Foreign investors now have an added incentive to pursue commercial real estate projects in Miami —a visa program that can lead to permanent residency in the U.S.
Though the program itself has been around since 1990, the federal government’s recent announcement designating Miami as an EB-5 Regional Center for Foreign Investment makes the city more attractive to developers from other countries. In fact, one local real estate expert believes it could position Miami as a burgeoning New York City of the south.
“I think the combination of troubled areas or troubled countries where people don’t feel safe keeping their money there is leading them to look elsewhere to invest,” Emile Farah, CEO of A Farah Group of Companies, who represents Miami for the “Sister Cities International” program, told The Real Deal.
“The growth that is going on here has been amazing,” Farah said. “For instance, the amount of development that has been going on just in the Brickell area, everyone is now calling it a mini-Manhattan.”
With a minimum investment of $500,000 and proof after two years that the commercial enterprise has created at least 10 jobs, a foreign investor and his or her family can obtain permanent U.S. residency. That incentive, along with Miami’s other attributes like the climate and lack of a state income tax, is expected to increase the region’s appeal.
First up among the growing pool of foreign nationals expected to take advantage of the immigration status perk from EB-5 are Chinese investors. The timing of the city receiving the special designation comes shortly after major changes in another popular target market — Canada.
In February, the Canadian government canceled its Immigrant Investor Program and in effect redirected more than 45,000 mainland Chinese investors to the U.S. They have now replaced South American investors as the largest group to utilize EB-5 in Miami.
One Miami-based builder, Riviera Point Development Group, raised nearly $30 million in EB-5 funding for office projects in Doral and Miramar in 2013. Investors in the developments came from China, Europe and South America, according to the company’s website.
SkyRise Miami developer Jeffrey Berkowitz reportedly plans to also take advantage of EB-5 to cover more than half of the $430 million cost of the 1,000-foot downtown observation tower.
“China is the number one user of this program and are pursuing more visas through it,” Liliana Gomez, director of international sales for ISG World, told TRD. “They have come to learn more about Miami and seem to like the number of universities that are nearby and the lack of pollution compared to other big cities.”
Chinese investors accounted for 3.7 percent of Florida real estate purchases in 2013, up from 2 percent in 2012 and 1 percent in 2011, according to Gomez.
Gomez recently returned from Beijing and said her sales consultant at ISG World China, Ying Peng, also noticed a significant shift in investment strategy abroad. New York remains high on the list, but the growth potential in Miami and South Florida overall is evident.
The expansion of the Panama Canal and the deep dredging being done to PortMiami to accommodate larger ships are expected to be big draws, Gomez said. “This is going to help the economy in Miami, create more jobs and impact residential real estate as well.”
In addition to the Chinese and South Americans, investors from the Middle East are showing an increased interest in Miami.
Farah and Miami Mayor Tomas Regalado hosted Beirut’s mayor last month, as Beirut is now a sister city of Miami. Partnerships with Qatar and Dubai also are in the works. Farah pointed to newly available direct flights between Miami and Doha as an encouraging sign for luring investors from Qatar.
“We are definitely working together now, trying to start enticing people from the Middle East to come and invest here, so that was one of the subjects that we discussed with the mayor of Beirut,” Farah said. “They would [also] be interested in having some investors go into Beirut and invest. So the sister city agreement was a very important agreement to sign and was actually the first time an Arab mayor visited the City of Miami on an official visit.”