As the Miami condo market cools, Asians step in to fill the void left by Latin buyers.

Fewer Latin American and European buyers are investing in Miami condos as global currencies weaken, but Asian and domestic buyers are filling the void. This is according to Integra Realty Resources’ First Quarter Greater Downtown Miami Market Residential Real Estate Market Report, which was recently published by the Miami Downtown Development Authority (DDA) (IRR). sales qatar

The Greater Downtown Miami real estate market is in the early stages of a healthy stabilization, even as the number of condos under construction, unit sale prices, and rental rates rise. As sales from Latin America continue to plateau and construction costs increase, the condo market is approaching a point of equilibrium where supply is catching up with demand.

With a “South American Financing Model,” which saw foreign investors fund 50 percent or more of unit costs by the time the building was completed, foreign investment fuelled the majority of Downtown Miami’s condo comeback. However, as the world responds to a strengthening US dollar, weakening currencies in Europe and Latin America are causing many foreign buyers to hesitate, resulting in slower unit pre-sales in Downtown Miami. However, with China’s currency strengthening against the dollar, the authors of the IRR study predict that Chinese buyers will become a bigger player in the Greater Downtown Miami real estate market.

“After the recovery and with the first round of new condo deliveries, Latin American buyers were a blessing for Downtown Miami, but the area is now seeing considerable traction with Asian buyers,” says City of Miami District 2 Commissioner and Miami DDA Chairman Marc Sarnoff. “The condo market in downtown Miami is not solely reliant on Latin American buyers. The market is being watched by Chinese investors and local buyers. Miami is no longer just the gateway to Latin America; it is also the gateway to the rest of the world.”

Although less Latin American buyers are entering the market, the improving US economy is allowing more domestic buyers to join the market, which had previously been absent. Buyers from New York, Boston, New Jersey, Washington, D.C., and Chicago account for around 15% of the current buyer pool, according to the survey. As Baby Boomers look for second or retirement homes in more affordable areas, buyers from Las Vegas and California are flooding the local market.

“The Downtown Miami address has an increasing cachet for buyers around the world — and around the United States,” says Alyce Robertson, Executive Director of the Miami DDA. “Rents are increasing, approaching those in other chic South Florida communities, indicating a growing demand for a more urban lifestyle.”
According to the survey, rental prices in Greater Downtown Miami are continuing to rise. The average asking price is nearly $3,300 a month, reinforcing Downtown Miami’s position as one of the county’s premier luxury markets, with rental prices now comparable to those in South Beach. However, when new product enters the market, these rents should begin to fall or plateau. Nearly 2,600 traditional rental units are currently under construction, with over 1,000 expected to be completed this year.

Furthermore, as demand for tradesmen and skilled labor in South Florida outpaces supply, construction costs continue to increase. According to the study, rising costs are the most important factor in deciding whether or not currently selling and planned projects can go forward in the next six to twelve months.
As the foreign consumer pool shrinks, this overall market stabilization will cause developers to change marketing strategies, focusing more actively on domestic buyers. The study claims that projects with good funding and waterfront views have the greatest chance of succeeding. Secondary locations in developments with lower price points have the slowest pre-sale absorption.

According to Anthony M. Graziano, Principal of Integra Realty Resources, “all signs point to stabilization of an active real estate market.” “We’ve reached equilibrium with 6,000 units under construction and pre-sold over the last three years. Fewer developers would enter the market as a result of fewer investors, increasing building costs, and rising land prices. Even, Downtown Miami is gaining traction, with the rental and sales prices and the demand from Asian and domestic buyers seeking the lifestyle and affordability that Miami provides in comparison to other major markets.”