Related Group is hedging against the risk of a mass exodus from South Florida’s condo market by taking up to 100 percent of the sales price as an initial deposit, principal Jorge Pérez told CNBC’s “Squawkbox.”
“We are not taking the risk that we took in the previous boom,” Pérez said, adding that the company “probably lost about $3 billion” after South Florida’s real estate market crashed in 2008.
With deposits averaging around 20 percent, Related was among developers to see huge losses when buyers walked away following the crash.
Pérez claims that Related is shielding itself with hefy deposits from another mass exodus from the preconstruction condo market.
“If there was something to happen, we do not have to give back that money to the purchaser,” Pérez told CNBC. “All we have is an obligation to resell their unit for them at market. We have greatly reduced the level of risk.”
Related is proposing more than 2,300 new units in 13 condo towers, including six projects with nearly 1,400 units that are currently under construction, according to the Miami-based consultancy Condo Vultures’ Cranespotters condo preconstruction database. [CNBC] –Emily Schmall