Brazil’s reversal of fortune has been a boon for South Florida as cash-rich investors put more money into Miami-area bricks and mortar, brokers and real estate observers tell The Real Deal.
Brazil’s stock market has plunged 23 percent this year, rising inflation has further battered the value of the real to a four-year low and a wave of protests have crippled major cities. Miami leads the U.S. in total investment by international home buyers, and its overseas success exposes its thriving real estate market to changing economic realities abroad.
Government rates of up to 16 percent on money taken out of Brazil – meant to stem capital flight – simply mean Brazilian investors are changing their strategy, favoring real estate they can pay for incrementally, such as pre-construction projects, or that pays for itself, like rental properties.
Douglas Elliman’s top producing Miami broker Chad Carroll said Brazilians investors are “signing contracts left and right,” especially for rental properties, which are yielding ever higher returns.
Carroll recently showed clients, a Brazilian couple, a $2 million, four-bedroom condo finished and ready for immediate move in. The couple chose instead to buy two pre-construction units and combine them for roughly the same price. “The payment structure was more feasible, with the increments of deposits due over two years,” Carroll said.
Mayi de la Vega, the founder of One Sotheby’s International Realty, and another of Miami’s top brokers, said that if anything, Brazil’s loss has been Miami’s gain.
“I think directly proportional to this loss of wealth and declines in the stock market, it’s strengthened our real estate locally,” Mayi de la Vega, the founder of One Sotheby’s International Realty, told TRD.
Brazil is the top country of origin for Miami’s international home buyers, who constituted about 6 out of 10 sales last year.
While South Florida has drawn wealthy buyers from around the world, including all of the BRICs – Sunny Isles Beach goes by the moniker “Little Russia” – the Miami Association of Realtors claims Brazilians accounted for the largest share of Miami’s international sales in 2011 and 2012.
However, even if Brazilian sales were to taper off, Miami is well-positioned to benefit from foreign investors elsewhere, de la Vega said.
“I always find that when one country’s weak, another one’s strong. French buyers are desperately trying to take money out of there,” she said.
L.J. Rodriguez, the director of sales at Midtown, a massive residential and retail development in Miami, said that the turmoil of Brazil has fueled a spate of sales, with investors looking for fixed revenue from rents.
“Any potential downturn, we actually see as a positive because they’re going to find ways to hedge against their own economy,” Rodriguez said.
Most Brazilians – 78 percent in 2012 – paid for properties all cash, the association’s statistics show. Nearly half of buyers in 2011 said their intended use of the condo or house was as a vacation home for family and friends. A smaller share, 41.9 percent, gave that answer last year, with more buyers – 6.45 percent from 4 percent – saying they “don’t know.”