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Miami Is Now A Buyers’ Market For Luxury Properties

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Slower sales and a glut of inventory has led to a buyers’ market for South Florida luxury properties, according to Miami Beach real estate agent Jill Eber.

“For almost five years we were just on an upward spiral,” Eber, of Coldwell Banker’s the Jills, told a gathering of real estate professionals Wednesday evening. “But, right now, it has adjusted and it has become more of a buyers’ market. As a result, developers are adjusting their pricing and increasing broker commissions to move units. In no way is this like 2008, 2009, and 2010. The market has been steady.”

Eber participated on a panel hosted by the Miami chapter of the Asian Real Estate Association of America at Brickell City Centre’s East, Miami hotel. The discussion was moderated by Coldwell Banker luxury real estate Vice President Craig Hogan and featured Debora Overholt, Brickell City Centre’s vice-president for retail, Swire Properties Vice President Maile Aguila, Eber, Miami Association of Realtors President Teresa Kinney and Ramona Messore, vice-president of Saks Fifth Avenue at Brickell City Centre.

Overholt and Aguila offered their insights into Swire’s ability to finish massive developments like Brickell City Centre. Overholt noted that the $1 billion nine-acre mixed use project is modeled after Pacific Place, a complex of office towers, hotels and a shopping centre the company built in Hong Kong 27 years ago.

“If you are familiar with Pacific Place, what we are developing is very similar to that,” Overholt said. “We are very excited to bring something fairly new to U.S. retailers, but something we already do well.”

Since opening in 1989, the four-floor mall at Pacific Place has more than 711,000-square-feet of retail space that houses a Harvey Nichols department store and 140 luxury brand shops and boutiques. Similar to Brickell City Centre, the mall is integrated into three Class A office towers, four five-star hotels, and a condominium. Swire spent $2.1 billion in 2011 on a redesign project led by Thomas Heatherwick.

Aguila told the audience Swire’s success with Pacific Place proves the company has the strength and wherewithal to deliver every phase of Brickell City Centre.

“When we do things, we do things long-range and take a long time,” Aguila said. “I remember when we were developing Brickell Key, we were all looking forward to a retail component and food and beverage component that just never happened. We saw that need. We had the vision to come into the area at the right time and the right place.”

 

Source: The Real Deal

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Foreigners Swoop Into Miami Real Estate With Piles Of Cash

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It’s a scene that’s played out countless times here in recent years.

A working-class couple identify a home they want to buy, they work with their bank on a mortgage and prepare an offer, only to find that the property’s been purchased by a foreigner who plunked down a full cash payment. “That’s happened to every Realtor in Miami,” said Adrian Foley, a lawyer and real estate agent.

That situation is partly why Miami has become one of the most expensive cities in the U.S. to buy or rent a home. Lured by the beaches or the relative security of the American real estate market, people from around the globe have flooded the area in recent years.

 Every time the Argentine or Brazilian economy takes a plunge, Miami real estate agents see a wave of people flying north looking for a safer place to invest their money. Whenever global oil prices fall, Russians and Venezuelans start showing up. Vacationers from Europe buy properties to serve as winter retreats. “And there’s now for the first time quite a lot of activity coming from Asian buyers, especially Chinese,” Foley said.

One clear indication of foreign purchases is the number of Miami homes being bought with cash. As much as 70% of total home purchases in the Miami area were cash sales in March 2012, according to real estate research firm CoreLogic. That was down to 58% in December, but still well above the national average of 35.5%.

Miami still remains relatively cheap for buying prime property. “They are very inexpensive compared to other places in the world, be it Buenos Aires, Bogota, Paris, Germany, Russia,” said Alberto Orso, a Miami real estate agent who works with many Latin American buyers.

Another factor has been a strong push from city leaders and developers to cultivate a global, cosmopolitan environment that attracts a wide variety of wealthy foreigners. Christie’s International Real Estate listed Miami among its top 10 luxury markets in 2014. Flip through the April edition of American Airlines’ in-flight magazine and there are several Miami-area developers advertising their properties, one even promoting it as a place to buy and immediately rent out as an investment.

But when foreigners are making the decision of where to buy, it comes down to one thing. “You go to the most attractive cities,” said Geoffrey Garrett, the Australian-born dean of the Wharton School of business at the University of Pennsylvania, during a recent visit to Miami. “Globally-mobile people want to go to the most cosmopolitan places, and Miami is certainly up there.

Drawing those kinds of investors, however, has come at a cost. Developers are building mostly high-priced condos and homes to match the international demand. And with banks hesitant to hand out loans following Miami’s real estate plunge during the recent recession, local residents are left with few options.

“Ninety percent of new construction underway in Miami right now is unaffordable for 90% of the population that lives here,” said Jack McCabe, a real estate analyst with McCabe Research & Consulting. “When people talk about this great divide between the rich and the poor,” McCabe said, “it’s very evident in Miami.”

The focus on luxury projects has also left renters with few options. According to the online real estate database Zillow, Miami-area renters spent 44.2% of their income on rent in the last three months of 2014, the second-highest figure in the country, after Los Angeles.

 

Source: USA Today

 

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