Foreign Investors Still Stimulating Miami’s Real Estate Boom

by Bilzin Sumberg
Contact

Miami, once the poster child for the recent housing bubble and subsequent crash, now has the strongest housing market in the U.S. and is one of the exclusive high-end real estate “export” economies in the world. This remarkable transformation is due largely to the huge influx of foreign cash, according to a recent Miami Downtown Development Authority study conducted by Integra Realty Resources.

A real estate export economy basically refers to one in which foreign investors purchase real estate, not in which to reside, but as an investment. In Miami’s case 90% of all the new downtown construction is due to demand from foreign investors. Less than 11% of these are being used as primary residences. Further, most of these foreign buyers are interested in “high-end” real estate and are paying cash, as evidenced by Miami’s current luxury property building frenzy. These luxury properties are buyer financed, requiring hefty, pre-construction deposits.

Reuter’s Zachary Fagenson provides an example: the least expensive unit in the under-construction Dezer Development is $5.5 million.  Twenty-two billionaires have already put down deposits toward this project, consisting of 132 apartments “with a private elevator for delivering sports cars to owners’ units.”  The developer contends that he is “going to have a collection of the wealthiest people not only in Miami, but in the world.”  International marketing specialist Helen Jeanne Nicastri adds that “in terms of investment value, Miami is taking its place amongst world-class cities and is currently number eight in the world for luxury cities in quality surveys.”  Jonathan Miller, president and CEO of Miller Samuel, adds, “High-end real estate is the new global currency.”

Peter Zalewski in the Miami Herald points out that the areas of South Florida that have experienced the greatest recovery in condo and townhouse prices are the areas where foreign nationals are most active. And conversely, the weakest recovery has taken place in areas dominated by domestic buyers.

South America, Europe, and China are the most prevalent places from which Miami’s foreign investors originate. According to Lizette Alvarez of the New York Times, “Real estate developers credit South Americans for spurring the current housing boom.” And quoting real estate developer, Jorge Perez, she writes, “South Americans are the game changers — they are the ones that allowed the housing market to bounce back.”  The aforementioned downtown development study finds they comprise 65% of Miami’s foreign buyers.  This could be due to South America’s unstable currencies - investors want to move their cash reserves from there into American real estate.

The study also finds that domestic buyers constitute 10% of buyers with the remaining 25% primarily made up of Europeans and Asians.  For wealthy Chinese investors, the U.S. is the foremost destination for real estate investment according to Forbes.  Prohibited from buying multiple houses in China, they lead the way in U.S. foreign investment, spending $22 billion on American real estate during the year ending March 2014.  Miami, along with Los Angeles and New York, are the most prevalent cities in which they buy additional homes abroad.  And while the Chinese may not be the largest in terms of number, they are very active in the luxury, high-end Miami market, spending an average of $590,826 per home.  Saddy Delgado, vice president of Sotheby’s International, says, “Chinese buyers are starting to see Miami as a hot spot and are realizing prices aren’t as high as New York and other major cities.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bilzin Sumberg | Attorney Advertising

Written by:

Bilzin Sumberg
Contact
more
less

Bilzin Sumberg on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.