But approach downtown and suddenly there they are massive 18th-century stone walls and bulwarks that enclose 40 square blocks of pure colonial charm. Within those walls lie street after street of gaily painted facades, austere churches and cathedrals, and a graceful town square-complete with gazebo-just begging for a stroll.

In December 1999 UNESCO granted Campeche World Heritage status for its cultural and historic significance. The state government wants to turn Campeche, city and state, into a mecca for high-end cultural and eco-tourism.

Ten years ago, locals say, they couldn't even give away their big, rambling properties in Campeche's city center and historic barrios.

Playas Palmeras was the pioneer beach development in Campeche, and is the only one that's actually up and running. It lies 40 kilometers from Champot?n, farther south than the other two development projects. The British-backed group owns 13 kilometers of coastline, all of it white sand beach. Playas Palmeras sold its first beach lots in 2003; the first houses were built in 2005. Company officials say there are still about 25 phase one lots available. About 60 phase two lots will be released for sale by year end.

Lots at Playas Palmeras are priced by the square meter, at $100 a square meter. Lot sizes range from roughly 800 to 2,000 square meters. All lots have at least 20 meters of beach frontage. Housing construction costs range from about $100,000 to $400,000, depending on the size, complexity, and amenities of the house.

As currently planned, the resort will include over 3,000 condominium units; a marina with slips for 150 boats; an 18-hole Jack Nicklaus golf course; a 500-room five-star hotel; numerous pools; a beach; and an entire shopping center for everything from groceries to the latest designer beach wear.

The American-backed Santillana project lies one kilometer from the Grupo Mall project. As envisioned, Santillana will be a gated residential community in two parts: a "del Mar" area with two rows of beachfront lots, and, across the highway and farther from the beach, a "Sea Ranch" of larger lots.

Only first-row beachfront lots will be right on the water. However, all lots will have access to beach areas via footpaths. And the Sea Ranch lots, which run 2,000 to 3,000 square meters apiece, are big enough for private pools.

Prices for beach lots are $125,000 for first-row lots and $100,000 for second-row. There are 15 first-row lots and 14 second-row, all ranging in size from about 1,000 to about 1,500 square meters. Sea Ranch lots go for $75,000. These are all pre-development prices, says Santillana's management, and will hold through the end of December 2007.

Remember: Mexico's constitution does not allow foreigners to hold direct title to property within 50 kilometers of the coast. Campeche City properties, as well as the beachfront developments, fall within the 50 kilometer limit. So what do foreigners do? 

There are two options:

The fideicomiso is a trust that is set up to hold title to the property, with you as the trust's beneficiary.

Fideicomisos are flexible; you can do just about anything under a fideicomiso that you could do if you held the title yourself.

The downside: You'll pay an annual fee to the bank (usually $500 to $600) as long as you have the property. If you plan to live full-time on the property, you'll be advised to buy through a fideicomiso.

Mexican corporation. If you plan to use the property for investment-say, renting it out most of the year-you can choose to set up a Mexican corporation that holds the title. You'll avoid the annual fideicomiso fees, but there will be other guidelines you'll have to follow.

Suzan Haskins
Editor, Mexico Insider