The Interoceanic Train and associated CIIT project have been credited for Oaxaca’s recent boom in industrial growth. (Gobierno del Estado de Oaxaca)

Oaxaca led the country for industrial growth in December 2024, marking the second consecutive month the historically underdeveloped southern state topped the list, according to a national survey.

The national statistics agency INEGI industrial development survey measures growth by state on a monthly and annualized basis. A recent survey found that Oaxaca topped the list of 19 Mexican states that experienced industrial growth in the last month of 2024.

Rural, mountainous Oaxaca has historically received little industrial investment, sometimes due to opposition from local Indigenous communities. (Lon&Queta CC BY-NC-SA 2.0)

The data for December, released on Wednesday, indicates Oaxaca saw 18.8% growth compared to December 2023. Only one other state — Colima, at 10.8% — hit double figures. Baja California Sur was third with 9.8% growth.

Oaxaca was No. 1 in November as well, recording 15.9% growth, just above Guerrero (15.1%) and Baja California Sur (14.4%).

Manufacturing and construction drove Oaxaca’s December performance. The former climbed 19.9% compared to December 2023 while the latter rose 19.5%. The surge in these sectors offset negative numbers in mining (down 9.4%) and minimal energy sector growth (4.2%).

Oaxaca has benefited from the US $2.8-billion Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) project — featuring near-complete cargo and passenger rail lines connecting the Pacific Ocean with the Gulf of Mexico. A trunk line from Coatzacoalcos, Veracruz, to Ciudad Hidalgo, Chiapas, will be completed later this year.

The CIIT project also includes 10 industrial development poles, as well as the expansion of “intermodal” infrastructure at the ports of Salina Cruz, Oaxaca, and Coatzacoalcos.

The development poles — six of which are located in Oaxaca — consist of from 80 to 500 hectares of property used primarily to house industrial parks.

Oaxaca’s Minister of Economic Development Raúl Ruiz Robles told El Economista that he anticipates the development poles in his state will attract more than 720 billion pesos (US $35.3 billion) in investment over the next six years.

The state is also investing in highway upgrades with two projects in particular paving the way: improvements to the Mitla-Tehuantepec section of Highway 190 that connects the eastern end of the central valley with Tehuantepec, the second largest city in the Isthmus; and the Barranca Larga-Ventanilla section of Highway 175 that connects central Oaxaca with the Pacific Coast near Salina Cruz.

The US $2.8-billion Interoceanic Corridor project (CIIT) has brought infrastructure development to the Oaxacan countryside. (Presidencia/Cuartocuro)

The government is also building a gas line that would serve both residential and industrial needs.

There is still plenty of room for growth, said José María Villalobos, a consultant and former president of Oaxaca’s College of Economics.

He noted that despite the surge in investments — especially in housing, tourism and infrastructure — the CIIT project has not translated into job growth. Perhaps of more concern, according to Villalobos, is the notable lack of interest in developing alternative sources of energy, such as wind farms.

In some instances, Indigenous communities have fought against the installation of wind farms, and the lack of new energy sources, Villalobos says, has limited the arrival of new manufacturing enterprises.

With reports from El Economista and Revista Transportes y Turismo

 

As I stand on a terrace overlooking Puerto Escondido’s pristine beaches, the transformation unfolding before my eyes is nothing short of remarkable. Having spent the last decade watching Oaxaca evolve from a hidden gem to an emerging powerhouse, I can tell you firsthand: the Oaxaca Coast investment opportunity has never been more promising.

Oaxaca’s Industrial Renaissance: Leading Mexico’s Growth

The numbers are strong. According to recent data from Mexico’s National Institute of Statistics and Geography (INEGI), Oaxaca registered a staggering 15.9% annual growth in industrial activity last November, positioning it as the national leader in industrial development.

This isn’t just a temporary spike or statistical anomaly. The state has consistently shown year-over-year increases since March of last year, creating a robust foundation for sustainable economic expansion that benefits both locals and investors.

But what’s driving this Oaxaca Coast investment boom? As José María Villalobos, former president of the College of Economists of Oaxaca explains, it’s a perfect storm of strategic investments across housing, tourism, and infrastructure sectors.

Real Estate Development: The Foundation of Growth

The construction sector in Oaxaca is experiencing unprecedented momentum. Private developers have significantly increased middle-class housing projects, particularly in Oaxaca de Juárez and surrounding municipalities. This development coincides with an influx of American and Canadian retirees who recognize the exceptional value proposition of this region.

As someone who made the move south years ago, I’ve witnessed firsthand how foreign investment has helped elevate the market. Higher rental payments from North American expats have stimulated property value appreciation, creating a virtuous cycle of investment and development that benefits everyone involved in the Oaxaca Coast investment ecosystem.

Transportation Revolution: Breaking Down Barriers

For decades, Oaxaca’s breathtaking landscapes came with a significant drawback: challenging accessibility. Those days are rapidly fading into memory, thanks to transformative infrastructure projects that are revolutionizing connectivity throughout the region.

The recent completion of the Mitla-Tehuantepec highway, a monumental engineering achievement 20 years in the making, has reduced travel time from Oaxaca City to the Isthmus of Tehuantepec from four and a half hours to just two and a half hours. Traversing 169 kilometers and benefiting 1.4 million residents across 14 municipalities, this highway represents a critical artery for commerce and tourism.

The most complex 57-kilometer section required an investment of 32 billion pesos, featuring 124 structures including 10 tunnels and 79 bridges and viaducts. The highest viaduct in Acatlancito reaches an impressive 110 meters, while the construction process generated nearly 3,000 direct jobs.

Similarly, the Barranca Larga-Ventanilla highway has dramatically improved access to coastal regions reducing travel time from 7 hours to 2.5 hours from Oaxaca City to Puerto Escondido, creating new opportunities for development and tourism. As a real estate investor, I’ve learned that improved accessibility invariably leads to property value appreciation, making now the perfect time to consider Oaxaca Coast investment opportunities.

Puerto Escondido: The Jewel of Coastal Development

The expansion of Puerto Escondido’s airport marks a pivotal moment in the coastal region’s development trajectory. This enhancement has catalyzed construction of new hotels and demonstrates growing interest in developing tourism infrastructure throughout the zone. United Airlines has now programmed a year round direct flight from Houston to Puerto.

When combined with the misfortune that befell Acapulco and Oaxaca’s improved connectivity, the state has positioned itself as an increasingly attractive alternative for tourists and business owners. Each new visitor discovering the magic of Puerto Escondido and surrounding coastal areas represents potential real estate clients, whether they’re seeking vacation properties, retirement homes, or investment opportunities.

The Interoceanic Corridor: Economic Engine for the Future

The Interoceanic Corridor of the Isthmus of Tehuantepec represents another pillar of Oaxaca’s industrial growth. While federal works are capital-intensive and employment generation hasn’t yet matched expectations, the long-term strategic importance of this project cannot be overstated.

This ambitious initiative aims to connect the Pacific and Atlantic oceans through a modern transportation and economic corridor, potentially establishing Oaxaca as a crucial logistics hub. For real estate investors, identifying opportunities along this developing corridor offers significant potential for appreciation as the project matures.

Tourism: The Growth Multiplier

Tourism serves as both a cause and effect of Oaxaca’s development. The influx of visitors creates demand for better infrastructure, which in turn attracts more tourists. This virtuous cycle continues strengthening year after year.

Having witnessed similar patterns in development hotspots across Latin America, I can confidently state that Oaxaca is following the classic growth trajectory that preceded major value appreciation in markets like Playa del Carmen and Los Cabos a generation ago.

With Acapulco facing challenges and travelers increasingly seeking authentic experiences, Oaxaca’s blend of breathtaking coastlines, rich indigenous cultures, world-renowned cuisine, and improving infrastructure positions it perfectly to capture growing market share in Mexico’s tourism industry.

Comparative Advantage: Oaxaca vs. Other Mexican Regions

While Oaxaca leads industrial growth, it’s worth noting the broader regional context. Guerrero achieved 15.1% annual growth, primarily through energy distribution and construction sectors. Baja California Sur saw a 14.4% increase driven by construction in the tourism sector. Durango registered a 13.2% increase, representing recovery to previously established levels.

However, the broader southern region of Mexico, excluding Oaxaca and Guerrero, experienced industrial activity declines. Tabasco (-9.9%), Campeche (-15.8%), and Quintana Roo (-61.2%) all registered significant drops, largely due to high comparative bases established during the Mayan Train project.

This regional perspective highlights Oaxaca’s exceptional performance and reinforces why the Oaxaca Coast investment opportunity deserves serious consideration.

The Outlook for Oaxaca Coast Investment

As someone who’s navigated real estate markets across North America for decades, I recognize the telltale signs of an emerging investment hotspot. The Oaxaca Coast exhibits all the classic indicators:

• Leading economic growth metrics
• Transformative infrastructure development
• Expanding tourism appeal and infrastructure
• Strategic positioning within national development priorities
• Relatively early stage in the appreciation cycle

For investors and homebuyers considering the Oaxaca Coast, the current moment represents a particularly advantageous entry point. The foundations for sustained growth are firmly established, yet prices haven’t reached the premium levels seen in more mature Mexican destinations.

Whether you’re seeking a vacation property, retirement home, or pure investment opportunity, the Oaxaca Coast offers compelling value propositions across various market segments.

Our team of experienced real estate professionals understands both the tremendous potential and the nuanced considerations of investing in this dynamic region. We’re committed to helping you navigate the opportunities, understand the market dynamics, and identify properties aligned with your specific objectives. Browse our listings here: https://mexicoliving.com/developments/

The convergence of economic momentum, infrastructure development, and tourism growth has created a unique window of opportunity along the Oaxaca Coast. Those who recognize and act on this potential today will likely find themselves positioned advantageously in what promises to be one of Mexico’s most compelling development stories of the decade.

Read more: Oaxaca lidera el crecimiento industrial del país