San Miguel de Allende, Mexico

How does this relatively small Mexican city (photos) attract some estimated 12,000 ex-pats, mostly American?  In 1938, the Escuela de Bellas Artes was founded and offered mural painting courses.  This attracted other types of artists and in 1951, Instituto Allende opened and attracted many foreign students.  Once you get artists, you get art galleries, fine restaurants and boutique hotels.  Property values, particularly in the historical center of San Miguel are very high with many of the restored colonial houses selling for many millions of USD.

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