As British househunters seek new destinations overseas, the latest country to appear on the radar is Mexico. So far the market has been very much driven by American investors and holiday homebuyers - but now the number of British househunters is growing all the time. It is estimated that about 7,000 U.K. citizens now own property in Mexico.

Mexico, whose oil-driven economy is booming, has a lot to offer. Wonderful weather, stunning scenery and authentic Latin American culture - plus lots of affordable properties and a cost of living that is 50 per cent lower than the U.K.

It is perfectly legal for foreigners to own Mexican real estate, including properties and land in the restricted zones within 50 kilometres of the coast and 100 kilometres of international borders. The Mexican government is even encouraging foreign investment in these areas, and many U.S. companies are taking advantage of the law, constructing tourist resorts and new residential developments all along the Mexican coast.

There are three ways of owning Mexican property - via direct deed, through a Mexican corporation (commercial property), or through a bank trust called a fideicomiso, in the restricted zones. All three ways of property ownership are safe, and it is even possible to obtain title insurance to further protect an investment.

The big attraction for many overseas homebuyers is the vast holiday rental market. Last year about 25 million holidaymakers visited Mexico and hotels are on average about 85 per cent occupied all year round. This means that buy-to-let properties are an attractive proposition.

New beachfront developments bring the best rental returns. Puerto Vallarta, a well-developed town on the Pacific coast, attracts 4.5 million tourists a year and at peak times in December and January you can get £100-£125 a day in rent from a two-bedroom beachfront apartment. Yet costs are relatively low. Apartments at the 400-unit Taheima Wellness Resort & Spa, which has a beach club, golf course and marina, start at £105,000.

Away from the high-rise tourist hotspots, is the resort of Campeche, a UNESCO world heritage site, on a 400-mile stretch of largely unspoiled Gulf of Mexico coastline. On the other side of the Yucatan peninsula from touristy Cancun, Campeche aims to become a hub for high-end eco-tourism. A total of 2,500 properties, starting at about £140,000, are being built on a £200million 760-acre development site, complete with 18-hole golf course, sports marina and five-star hotel. They will be completed by 2010 and, because it’s a eco-friendly resort, nesting turtles will even get their own beach nearby.