Miami Condo Boom 2.0 Has Begun
Miami Condo Boom 2.0 Has Begun, International Buyers Providing The Spark
Because Miami's prior decade of excessive condo building was something akin to a multi-year sporting event watched and followed by millions around the world, today's condo environment can now be summed up in three words: "Game On, Again!"
But the game is much different now.
Unlike the prior condo boom, fueled by thousands of U.S. consumers and condo speculators using 90% to 100% leverage to finance their purchases, today's buyers are mainly foreigners - and they buy in cash.
The National Association of Realtors (NAR) reports that the total residential international sales in the U.S. for the past year ending March 2011 equaled $82 billion, up from $66 billion in 2010. Total international sales were split evenly between non-resident foreigners and recent immigrants, while combined total domestic and international existing-home sales in the U.S. were $1.07 trillion.
Therefore, Miami has now become the main beneficiary of this growing global real estate investment trend.
Emerging economies in Latin America, mainly Brazil and Colombia, coupled with favorable exchange rates, are driving an historic multi-billion dollar per month inbound 'flight of capital' from the South into Miami that most other U.S. markets don't enjoy.
According to the Miami Association of Realtors, Miami experienced a 54% increase year-over-year in condo sales in the month of June 2011 alone. Most of those sales were to international buyers, who mostly purchased in cash.
Miami now is the leading international real estate market in the U.S. according to Jed Smith, Managing Director of Quantitative Research for the National Association of Realtors.
See related news stories on WORLD PROPERTY CHANNEL:
- Foreign Buyers Now Driving $82 Billion in U.S. Real Estate Sales, a 24% Annual Surge with Florida as Leading Investment Gateway
- Miami Condo Sales Spike 54% Year-over-Year in June, Home Sales Rise 35%
This influx of foreign real estate investment has re-stimulated sales in a number of existing condo projects, as well as about a half dozen soon-to-be-announced new condo towers in Miami over the next six months.
Edgardo Defortuna, president and founder of Miami-based Fortune International stated, "While Miami has always been an international buyers' market for real estate, we see a significant increase in real estate purchases from countries like Brazil, Venezuela, Argentina and Mexico."
Mr. Defortuna's firm, one of Miami's largest real estate brokerages, handles a large number of condo projects in Miami, including the recently announced Blue Hyatt Residences. "The Blue" is a luxury condo-hotel property in the heart of Doral that is now offering studio, one to three bedroom condo units in the $150,000 to $350,000 price range.
According to Defortuna, "We are seeing an acceleration of foreign buyers hailing from Venezuela, Colombia and Brazil (as well as from the Northeast U.S.), who are looking for a second vacation home with great golf amenities, easy access to Miami's shopping and restaurant districts, and great pricing value."
The Trump Hollywood condo tower has a similar story to tell.
Greg Freedman, principal of BH3 which is the new owners of Trump Hollywood, said, "Of the $90 million in recent condo sales that we've experienced in 2011 so far, about 45% was from international buyers, mainly from Canada and Latin America."
Freedman further commented, "We also are seeing a number of local buyers as well. There use to be a 'season' for selling luxury condos in Miami and that is no longer the case. It is a year-round season with the combination of local, northeastern and international buyers coming to us continually."
At the uber-luxe W South Beach where condos are selling for $1,600 to $2,600 a square foot, 77% of their condo sales were to international buyers.
"In June, The Residences at W South Beach closed $25 million in sales, making this the highest selling month for the project in 2011. This luxury development is witness to the recent influx of buyers from the international market. Since the second quarter of last year the Brazil market has especially been strong for us. The cost of living is increasing in Brazil, making Miami a very attractive market," says Mayi De La Vega, founder and owner of ONE Sotheby's International Realty.
"A large percentage of the buyers for The Residences at W South Beach are from Brazil, Russia, Turkey, Belgium and Portugal."
At downtown Miami's Marquis Residences, Lori Ordover, the managing member of the Ordover Group says, "Over 60 percent of buyers at Marquis Residences are foreign, with the bulk being Brazilians. Other buyers hail from Italy, Singapore and France. Although Brazilians are increasingly buying up properties throughout Miami."
The recently announced new 22-story luxury condo tower by Miami's mega-developer Jorge Perez of the Related Group called Apogee Beach Hollywood is now about to come out of the ground. The Related Group recently struck a marketing partnership with International Sales Group to form Related ISG.
Craig S. Studnicky, principal of Related ISG, told the World Property Channel that the international buyer market is very strong with wealthy cash buyers; they are able to finance their entire project "Latin American style."
This means that they require all condo buyers to put up 70% to 80% of purchase price before the building is completed. As of today, they have already sold over 40 of the proposed 49 units in tower one under this program.
Another condo project (a relaunch versus a new condo project) being handled by Studnicky's firm is called Vizcayne, located in downtown Miami.
The Vizcayne was reintroduced to the market after a multi-million dollar investment was made by Rockwood Capital to complete the project. The development is nestled on over 2.8 acres on Biscayne Boulevard with spectacular views of Biscayne Bay, South Beach and the Brickell skyline. The residential floor plans range from studios to tri-level, 3-bedroom penthouses.
The Vizcayne has just sold at record pace over 100 luxury condo residences in less than 100 days.
Studnicky's firm just released a new Miami condo report that actual predicts a possible 'condo shortage' by the end of next year, paving the way for another strong cycle of new condo product development with over a half dozen new projects about to be announced in the next few months in Miami alone.
Here are some of the highlights from Related ISG's Miami condo market report:
- 2nd quarter maintains the highest condo absorption rates ever reported for the downtown/Brickell area--as also seen 1st quarter.
- Related ISG predicts that by end of 2012, no developer inventory will remain from 2005-2006 new construction projects.
- Sellouts and strong foreign activity paves way for new construction cycles. At Apogee Beach, Related ISG's first joint project, buyers are paying 70% to 80% of the purchase price before closing- the new norm in South America that Related ISG is pioneering in Miami to great success with two-thirds of the building currently under reservation.
- Central America is also emerging as a top consumer market (Peru, Guatemala, Ecuador, Nicaragua and Mexico) and will be among the most active buyer markets during the months ahead.