Twenty years ago, South Beach was a district of ramshackle historic buildings occupied by elderly retirees, drug dealers and poor immigrants. Billions of dollars worth of revitalization later, South Beach is a retreat for celebrities and affluent internationals trying to purchase a piece of paradise.
“South Beach’s luxury market is selling strong, even though some deals are getting done at 20 to 30 percent below the asking price,” said Esther Percal, a senior vice president at Esslinger Wooten Maxwell in Miami Beach. “But nobody is giving anything away down here.”
Despite the economic downturn, the credit crunch and housing market devaluations, South Beach luxury brokers report some standout sales in 2008 — especially in South of Fifth, or SoFi, an ultra-exclusive neighborhood surrounded by water on three sides. It is also home to Apogee, which brokers call the most prestigious South Beach condo ever built.
Of course, it comes with a very high price tag. Apogee’s three-level, six-bedroom penthouse, complete with ocean, bay and city views, is listed for $22 million. It boasts a private pool, rooftop palazzo, summer kitchen, staff quarters and other luxury amenities.
“People don’t want to live north of Fifth Street because they want the status and exclusivity this neighborhood offers,” said Sildy Cervera, a condo specialist at Related Cervera Realty in Miami. “When you live in SoFi, you can walk to great restaurants, shopping, nightlife and the beach.”
SoFi is located within South Pointe, the southernmost tip — and most exclusive area — of mainland Miami Beach. The most expensive condos and single-family homes in South Beach are all located here, from Apogee to its luxury-row neighbors, such as
Yacht Club at Portofino, Continuum and Icon South Beach. The highest-priced Miami Beach sale this year was $15 million for a penthouse at Apogee. In fact, nine of the 10 most luxurious South Pointe sales for 2008 can be found there.
While the inventory is swelling and the prices have deflated, the most expensive properties in SoFi, and South Pointe in particular, are holding their value better than most other Miami Beach neighborhoods. The average sales price at the top of the market is nearly 2,000 percent higher than the median sales price, according to the real estate Web site Trulia.
“The highest-priced properties on South Beach aren’t affected, but sales of luxury properties in the
million-dollar range have definitely dropped,” said Thomas Flitsch, principal of Engel & Völkers Miami Real Estate. “This is a second-home market and a holiday destination for foreigners, but they are looking for bargains.”
The bargain hunting is reflected in the difference between listing and sales prices: The three-month average listing price in Miami Beach is $927,791, down 2.5 percent. In contrast, the average sales price is $745,266, down 36.4 percent year over year.
Beyond the typical wealthy Europeans, Asian billionaires are outbidding South American buyers as they leverage a weak
dollar. And brokers say bigwigs from New York City, Chicago and Los Angeles are still haggling for second homes in the million-dollar range.
“It doesn’t matter if it’s a Trump condo or a $250,000 studio on South Beach; everybody wants to feel like they are getting a good deal,” said Tom Grimshaw, a broker at Real Living Properties in Miami. “Even if they are paying a premium, they want to tell their friends at the cocktail party what a great deal they got.”
There are a lot of friends to tell: The number of sales is up nearly 24 percent since the same period last year.
In exclusive SoFi, there are deals to be had. Take, for example, the new 28-unit condo development at 125 Ocean Drive, where spacious pads are priced between $6 and $8 million, and the developer is offering buyers a new Lamborghini Gallardo Spyder. But if they’re not motivated by incentives, the average listing price for South Pointe was $1.4 million through the first nine months of the year, and the average sales price was $1.36 million.
While the average listing price on South Pointe is down 1 percent, the average sales price is down 9 percent. The number of sales, however, is down about 50 percent year over year, something brokers attribute to the credit crunch.
“Naturally, we expect a fallout from the Wall Street crisis, but we are blessed because people still want to be in South Beach,” said Jill Eber, a broker at the Jills, an agency under the Coldwell Banker flag in Miami Beach. “We’re still selling luxury condos South of Fifth for $2,500 a foot, whereas in New York City comparable condos are selling for $6,000 a foot.”
Miami is touted as the gateway to Latin America, but South Beach may be the region’s most international locale. The famed Lincoln Road attracts shoppers from all over.
“The wealthy internationals are still coming to South Beach in droves,” said Nelson Gonzalez, a realtor with Esslinger-Wooten-Maxwell in Miami Beach. “Everybody else goes somewhere else in South Florida. South Beach is like New York, with the nightlife and the culture — but we have palm trees and sun.”