Gov. Ron DeSantis’ crackdown on foreign investment is having ripple effects on Florida real estate.
Senate Bill 264 bans nearly all purchases by Chinese nationals and China-based companies. It also bars buyers from what the state deems “countries of concern,” including Venezuela and Russia, from purchasing agricultural land in the state, as well as any real estate within 10 miles of military and critical infrastructure facilities.
Approved by the Legislature and signed into law by DeSantis in early May, the law goes into effect July 1. It’s part of a larger trend playing out nationwide, including in Texas, and is the latest of many battles DeSantis is waging in the Sunshine State while getting ready for a presidential run.
The effect that the legislation has on how South Florida is perceived to foreign investors could be greater than the effect it will have on actual real estate sales.
“Inhospitable jurisdiction”
Some residential brokerage heads said the law restricting foreign purchases of Florida real estate goes too far, and they expect it will be overturned. Many declined to comment, likely fearing retribution from DeSantis, who’s cultivated a reputation for score-settling. He’s been accused of using his seat to retaliate against politicians, labor unions and The Walt Disney Company, the state’s largest employer.
In late May, a group of Chinese citizens who are lawful U.S. residents and Clermont-based Multi-Choice Realty, a brokerage catering to Chinese and Chinese Americans, sued state officials. They allege SB 264 is unconstitutional, discriminatory and violates Fair Housing laws.
The 10-mile radius for real estate acquisitions near critical infrastructure facilities includes all airports, seaports, electrical power plants, water treatment plants, gas plants, certain manufacturing facilities and more. Because many of those facilities are near urban cores and residential communities, it’s difficult for brokers, buyers and sellers to understand where it would actually be legal for those buyers to purchase, experts say. The law could also affect EB-5 investment, as foreign entities who invest in EB-5-funded developments own an interest in the land.
“[It] casts a cloud of suspicion over anyone of Chinese descent who seeks to buy property in Florida,” the lawsuit filed against the state alleges. The American Civil Liberties Union, which is representing the plaintiffs, said in a statement that the governor’s “misguided rationale unfairly equates Chinese people with the actions of their government, and there is no evidence of national security harm resulting from real estate ownership by Chinese people in Florida.”
Scott Bettridge, who chairs Cozen O’Connor’s immigration law practice, said SB 264 could violate real estate agents’ code of ethics. The National Association of Realtors dictates that its members can’t refuse to work with people based on race, color, national origin and other identifying factors.
Florida Realtors said that “there are too many unknowns to comment,” while the Miami Association of Realtors did not respond to requests for comment.
“Real estate is always concerned when a subset of buyers are eliminated.”
Christina Pappas, president of the Keyes Company, one of the largest independent brokerages in the state, said the real estate industry “is always concerned when a subset of buyers are eliminated.”
And even though Chinese buyers aren’t top of mind for South Florida brokers, potential Chinese buyers have been very interested in Miami real estate in recent months. China topped the Miami Association of Realtors’ list of countries whose residents were searching for Miami homes in April, representing more than 9 percent of all international searches. It was No. 2 in March.
Meanwhile, users in Venezuela represented the fourth most international searches on MiamiRealtors.com in April.
“It’s a matter of turning more of those searches into purchases,” Ines Hegedus-Garcia, the association’s board chair, said in a release.
“The search data indicates that Chinese are watching our ascension along with the rest of the world,” said Ana Bozovic, founder of real estate data firm Analytics Miami. “However, if we are deemed an inhospitable jurisdiction, the money will flow elsewhere.”
Daniel Ettedgui, owner of Miami Beach-based lender and mortgage brokerage firm Financial Triangle, referred to conversations he had with bankers in Paris and London when the law was being heard in the Florida Legislature. Ettedgui, who drew parallels to Nazi Germany’s decree requiring Jews register their properties with the government, said the bankers called the bill “ridiculous.”
In the weeks after DeSantis signed the law, many broker heads struggled to articulate a response. Some declined to comment, while others said they didn’t know enough about it.
“None of our buyers I’m aware of have said anything about it,” said Ron Shuffield, CEO of Berkshire Hathaway HomeServices EWM Realty.
Shuffield and Jay Parker, CEO of Douglas Elliman Florida, both referred to the influx of migrants crossing the border and rising crime associated with that.
Parker said it was important to “focus on the core of the law” and the need to “protect our military bases.” He acknowledged, though, that the law wasn’t perfect, and it was “overstepping” to restrict investment from Venezuelan and Cuban buyers.
Like others, Parker pointed out that there hasn’t been much Chinese investment in South Florida real estate. But he “would love to see more.”
“When you start to dictate who can buy real estate in your country, you’re going down a scary path,” he said.
Still, Parker went back to the issue of national security. The U.S., he said, has “been very, very lackadaisical in protecting our country from international threat.”
He then attempted to change the topic and discuss the strength of the current market.