Many South Americans used to head straight to Miami as a place to plunk down investment money for an apartment. But now they are increasingly shifting their interest northward — because the Miami market is in shambles, and the weak dollar is presenting them with opportunities here that seemed out of reach before.
The uptick of inquiries started late last year.
Gabriel Bedoya, a vice president at Corcoran, said he used to hear from very few South American buyers. But in late 2007, he began receiving two to three calls a week from Brazilians, Chileans, Argentines, Colombians and other South Americans interested in buying apartments in the city.
Also, Sonya Smith, a salesperson for Citi Habitats, said she’s recently started getting inquiries from Brazilians looking for properties in Manhattan. For example, she worked with two separate Brazilian clients — one looking for a loft, another for a one-bedroom — who originally planned to rent but are now hoping to buy.
“They expressed more interest in buying because of the value they were going to get,” Smith said.
Smith said her two Brazilian clients, who both work in finance, will use their New York apartments and keep them as investment properties.
The first explanation for the increased interest from South America in the New York market applies to all foreign investors turning here for real estate: The dollar has been pummeled, so international purchasing power has increased.
But with South American investors, there are also other forces at play.
For starters, several South American countries have experienced economic booms in the past few years, which have expanded the pools of investors with expendable cash looking for second homes. Fueled by the rising prices of commodities, Brazil, Latin America’s largest economy, is expanding at such a rapid pace that residents there have newfound money to spend and invest. According to the Economist magazine, 2007’s 5.4 percent economic growth in Brazil is expected to be followed by a still robust 4.2 percent annual growth through 2014. Similarly, the economy in Argentina, which grew 8.7 percent in 2007, is expected to grow 6.2 percent this year.
South American buyers have traditionally been attracted to Miami for its Latin flair, warm climate and vibrant beaches. However, now that Miami has seen its real estate values tank — a result of overbuilding and the credit crunch — investments there are more volatile.
According to a recent report by the Mortgage Brokers Association, Miami, which saw home values plummet 19.3 percent, was tied with Las Vegas for the city with the greatest decline in property values between January 2007 and January 2008.
“A lot of South Americans have invested in Florida heavily,” said Jacky Teplitzky, an executive vice president at Prudential Douglas Elliman.
Now, foreign buyers who parked their cash in Miami homes are looking to move to more stable horizons. While the New York market has softened and given buyers more room to negotiate, the city is still widely viewed as a stable investment.
While the motivation driving South Americans to buy Manhattan properties varies depending on the individual and their nationality, a high percentage of them are looking for investments. Bedoya estimated that 70 percent wanted homes as investments, while 30 percent intended their purchase to be a second or third home. He noted that the average price range of the South American clients he is talking to is between $1 million and $2.5 million, and buildings that are commonly requested are the Caledonia, 250 Mercer, 200 Chambers, Worldwide Plaza and the Orion.
“They don’t like small studios, because the studio isn’t common in South America,” Bedoya said. “They love the concept of lofts.”
Teplitzky, who was born in Chile but moved to Israel as a young girl, put the investment home/second home ratio at about 50-50 for her clients.
While she said she hasn’t seen a dramatic increase in South Americans who are pulling the trigger on Manhattan-based deals, she noted, “People are inquiring more. People are calling back.”
Bedoya said one common denominator among most South American buyers is that they often like to look in Midtown and Lower Manhattan.
“One of the reasons is they are familiar with those neighborhoods,” he said. “They sense the comfort level, the familiarity.”
Outside of those two areas, brokers say they see clients gravitate toward different neighborhoods, depending on their nationality. For example, brokers say Brazilians tend to opt for Fifth Avenue and Park Avenue, where many other Brazilians already live, as well as to apartments near Central Park. Colombians, who also like to be near the park, are drawn to more artsy neighborhoods, such as Soho, the West Village and West Chelsea.
Teplitzky said Chileans are willing to venture into Manhattan neighborhoods that are less well-known, such as those in the West 40s and upper 90s.
“I have been very successful with Chileans,” she said, noting that until now they have been among the biggest buyers in Florida. She also has started to see some clients from Uruguay as part of a trend in which foreign buyers are coming from countries that traditionally hadn’t been represented in the Manhattan market. Others said clients are coming from Venezuela, too.
“I think it’s just [that] New York has maintained its own,” said Citi Habitats’ Smith. “It’s not as volatile.”