Baja or Bust

Until now, there were few reasons for an entrepreneurial-minded gringo to take a closer look at the northernmost part of Baja California, a gnarly finger of land that stretches down the Pacific coast.

But, across the border from America, just south of San Diego’s manicured boredom, and an hour’s drive past the chaotic, sooty Tijuana checkpoint (with 60 million crossings a year) is Ensenada. Hugging a cove on the stunning coastline, the city used to make its living by reeling in big tuna and boatloads of badly dressed cruise-ship tourists.

In the past few years though, Ensenada has undergone a fundamental change: it has become a booming centre for post-industrial living, catering to affluent visitors and new permanent residents from the US and the rest of Mexico. Little by little, the commercial and hedonistic infrastructure that attracts creative types, knowledge workers, retired people and wealthy slackers alike has developed. “The property market is simply exploding,” says Federico Fuentes, an investment banker from Mexico City who lives in San Diego, but has already staked several claims in Ensenada, and spends most weekends there.

Daniel Espriella, who works for the state’s office for tourism planning and investment advice, says, “Ensenada will see 7,783 new apartments, with a market value of $2.4bn [€1.8bn]. The rest of the coastline up to the border will get a total of 8,639, worth $1.9bn [€1.5bn].” How many were on the market three years ago? Espriella shuffles the print-outs of his canned presentation and finds a stunning answer: a total of 300 apartments for all of northern Baja.

That means that more than half of all new property activity by dollar value will focus on Ensenada, the port city locals call the Cinderella of the Pacific. Plans for Ensenada include all kinds of new economic activity, including “intelligent” buildings wired for high-speed internet connections so that creative minds can work while gazing at the Pacific.

The clearest indication of things to come is the Trump Ocean Resort, a development of three towers with over 500 apartments. It will have Wi-Fi throughout, Italian kitchens and German appliances. “All that money is pushing south,” says Brendan Mann, the resort’s sales director, when asked why so many clients are from California. At a preview event in San Diego last year, the developer sold 80 per cent of the first tower in a day.

“This city has grown four- or fivefold since I moved here. It will be completely different five years from now,” says Diego Fernández. The 36-year-old entrepreneur came from Mexico City and settled here before the boom. Trim, with a sailor’s tan and cropped hair, Fernández runs a thriving yacht repair shop and marina with his brother Tomás. Demand from US boat-owners has grown so much at their company, Baja Naval, that they recently launched a new venture.

“Boats get bigger every year, people get richer and buy more boats,” explains Fernández while he walks through a forest of stilts and big wooden wedges supporting a dozen or so yachts in various stages of being sanded down, painted or generally overhauled. Labour costs are one-third lower than at US yards, and the staff of 70 works on more than 400 boats a year. On vessels heavier than 70 tons, though, they had to take a pass.

Now they want to cash in on the mega-yachts. In the summer of 2005, the two brothers bought an old commercial yard on the north side of the port that had been used for the old tuna fleet. The venture, Gran Península, will repair luxe boats up to 250ft and the 80,000 sq m of prime harbour property will be turned into office buildings. It is still a work in progress, with rusty equipment and planks lying about, but the first large boats have been hoisted out of the water: 24 last year, probably 50 this year.

“It has huge potential,” says Fernández, who’s pouring $3m (€2.3m) into Gran Península’s first expansion phase. “So far, there is no yard for super-yachts along the entire Pacific coast. Boats had to choose between Alaska, Kauai or the Sea of Cortez on the eastern side of Baja. If you think about it, a boat costs around $80m [€60m] and up. Ten per cent of its value goes to annual maintenance – there’s a lot of money floating by.” Ensenada currently has three marinas in the works to keep the gringo vessels coming.

Of even greater importance as a long-term economic multiplier is Ensenada’s wine cluster. It attracts international attention, talent, investment and sophisticated tourism. The valley of the Guadalupe River is a dream destination waiting to happen – half an hour from the ocean and half an hour from the dirt-bike tracks in the desert.

The valley would still produce cheap jug wines if it weren’t for Hugo D’Acosta. The 48-year-old León native studied agriculture and oenology in France before arriving here in the late 1980s, where he almost single-handedly started the industry of artisanal winemaking.

“We used to be five and we’re probably up to 20 or more wineries,” he tells me one evening while sitting in the office of Casa de Piedra, his flagship winery, wearing faded jeans and a flannel shirt. “There are at least another 50 or 60 underground wineries.” The total output of the valley is roughly one million cases a year – merely a drop in the global wine glut. But Baja wines are sought after because of the limited quantities and their curious salinity, which they owe to the old seabed that forms the valley’s soil.

D’Acosta is the benevolent godfather of Ensenada’s budding wine cluster. He brought an old vocational school back to life by teaching a winemaking course during the summer. He calls his freewheeling course an “incubator”, and it has spawned at least six new wineries so far. Some of the garage winemakers have turned their passion into a full-time job.

“We’re witnessing the beginning of a great wine region,” says D’Acosta. “And the field is still wide open. We need all kinds of people here, particularly good winemakers. Unlike in Napa, they can start here with very little money. And once the grapes are ready for harvesting, there are plenty of opportunities for all the service providers that make a wine cluster thrive: manufacturers for bottles, corks and barrels, designers and print shops for packaging, labs for testing, marketing companies and distributors.

The boom in Ensenada is also attracting architects from all over Mexico. D’Acosta’s brother Alejandro and his wife Claudia Turrent moved from Oaxaca and have just completed Hugo’s latest winery, called Paralelo. This is a most unusual building in the shape of an adobe-clad cross, made from reclaimed local materials such as telephone poles and old tyres.

It is also the first of a handful of boutique wineries set up by San Diego banker Fuentes with 15 other investors from Mexico and the US. They expect their dividends to be paid in cases of red wine, and have been promised a 30 per cent annual return on investment. “Any great architect in Mexico would like to do some projects here,” claims Alejandro D’Acosta, who is busy finalising plans for 400 villas by the sea and an adjacent 20-storey apartment tower.

Then there’s Michel Rojkind from Mexico City, who is building a villa that looks like the residential version of Louis Kahn’s Salk Institute (remember Gattaca?) on a cliff overlooking Ensenada’s ocean front for a local industrialist.

Renowned expat architect Sebastián Mariscál, who has mostly worked on San Diego’s gentrified downtown, is about to construct his second and third projects in the wine country. Both will be small designer hotels sunken into the undulating vineyards in order to immerse guests in the region’s terroir.

The unexpected growth has its downsides, as locals point out a few minutes into every conversation. Water shortages and question marks over sewage treatment threaten the unfettered building boom, and the influx of better-off tourists demands more places to eat and sleep well. The whole region needs to upgrade its transportation infrastructure and get comprehensive zoning and development plans – something local activists have been demanding for years.

And then there is the border hustle when crossing into California. “Where in the world is there a city with 400,000 people without a commercial airport?” asks Peter Tarquinio, a boater from LA who spends most of his time in Ensenada these days. For a good business reason.

If all goes according to plan in the next few days, Tarquinio’s own airline, Ensenada Concierge, will start scheduled service in and out of the city’s old airport at the end of February. “People need to have an easier way to get here, and I’ll help them do that.”

For starters, Tarquinio will only use a nine-seater Cessna to fly every weekend into Carlsbad north of San Diego, and Long Beach outside LA, for $185 each way. Tickets will become cheaper once hotels and even cruise organisers come on board, he believes. “Ensenada’s airport has a mile-long runway. That’s big enough to land a Boeing 737. It’s only a matter of time.”

There’s another development under way that makes Tarquinio confident he is at the forefront of the Ensenada gold rush: a private company is also to build a giant container port in Punta Colonet, an inlet 80km south of town that until recently was only known to surfers and fishermen. By 2025, the new port is slated to handle six million containers from Asia a year – which would put it on a par with the ports of Los Angeles and Long Beach. Once the ground is broken for this multibillion-dollar project, it means that Ensenada is no longer the last charming refuelling stop before Baja’s wildback country.

“This is not a place to have a city life,” Jose Perez says. “The beauty of Ensenada is not in the city. If you don’t like nature, then you’re lost here.”

But nightlife for food lovers is lively. The winemakers congregate at Manzanilla on Thursday nights and eat and drink until dawn.

Laja, another highly regarded seafood restaurant opened six years ago in the Valley by former Four Seasons chef Jair Tellez, has become a destination spot – diners drive down from San Diego just for lunch.

Local scientists hang out at jazz and wine bar La Bodega. Café Tomas and Café Kaffa brew the best coffee in town; and absolutely everyone goes to Hussong’s cantina for drinks and music at night which has been open since 1892 and it's supposedly where the Margarita was invented.

The Gran Península container port is inside the port of Ensenada, south-east of Los Angeles and San Diego, 120km from the US border.

The Mexican business tax-corporate income tax was reduced to 29 per cent in 2006 and will move to 28 per cent in 2007.

Businesses related to farming, forestry and fishing can qualify for a 50 per cent tax reduction.

There are regular flights between Tijuana and Tokyo’s Narita airport.

Ensenada and the Valle del Guadalupe are an easy four-hour drive from Los Angeles). But crossing the border at Tijuana can be a three-hour ordeal. Locals suggest that you instead drive through Tecate, 40 minutes to the east of the wine trail, which generally takes a more manageable 10 minutes.

The 70km-long corridor from Rosarito, south of Tijuana, is currently a giant construction site, with developers’ posters announcing the next high-rise, ocean-view resort or housing development.

Baja’s coast is eager to take in newcomers from Southern California. Federico Fuentes, a banker from Mexico City, says, “For $500,000 (€380,000) you can get a mansion with ocean view.” Ensenada will see 7,783 new units with a market value of $2.4bn (€1.8bn) along the waterfront where there is great sailing, fishing, whale-watching and surfing. The development will be modelled on Miami: a “gringo ghetto” of high rises and pensioners.

The estate agents in Ensenada are putting their money on the wine region. “It’s Napa-Sonoma 50 years ago,” says Jose Perez, the owner of Ensenada Realtors, who is planning to move to Valle de Guadalupe. “You can get land there for $30,000 (€23,000) an acre.”

A downside of the area will always be the limited water supply; it is nearly impossible to obtain a new well permit, although you can buy an existing one for roughly $15,000 (€12,000).

Entrepreneurs started making their way to Ensenada in about 2000. Many have settled in the port city of Ensenada or in Valle del Guadalupe, the wine-making region 15 minutes’ drive away. Twenty vineyards have opened there since 2002.

Producers Eileen and Phil Gregory moved to Valle del Guadalupe from Hollywood in 2002, tipped off by a film industry friend who’d worked at Baja’s Foxploration Studios. At that time, even local estate agents didn’t know about the area. The Gregorys opened Las Brisas del Valle, an upmarket B&B on 70 acres of land, taking advantage of the financial incentives Mexican law offers business owners.

Graphic designer Luis Ariza, who has been here since the beginning of the Ensenada boom, has played a key role in re-branding the region. His modern, innovative designs are splashed across menus and wine bottles in town. He’ll soon create the visual identity for this year's Fiesta de la Vendimia, the annual harvest festival that draws more than 40,000 visitors each August.

Opportunities abound for secondary businesses to support the growing wine region and service the new residents in the waterfront developments. Eileen Gregory has already started Baja Botanica – a range of beauty products made with lavender grown in her garden.

The city also needs a wine and tapas bar; a gourmet market to sell local artisanal breads, olive oils and organic produce; a high end craft shop; and a contemporary design store, health care services, more roads, more shops and malls, more restaurants and more schools.

Several of the researchers from Ensenada’s renowned marine biology institute have launched aquaculture businesses that aim to harvest seafood such as halibut, flounder and mussels in a more sustainable way than the tuna fleets did in the past.