Some six years after the South Florida real estate market began to collapse, preconstruction condo units emerged once again as the investment darling of the local market in 2013.
The seemingly endless influx of foreign buyers from Latin America, Western Europe and Russia willing to hand over 50 percent deposits for preconstruction units has triggered a surge in proposed condo towers on the South Florida coast.
In the last days of 2013, nearly 185 new condo towers with more than 24,800 units have already been proposed for sites east of I-95 in Miami-Dade, Broward, and Palm Beach counties, according to the preconstruction condo projects website CraneSpotters.com.
Compare this to less than three years ago, when the Melo Group launched presales in the second quarter of 2011 for the first new condo tower to be developed in Greater Downtown Miami since the last real estate crash.
This dramatic swing in the preconstruction market climate – especially in the last 12-month period – prompted the Miami Herald to name South Florida’s latest “Condo Boom (And Bubble Warnings) 2.0” as one of the three most important business stories of 2013.
Some of this year’s business stories deemed less important than the preconstruction condo boom are the emergence of American Airlines, Miami International Airport’s busiest carrier, from bankruptcy as part of a merger with US Airways; the ouster of Frank Nero as head of Miami-Dade County’s economic development authority the Beacon Council; and the death of populist president Hugo Chavez, who is credited with single-handedly spurring a record amount of flight capital from Venezuela to South Florida.
Going forward in 2014, South Florida’s preconstruction condo market is expected to rank as one of the most important stories of the year, as some of the first round of towers being built in this latest boom are scheduled to be completed.
As of December 2013, four new condo towers have been completed and 45 additional towers are under construction, according to CraneSpotters.com.
Besides the new towers that are under construction, focus should also be put on the dozens of proposed projects that may not get started as planned in 2014.
Several other preconstruction condo market issues are also expected to emerge in the coming year, including an increased willingness by out-of-town lenders to finance the construction of new towers in South Florida and an industry effort to reduce presale deposits below 50 percent in hopes of attracting more U.S. buyers.
The unanswered question for 2014 is whether the South Florida preconstruction condo market will still look as attractive to real estate investors a year from now as it apparently did in 2013.
Peter Zalewski is real estate columnist for The Real Deal who founded Condo Vultures LLC, a consultancy and publishing company, as well as Condo Vultures Realty LLC and CVR Realty brokerages and the Condo Ratings Agency, an analytics firm. The Condo Ratings Agency operates CraneSpotters.com, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors.