He wasn’t kidding.
The transformation of Miami’s residential (and particularly condominium) sector since the darkest days of the downturn has been propelled by Latin American buyers.
Brokers across South Florida point to Latin Americans, chiefly Brazilians, paying cash for perceived condo bargains as the single-biggest driver of the market. And they’re also playing a key role in the current wave of new projects springing up across the Sunshine State’s southern tip.
“I think they’ve kept our entire real estate market alive, to be honest with you,” said Michael Sadov, director of sales at Canyon Ranch Living Miami Beach. “If we didn’t have the South American influx, I do not believe you’d see the absorption of the real estate that happened. I think they were monumental for us.”
In 2012, 35 percent of all foreign buyers in Florida have come from Latin American countries — the largest buying bloc of any region coming to South Florida — according to a survey conducted by Florida Realtors. (Canada was the second-largest demographic, but the vast majority of Canadians purchased in southwestern Florida as well as in the traditional Canadian stronghold of Broward County.)
And Latin Americans represent a vast chunk of the $10.7 billion foreign buyers have brought in Florida sales from 2011 to 2012. And a supermajority of buyers in the condo market in Miami are from Latin America, according to Peter Zalewski, founder of brokerage and consultancy Condo Vultures.
“They came in with a lot of buying power, and we’re basically pretty inexpensive compared to major markets in Europe or even in Brazil,” said Nathan Zeder of Esslinger-Wooten-Maxwell’s Zeder Team in Coral Gables. “Consequently, with their strong currencies and much lower prices, they were able to absorb the inventory inexpensively.”
Compared to beachfront condos in places like Rio de Janeiro, Miami represented a relative bargain, he said.
“From my understanding, the good areas in Brazil are in excess demand, and they’re probably $2,000 to 3,000 a square foot for the really high-end areas,” Zeder said. “The best areas in Miami were [in 2010 and 2011] around $1,000. They’ve gotten higher, but at the bottom of the market, you could pick up fantastic units and you’d be paying under $500 a foot.”
So who are these Latin American buyers?
They’re affluent, with cash in hand, and largely looking for either second (or third or fourth) homes or for investment properties. (Some brokers attribute much of the surge in Miami’s concomitant rental boom downtown to that increased investment.)
“You’re seeing Brickell preconstruction projects being sold out, and it’s all South Americans,” Zeder said. “It’s all cash. They are investors, but they are different types of investors than before — you don’t have cashiers from Publix [supermarket] trying to buy a piece of property with 100 percent financing.”
So strong has been the demand from foreign buyers that it’s even changed the way Miami developers market and finance their condos. Of course, it’s not just South Americans scooping up local properties. It was, after all, an Italian buyer who paid $25 million in May for the largest single condo transaction in Miami-Dade County.
In Latin America, larger up-front deposits with payments throughout the construction schedule are common. That means more financing is coming directly from buyers, rather than lenders.
“The model of pay-as-you-go is not common in South Florida or even in most of the United States,” Zeder said. “It’s a great indicator that foreign buyers are driving this whole new wave of construction — without foreign buyers, I don’t think we would have 12 towers under construction. And European buyers don’t necessarily work on the same type of system, nor do Canadians,” he said.
Perez himself has been at the center of the boom, with a host of new projects built on that model — from Apogee Beach in Hollywood to MyBrickell in Brickell.
“It doesn’t mean it will continue this way,” Zalewski said. “But there are Latin American fingerprints all over this condo boom.”