ONCE IN DEEP TROUBLE, DEVELOPERS LIKE THE RELATED GROUP ARE FINDING CASH BUYERS FOR EXISTING UNITS AND FOR FUTURE PROJECTS
Is South Florida ‘Building’ Another Real Estate Boom?
To the panelists participating in the MiamiEmpresarial / ProMiami Banking & Real Estate Forum, it sure seems like a new upswing is actively brewing, but this time, our five experts say, things will definitely be different
Rebeca C. Trujillo
“Real estate always is, chiefly in Miami, in boom and bust cycle, and I think that we’ve been through a very rough three to four years.”
This statement by Richard Zelman, a seasoned real estate attorney and managing partner at Sacher, Zelman, Hartman, Paul, Beiley & Rolnick, initiated an insightful, 90+ minute exchange at the Miami Empresarial / ProMiami Banking & Real Estate Forum, held recently at Miami-Dade College’s Wolfson Campus as part of ConsuMiami 2012 Expo.
And while conditions in the South Florida market are far from ideal, Zelman and his fellow panelists —each from his unique experience and perspective— agree that there’s another boom in the making.
“MIAMI IS A VERY NICE SAFE HARBOR”
“There are lots of people from all over the world that like to come here to vacation, to own a piece of property, to make an investment, to find safe harbor from political, economic instability in wherever they live or wherever their primary business is,” says Zelman, whose practice focuses on banking and finance law, business and commercial law. “Miami is a very, very nice safe harbor for a lot of people.”
However, he and Raúl Valdés-Fauli, president/ CEO at Professional Bank, agree that there’s the proverbial “fly in the ointment” for individuals who are not U.S. tax-payers and have bank accounts, property and investments in South Florida or anywhere in this country: Information of their holdings may be made available to their countries of origin or residency if new regulations proposed by the Internal Revenue Service/Department of Treasure are implemented.
Single family homes, once the ‘darling’ of the South Florida real estate market, have now been replaced by condominiums as prospective buyers’ preferred property. Reports by the Miami Association of Realtors indicate that, compared to a year earlier, the median sales price of condos surged 40.4 percent in February and experts say the existing inventory is 95 percent sold
“Just pick a country; for example, all the Venezuelan nationals here. Suddenly the IRS is exchanging information with the Venezuelan government,” explains Valdés-Fauli.
A move like this, they concur, would be extremely detrimental to foreign investors, especially those from totalitarian or quasi totalitarian regimes that would then put in place legislation to control and impede the transfer of funds to U.S. financial institutions.
BRAZIL: INVEST, INVEST, INVEST IN MIAMI
Born in Brazil, Cristiano Piquet is a championship caliber race car driver and a realtor with over a decade of experience in South Florida real estate. His fellow countrymen, he confirms, are investing heavily in South Florida properties.
Asked if this focused interest will dissipate or slow down in the future, Piquet says: “I think that this will be in the long run. Brazil has a good momentum now, with agriculture, petroleum. We have the Olympics coming. There’s a lot of money going to Brazil, a lot of money circulating in Brazil. And they love Miami!”
“The currency exchange also helps and it’s not going to change any time soon,” he says. “So we’ll see them (Brazilian investors) for a long time.”
Miami has a positive, long-term relationship —a love affair of sorts— with Brazilian nationals and, Piquet says, the properties they are buying are mostly vacation homes.
“People feel very bullish about Brazil and its economy,” adds Santiago Cueto, partner at the Cueto Law Group, who represents clients in matters pertaining to international law and business transactions. “In Brazil, GTS, the largest private equity firm just invested $1 billion in real estate there. Of course, here in Miami we feel the spillover of that enthusiasm, but it’s not just here that the money is circulating; it’s back there as well.”
A NEW BOOM?
Money is certainly pouring into South Florida from Brazil and other nations, but buyers are not focusing on the type of property that flourished here in the past few decades. In fact, single family homes in Miami-Dade and Broward county suburbs, once the “darling” of the region’s real estate market, have now been replaced by condominiums as prospective buyers’ preferred property.
The demand is clearly reflected in the pricing. Reports by the Miami Association of Realtors (MAR) indicate that, compared to a year earlier, the median sales price for condos surged 46 percent in March to $141,700, the fourth consecutive monthly increase, while the median sales price for single family homes increased 13 percent to $180,000.
In addition, experts say the existing inventory of condominiums is 95 percent sold.
Construction activity has also resumed in vacant parcels that had been tagged five or six years ago for high rise projects. Once in deep trouble and on the verge of succumbing to the economic crisis, developers like Jorge Pérez and his Related Group are finding cash buyers for existing units and future projects.
But this sustained enthusiastic market upswing also seems to be generating the previous boom’s tell-tale signs of doom: the flipping frenzy.
Commented Valdés Fauli: “I heard two people flipping condo contracts last week. That feels like 2005!”
CANADA: A STEADY PRESENCE IN MIAMI
Claudio Ramírez, consul and trade commissioner at the Consulate General of Canada in Miami, confirmed that his fellow countrymen have a steady presence as investors.
“We saw an increase between 2010-2011, and it (Canada) has continued to have a lion’s share of the real estate market in Florida. It went up from 32 percent to 39 percent. The media attention focuses more on Latin America; that’s more than Latin America combined.”
“Canadians come here for the same reasons so many others are buying here: the dollar is historically devalued; then there’s the low interest rate environment, that is good for mortgage lending, and there are a number of Canadian banks, four of the top five, that are here actively providing cross border financing solutions for Canadians.”