Brazil is to the Miami real estate market as LeBron James was to the Miami Heat: a supernova phenomenon that lifted us to the greatest heights, but left difficult questions and painful longing in its absence.

And as the former MVP teased a dramatic comeback to the Magic City on his Instagram in July, Brazil appears doing the same.

In 2010, Brazilians rescued Miami from the biggest housing bubble this country has seen. They arrived on our shores and purchased troves of stagnant and deeply discounted real estate all the way from Doral to Miami’s beaches, at all price levels. It was like a tidal wave of cash that quickly soaked up a huge surplus of inventory, which some experts predicted would take a decade to completely sell out.

But it only took two years for Miami real estate to recover like nothing ever happened; much like it took James two years to bring Miami its NBA championship. It was the start of a new real estate boom that brought Miami renewed global attention.

(While many other countries participated in this spectacular surge, Brazil’s sheer size had the most impact of all. According to the CIA’s World Factbook, it is the fifth-largest country in the world; with more than 207 million people, the sixth-most populous; and it claims the world’s eighth-largest economy.)

Miami being Miami, where we build and sell real estate better than anywhere else, it quickly sold out that entire older supply of inventory, and then moved on to build thousands of new apartments and homes. It’s what we do. And we felt the pain of Brazil’s downfall as sharply as the Heat felt LeBron’s heartbreaking departure.

The Fall

According to the World Bank Group’s June 2017 report “Global Economic Prospects: A Fragile Recovery,” Brazil’s real Growth Domestic Product significantly declined in 2015, by as much as 3.8 percent. The effects were felt immediately in Miami with a sudden and steady decline in the number of Brazilian real estate buyers.

The numbers were not much better in 2016, when the GDP fell again, this time by an additional 3.3 percent. The country’s unemployment rates outpaced most other Latin American countries in that same year.

“In Brazil, rising unemployment, tightening financial conditions and continued political tensions extended deep declines in private consumption and investment,” the report adds.

Brazil was neck-deep in trouble, both politically and economically. It did not help that, as the United States emerged from the Great Recession and the dollar gained significant strength, the Brazilian real took a dive and the exchange rate between the two currencies went from two Brazilian reals for one dollar to a whopping four Brazilian reals in 2016. It was devastating — imagine that condo on the ocean you might be considering for $2 million suddenly doubling in price.

The Rise

After much turmoil and soul-searching, Brazil’s economy is finally showing signs of life. Its GDP is up 0.5 percent this year, and that number is expected to accelerate to 1.8 percent in 2018 and 2.12 in 2019, according to the World Bank Group report. And right on cue, wealthy Brazilian buyers have once again renewed their love affair with Miami real estate.

The Porsche Design Tower and Residences by Armani Casa in Sunny Isles Beach, are experiencing a remarkable new surge of buyers from Brazil.

Another indication of confidence in Brazil’s improving economy, as well as its love affair with Miami, was Avianca Brasil’s recent launch of direct flights between Sao Paolo and Miami.

That company’s president was quoted in Forbes saying, “…it’s still not clear how fast the recovery will come…but at the same time Brazil is a very big country with huge potential.”

There’s an important distinction with this year’s crop of Brazilian buyers. Those who made their investments earlier in the decade were buying in Miami just to get some of their money out of the country, and to have a pied-à-terre where they could spend the holidays and shop.

Many of these buyers are looking to permanently leave their country, as they are fed up with not only the economic and political climate, but also the lack of safety and stability. They are looking to move here permanently, and also buying businesses such as restaurants, stores, shopping centers and income-generating properties. They have little faith in their home country, and are looking to build new lives in America.

The Future?

Just as the Heat did not collapse when James returned to Cleveland, Brazilian buyers never truly stopped investing in Miami altogether. Even at its lowest point, the country has remained a staple on the monthly Miami Association of Realtors list of foreign countries that search for local real estate online.

Whether Brazil can reclaim and hold the top spot for a sustained period remains to be seen, but the hope here is that the country cleans up its act politically, maintains and improves its economic stability, and becomes a steady and more predictable source of investment in Miami real estate.


Source: Miami Herald

Related Group’s Jorge Perez thinks that there are condo projects proposed in Miami that “don’t make sense” and “should not be developed.”

“Developers have come to Miami from Colombia and Argentina who don’t know the market, and some are proposing projects that wouldn’t work even in a good market,” Perez told The Real Deal.

Perez didn’t specify which projects he was referring to, saying he didn’t want to throw anyone under the bus.

According to Perez, the strength of Miami’s condo market is almost impossible to predict, since around 80 percent of sales are to foreigners.

“Demand in Miami will rise and fall based on conditions in places such as Brazil, Colombia and Venezuela,” Perez said.


Source: The Next Miami

Several green building trends emerged over the past 12 months that will impact commercial real estate in the United States in 2015, according to Doug Lawrence, founder and managing principal of 5 Stone Green Capital—Bainbridge, an institutional real estate company.

Lawrence serves on the investment and natural resources committees of the University of Connecticut Foundation and the advisory board of Rutgers Business School.

Here’s what he foresees for emerging trends in green real estate in the year ahead.

1. Aging baby boomers and Gen X, Y and Z will continue to move to cities, requiring more affordable housing—and expecting it to be green.

CREPredictionNo1U.S. cities are growing faster than the suburbs. Baby boomers will need urban housing that supports their health and community needs, but so will the younger generations flocking to live in urban environments. As a policy matter, this means cities will be pressured to create housing that serves a wider range of income and age demographics. Affordable housing is likely to be the target of municipal agendas throughout the country.

Green multifamily really wins within this demand picture. The ability to reduce overall operating expenses through green technology, therefore also reducing occupancy costs for tenants, should improve residential affordability. Green multifamily properties featuring optimal health designs will become increasingly attractive. These would include better air filtration systems to reduce dust, pollen and airborne pathogens that may trigger asthma; more daylighting to improve natural vitamin D production; and antibacterial countertops and doorknobs.

Expect multifamily vacancy rates to continue to fall for affordable and seniors housing sub-sectors. Absorption rates will remain solid for new multifamily construction. The 18-to-34-year-olds seem psychologically predisposed to green housing and, thanks to tight lending standards and high student loan debt, this group will not be seeking single-family homes in the near future. Thus, multifamily demand looks pretty good for 2015, and green multifamily will be the likely winner with the younger generations.

2. The anti-climate-change voices will yell even louder.

CREPredictionNo2Some naysayers will stop arguing that there is no increase in carbon dioxide (CO2) in our atmosphere. Instead, they will argue that increasing CO2 is good for the global economy because CO2 is necessary to increase agriculture. Under this theory, more CO2 in the atmosphere would mean a golden age for crop production. Green real estate investors will continue to reduce their carbon footprint under the belief that doing so increases profitability and is good for the environment as well.

3. Renewable technology, particularly solar, will continue to fall in price and improve in efficiency.

CREPredictionNo3Solar panels that can convert up to 70 percent of the sun’s light spectrum into electricity (from gamma rays to X-rays) are already in beta testing. This could be a game-changer for real estate owners, especially in the multifamily and industrial sectors, as well as for those with properties in dense urban environments in high-cost electricity states.

The cost of solar energy could fall below that of fossil fuel-generated electricity per kilowatt hour, even with the drop in oil and/or gas prices. As technology improves, real estate managers will explore new ways to provide energy to tenants and users at more efficient prices.

4. Urban resiliency and climate change will become topics for deeper discussion among policy-makers.

CREPredictionNo4Following rising average sea levels in a wide range of American cities—from Los Angeles to Galveston, Texas to New York and Boston—and more frequent and more damaging storms, cities are becoming very focused on hardening essential infrastructure.

The real estate industry may see new building codes that emphasize sustainability, as well as resiliency.

5. Utilities companies and smart developers will form partnerships for distributed generation.

CREPredictionNo5It’s getting harder and harder to build new power plants, yet we have more people for whom to provide electricity; meanwhile, business demand for electricity is increasing as the economy strengthens. U.S. power plants are not only aged, but also use incredibly large amounts of fresh water for cooling. Moreover, some experts predict that as much as 10 percent of coal-fired electricity-generating plants in the United States may be shut down over the next few years. More demand, coupled with fewer production resources, may spur real estate owners and power companies into an alliance.

The concept of distributed generation, wherein solar-powered rooftops are used to create renewable energy that feeds the grid, will become more attractive. In this way, the utility company will gain a production source to feed growing demand without having to go through nightmarish public hearings to obtain the production increase. Meanwhile, the real estate owner may see a new revenue stream, or at least a reduction in energy consumption. All in all, partnerships between developers and utility companies may reduce overall operating expenses for garages, public areas, elevators and other electrical hot points.

6. The sharing economy will continue to grow.

CREPredictionNo6Sharing economy enterprises are thriving, particularly in urban markets. Think office sharing, or even These phenomena are no longer fads, and they are changing how we think about office space, hoteling and more.

Many experts assume that the more we share, the less stress we will have on the environment, but it may still be too early to tell whether that’s true.

7. Food production will become more urban and commercial buildings’ rooftops will increase in value.

CREPredictionNo7It’s becoming less profitable to truck a tomato from California to New York and, due to the increasing demand for locally-grown produce, the term “farm-to-table” has become embedded in our vocabulary. The demand for food that is grown without pesticides, fungicides or other chemicals is increasing. We already see grocers like Whole Foods establishing hydroponic farms on their rooftops. Such production reduces transportation costs and improves produce freshness and variety. Other grocers, including Safeway, have gone green by deploying solar arrays and other renewable energy technologies on their stores’ rooftops in order to reduce peak-demand electricity charges. Large rooftops will therefore continue to find new value as non-traditional tenants begin to use them in new ways.

8. Mortgage finance and insurance organizations will consider green standards.

CREPredictionNo8As the government-sponsored entities Freddie Mac and Fannie Mae continue reviewing and improving their standards for green buildings, other mainstream lenders and insurance companies will catch up with the trend. Insurance companies will see green buildings as a way to reduce risk. Lenders will potentially see lower volatility in net operating cash flows. As the capital markets go green, so will more building owners and investors.

The Dow Jones Sustainability Index is proving that green business outperforms the non-green Dow Jones Industrials Index. Green building will mimic that outperformance and, as a result, gain momentum in 2015.


Source: NREI