit b = deals per asset per year; unit c = average transaction value in the submarket
$12.0B
Cabo San Lucas and the Corridor Annual transactions 2,000 Deals per asset 1 Average value $3,000,000 $6.0B
San Jose del Cabo and the East Cape Annual transactions 1,750 Deals per asset 1 Average value $2,000,000 $3.5B
The Pacific corridor Annual transactions 1,250 Deals per asset 1 Average value $2,000,000 $2.5B
About 6% compound annual growth in corridor transactions, 2025 to 2029 Corridor transaction analysis, 2026
MK 05 / 10
Depth of buyer demand $3.2B

Four screens on demand

Segment: branded, operator-run resort and residences only - 40% concentrates on operator-branded product and excludes the unbranded coastal tail
Geography: the Los Cabos corridor Solara can reach - 85% excludes coastal volume outside the San Jose del Cabo to Cabo San Lucas corridor
Buyers: US and international purchasers active in the market - 90% excludes the small share of buyers who transact only through private off-market channels
Assets: stabilized product open to institutional sale, not held off-market - 87% excludes founder-held and legacy assets that never reach an open sale process
Branded, in the corridor, active buyers, transactable assets: about $3.2B of reachable demand
$3.2BREACHABLE BUYER POOLBranded, operator-run segmentLos Cabos corridorActive US and international buyersStabilised, transactable assets
MK 06 / 10
Solara's offering Solara's position today $180M
Year Corridor market Reachable buyer pool Solara Cove Total
Y1 y1 unit a count y1 unit b rate y1 unit c value y1 total
Y2 y2 unit a count y2 unit b rate y2 unit c value y2 total
Y3 y3 unit a count y3 unit b rate y3 unit c value y3 total
Y4 y4 unit a count y4 unit b rate y4 unit c value y4 total
Y5 y5 unit a count y5 unit b rate y5 unit c value y5 total
Active users01M2M3M4M150K600K1.4M2.6M3.8MYear 1Year 2Year 3Year 4Year 5
MK 07 / 10
Industry Growth and CAGRAbout 6% compound annual growth through 2029
1×2×3×1.0×3.3×27% CAGR202520262027202820292030Tourism and real-estate market sources, 2025 to 2026
Los Cabos resort and branded-residence transactions about $12B, +6% year over year 2025
Branded, operator-run coastal segment growing about 7% a year
US visitor arrivals to Los Cabos up about 8% year over year
Baja California Sur branded-residence sales about $2B a year, roughly 7% growth through 2031
MK 08 / 10
Market Challenges Four real risks, each with a clear mitigant for Solara
Construction cost and programme risk A 60-month build carries cost and timing risk, and a $10M overrun moves project profit A 5% contingency, fixed-price contracts and a staged programme absorb the swing
Residence sales absorption Villa sell-out depends on steady buyer demand across the build period Forward-sales and about $19M of deposits lock in buyers before completion
New competing supply A new branded resort or residence scheme could enter the corridor during lease-up Constrained coastal land and a signed operator hold Solara's position first
Resort lease-up and exit timing Stabilized NOI depends on the resort ramping to 60% occupancy under the operator The operator's brand and distribution drive ADR and occupancy from opening
MK 09 / 10
Key Takeaway The Los Cabos corridor: scarce coastal supply, close US buyers, branded demand
Total resort & residence market $12.0B
Addressable buyer pool $3.2B
Solara's offering $180M
Compound Annual Growth Rate 6.0%
MK 10 / 10