Jularc
11-15-2007, 06:37 AM
International buyers prop up market in Miami
Thanks to healthy euro, Europeans gain on Latin American purchasers
http://www.therealdeal.net//issues/November_2007/images/1194222109.jpg
About 75 percent of purchasers
at CIMA, a luxury condo on the
Miami River, are international.
By Steve Cutler
November 2007
While foreign buyers have helped buoy residential real estate in New York City, they are a virtual lifeline to the seriously ailing condo market in South Florida.
Some new projects -- expecting to sell as many as 75 percent of their units to international buyers -- are putting the lion's share of their marketing dollars into attracting foreign investors.
According to Lissette Calderon, founder of development company Neo LLC, which is now building CIMA, their fourth luxury condominium on the Miami River in Downtown Miami, "Our international percentages have increased significantly for this project -- higher than we've ever seen. About 75 percent of our purchasers are international."
And while Miami could always depend on Latin American nationals to buy second homes or invest there, Calderon observes a new trend: "In the last several years, and especially over the last year, there has been an incredible influx of European buyers because of the strength of the euro." Of the international buyers at CIMA, she expects that 60 percent will be Latin American and 40 percent will be European.
Located in the 13.5-acre River Front, a gated residential enclave on the Miami River, the 52-story CIMA will have 507 units. Scheduled to complete construction at the beginning of 2010, the building is already about 60 percent pre-sold thanks in part to aggressive international marketing.
The developers have prepared brochures for the project not only in the usual Spanish, but also in French, Italian, Portuguese and Russian for distribution at events overseas and to send to brokers in cities around the world.
The project has also designed amenities that appeal to a mix of nationalities, including a multilingual concierge and personal chauffeur, and an international newsstand that will carry foreign newspapers and magazines.
Global Florida
In a study of last year's home sales, the National Association of Realtors found that of all the homes sold to international buyers in the U.S. in 2006, one out of every four was in the state of Florida. The Miami-Ft. Lauderdale area itself accounted for more than a quarter (27 percent) of those Florida sales. Orlando was next, with 14 percent.
About a third of foreign homebuyers in Florida were Latin American. Half were from Europe, including Eastern Europe, which doubled its representation over the last year to 6 percent. Canadians accounted for 9 percent of home sales to foreigners in Florida.
The number of sales in Florida to buyers from each of 100 countries around the world in 2006 increased over the previous year, except for the United Kingdom, which slipped back a bit. British buyers represented 21 percent of the foreign purchases in the state, down from 33 percent in the previous year's survey. The U.K. remains the country with by far the most purchases in Florida. Venezuela is next, with 11 percent.
Developers and brokers in the Miami-Ft. Lauderdale area report a much higher percentage of sales to South Americans than the state average. As Miami is the gateway to Latin America, the city remains a natural place for wealthy Latin American nationals to relocate, own a second home or invest -- especially if they are interested in dollar-denominated assets.
But lately, according to Paolo Scattarreggia, principal of the Miami Beach-based Miami Lodge Realty, "Latin American investors, which have been the main group of buyers in South Florida for a while, have lost some ground to Europeans, mainly because of the decline of the U.S. dollar. It takes over 1.4 dollars to convert into one euro, and one U.K. pound equals two dollars. U.S. prices appear to be a true bargain to overseas buyers."
Also, adds Scattarreggia, "in most European prime markets, prices of real estate are higher than in South Florida."
For example, according to the Land Registry of England and Wales, the average price of an apartment in greater London last August was $714,000, a nearly 17 percent increase over the year before. By comparison, most of the apartments at CIMA range between $330,000 and $900,000.
South Beach sales
Of late, says Scattarreggia, Europeans "get somewhat confused and deterred by reading newspaper articles about the real estate and mortgage markets here." As a result, they've become more cautious.
"What has changed recently," he notes, "is that they want to make sure they buy in primary locations. That's why in the eyes of most foreigners, South Beach is still the place to be and buy."
As an example, he says, "Italian buyers are purchasing in buildings such as the Icon South Beach," a luxury condo designed by Philippe Starck. Completed in 2005, the Icon has 43 of its 293 units listed for sale, from about $700,000 to $17.5 million.
"New pre-construction projects have lost some of their appeal compared to buildings that have been completed," adds Scattarreggia, "where buyers can evaluate them better. Location and quality of construction are again the main considerations."
One new condominium under construction -- Lincoln Square, located on the bay side of South Beach -- is marketing aggressively to Europeans during its pre-construction phase. "We're planning a road show this fall," says sales manager Gary Helms, "starting with London, Italy, Spain and Greece. There are a lot of Greek buyers here. We'll end it in Russia. There are a lot of Russians poking around South Beach."
Helms expects that about half of Lincoln Square's 35 units will go to foreigners. (Prices start in the $300,000s.) "Europe is stronger than Latin America now because of the dollar," he says. "They're enjoying every minute of spending our money."
Yet, some projects in Miami still aim at an almost exclusively Latin American demographic. Park Square at Doral, a $1 billion mixed-use development under construction in the City of Doral's town center, will offer 1,000 residential units, priced from the low $400,000s.
According to George Mato, director of sales for Adonai, the Luxury Group, which is marketing the residences, "Seventy to 80 percent of our people will be Venezuelans and South Americans." The immediate vicinity in which the project will stand is 85 percent Venezuelan, says Mato.
Doral is 10 minutes from the Miami International Airport. "We're target-marketing Latin America," says Mato, "opening up satellite sales offices in Venezuela and other South American countries."
An almost equal number of international buyers in Florida bought homes to use for vacation -- 38 percent -- as for investment. The purchases are especially ameliorative to an ailing market because they are often made with all cash: Almost a third (29 percent) of all foreign buyers bought with cash, versus 8 percent of all homebuyers in Florida.
While most foreign buyers go for single-family homes and condos, much of the big-ticket investment is on the commercial side, a sector of the market that has remained strong despite the recession in residential.
"We're still seeing money from Europe, South America, Ireland, Britain and the Middle East," says Robert Given, a CB Richard Ellis senior vice president. Often, that money is hard to trace to a foreign source, as the deals are handled through New York-based investment companies.
"Investcorp represents a lot of money out of Bahrain," Given says, "Real Estate Capital Partners represents several German funds, Equity One handles a lot of money coming out of Israel, and Regency Investments has partnered with the Australian funds."
Savvy and wealthy foreign investors, says Given, spend $30 to $50 million or more on Class A properties in prime locations, including higher-end retail, mixed-use projects, office buildings and community shopping centers.
"They like the classic good markets," he says, "like Coral Gables, South Beach, Downtown Ft. Lauderdale, Brickell in Miami and Boca Raton."
According to Diana Mendoza, sales manager for NR Investments, which develops office condominiums, "Three to 5 percent of our buyers have been foreigners, from Venezuela, Ecuador and France. But in the last three or four months, there has been more interest from foreign investors."
A promotional event the company produced in Argentina in September brought three or four possible sales prospects, Mendoza says. "We've been to Argentina, Venezuela, Brazil and Peru," she says. "Next year, it's Europe and China. The foreign market is a growing area. It's not a cycle that's going to end."
Copyright © 2003-2007 The Real Deal. (http://www.therealdeal.net/issues/November_2007/1194222109.php)
Thanks to healthy euro, Europeans gain on Latin American purchasers
http://www.therealdeal.net//issues/November_2007/images/1194222109.jpg
About 75 percent of purchasers
at CIMA, a luxury condo on the
Miami River, are international.
By Steve Cutler
November 2007
While foreign buyers have helped buoy residential real estate in New York City, they are a virtual lifeline to the seriously ailing condo market in South Florida.
Some new projects -- expecting to sell as many as 75 percent of their units to international buyers -- are putting the lion's share of their marketing dollars into attracting foreign investors.
According to Lissette Calderon, founder of development company Neo LLC, which is now building CIMA, their fourth luxury condominium on the Miami River in Downtown Miami, "Our international percentages have increased significantly for this project -- higher than we've ever seen. About 75 percent of our purchasers are international."
And while Miami could always depend on Latin American nationals to buy second homes or invest there, Calderon observes a new trend: "In the last several years, and especially over the last year, there has been an incredible influx of European buyers because of the strength of the euro." Of the international buyers at CIMA, she expects that 60 percent will be Latin American and 40 percent will be European.
Located in the 13.5-acre River Front, a gated residential enclave on the Miami River, the 52-story CIMA will have 507 units. Scheduled to complete construction at the beginning of 2010, the building is already about 60 percent pre-sold thanks in part to aggressive international marketing.
The developers have prepared brochures for the project not only in the usual Spanish, but also in French, Italian, Portuguese and Russian for distribution at events overseas and to send to brokers in cities around the world.
The project has also designed amenities that appeal to a mix of nationalities, including a multilingual concierge and personal chauffeur, and an international newsstand that will carry foreign newspapers and magazines.
Global Florida
In a study of last year's home sales, the National Association of Realtors found that of all the homes sold to international buyers in the U.S. in 2006, one out of every four was in the state of Florida. The Miami-Ft. Lauderdale area itself accounted for more than a quarter (27 percent) of those Florida sales. Orlando was next, with 14 percent.
About a third of foreign homebuyers in Florida were Latin American. Half were from Europe, including Eastern Europe, which doubled its representation over the last year to 6 percent. Canadians accounted for 9 percent of home sales to foreigners in Florida.
The number of sales in Florida to buyers from each of 100 countries around the world in 2006 increased over the previous year, except for the United Kingdom, which slipped back a bit. British buyers represented 21 percent of the foreign purchases in the state, down from 33 percent in the previous year's survey. The U.K. remains the country with by far the most purchases in Florida. Venezuela is next, with 11 percent.
Developers and brokers in the Miami-Ft. Lauderdale area report a much higher percentage of sales to South Americans than the state average. As Miami is the gateway to Latin America, the city remains a natural place for wealthy Latin American nationals to relocate, own a second home or invest -- especially if they are interested in dollar-denominated assets.
But lately, according to Paolo Scattarreggia, principal of the Miami Beach-based Miami Lodge Realty, "Latin American investors, which have been the main group of buyers in South Florida for a while, have lost some ground to Europeans, mainly because of the decline of the U.S. dollar. It takes over 1.4 dollars to convert into one euro, and one U.K. pound equals two dollars. U.S. prices appear to be a true bargain to overseas buyers."
Also, adds Scattarreggia, "in most European prime markets, prices of real estate are higher than in South Florida."
For example, according to the Land Registry of England and Wales, the average price of an apartment in greater London last August was $714,000, a nearly 17 percent increase over the year before. By comparison, most of the apartments at CIMA range between $330,000 and $900,000.
South Beach sales
Of late, says Scattarreggia, Europeans "get somewhat confused and deterred by reading newspaper articles about the real estate and mortgage markets here." As a result, they've become more cautious.
"What has changed recently," he notes, "is that they want to make sure they buy in primary locations. That's why in the eyes of most foreigners, South Beach is still the place to be and buy."
As an example, he says, "Italian buyers are purchasing in buildings such as the Icon South Beach," a luxury condo designed by Philippe Starck. Completed in 2005, the Icon has 43 of its 293 units listed for sale, from about $700,000 to $17.5 million.
"New pre-construction projects have lost some of their appeal compared to buildings that have been completed," adds Scattarreggia, "where buyers can evaluate them better. Location and quality of construction are again the main considerations."
One new condominium under construction -- Lincoln Square, located on the bay side of South Beach -- is marketing aggressively to Europeans during its pre-construction phase. "We're planning a road show this fall," says sales manager Gary Helms, "starting with London, Italy, Spain and Greece. There are a lot of Greek buyers here. We'll end it in Russia. There are a lot of Russians poking around South Beach."
Helms expects that about half of Lincoln Square's 35 units will go to foreigners. (Prices start in the $300,000s.) "Europe is stronger than Latin America now because of the dollar," he says. "They're enjoying every minute of spending our money."
Yet, some projects in Miami still aim at an almost exclusively Latin American demographic. Park Square at Doral, a $1 billion mixed-use development under construction in the City of Doral's town center, will offer 1,000 residential units, priced from the low $400,000s.
According to George Mato, director of sales for Adonai, the Luxury Group, which is marketing the residences, "Seventy to 80 percent of our people will be Venezuelans and South Americans." The immediate vicinity in which the project will stand is 85 percent Venezuelan, says Mato.
Doral is 10 minutes from the Miami International Airport. "We're target-marketing Latin America," says Mato, "opening up satellite sales offices in Venezuela and other South American countries."
An almost equal number of international buyers in Florida bought homes to use for vacation -- 38 percent -- as for investment. The purchases are especially ameliorative to an ailing market because they are often made with all cash: Almost a third (29 percent) of all foreign buyers bought with cash, versus 8 percent of all homebuyers in Florida.
While most foreign buyers go for single-family homes and condos, much of the big-ticket investment is on the commercial side, a sector of the market that has remained strong despite the recession in residential.
"We're still seeing money from Europe, South America, Ireland, Britain and the Middle East," says Robert Given, a CB Richard Ellis senior vice president. Often, that money is hard to trace to a foreign source, as the deals are handled through New York-based investment companies.
"Investcorp represents a lot of money out of Bahrain," Given says, "Real Estate Capital Partners represents several German funds, Equity One handles a lot of money coming out of Israel, and Regency Investments has partnered with the Australian funds."
Savvy and wealthy foreign investors, says Given, spend $30 to $50 million or more on Class A properties in prime locations, including higher-end retail, mixed-use projects, office buildings and community shopping centers.
"They like the classic good markets," he says, "like Coral Gables, South Beach, Downtown Ft. Lauderdale, Brickell in Miami and Boca Raton."
According to Diana Mendoza, sales manager for NR Investments, which develops office condominiums, "Three to 5 percent of our buyers have been foreigners, from Venezuela, Ecuador and France. But in the last three or four months, there has been more interest from foreign investors."
A promotional event the company produced in Argentina in September brought three or four possible sales prospects, Mendoza says. "We've been to Argentina, Venezuela, Brazil and Peru," she says. "Next year, it's Europe and China. The foreign market is a growing area. It's not a cycle that's going to end."
Copyright © 2003-2007 The Real Deal. (http://www.therealdeal.net/issues/November_2007/1194222109.php)
