Greater Downtown Miami condo market faces new risk
Question: The planned Panorama Tower in the Brickell area just made news for getting an EB-5 designation from the City of Miami. Does such a designation have any discernible impact on buyers of Greater Downtown Miami condo units?
At a time when the supply of new and existing condos for sale is mushrooming in Greater Downtown Miami, developers and resellers targeting international buyers as potential suitors for their units now have another competitor chasing those same investment dollars earmarked for South Florida.
Developer Tibor Hollo’s planned 83-story Panorama Tower rental project under construction in the 1100 block of Brickell Bay Drive has been approved for a federal program that “awards residency to foreign applicants who invest at least $500,000 to $1 million in U.S. projects that create at least 10 full-time jobs,” according to the Daily Business Review.
The planned Panorama Tower – scheduled to be completed for early 2017 – is the “first project” to obtain approval from the U.S. Citizenship and Immigration Services under the city of Miami’s EB-5 regional center initiative, according to the report.
The Panorama Tower development is reportedly “seeking $100 million from up to 200 investors,” according to an August Miami Herald article.
“In return, they [foreign investors] receive a two-year green card for themselves and their immediate family,” the article states. “If the project succeeds, and at least 10 U.S. jobs are created, the investors gain permanent residency plus dividends on their investment. If it fails, they’re out their green cards – and in some cases their money.”
News of Panorama Tower’s acceptance into this “special federal immigrant visa system” comes at a time when developers have already announced more than 60 new condo towers with nearly 18,500 units in Greater Downtown Miami, according to the preconstruction condo market website CraneSpotters.com.
(For disclosure purposes, my firm operates the website.)
Overall, developers have proposed more than 280 new condo towers with nearly 39,000 units east of I-95 in the tri-county South Florida region of Miami-Dade, Broward and Palm Beach.
An additional 2,200 condo units are on the resale market at an average price of nearly $650,000 per unit n Greater Downtown Miami, according to data from the Southeast Florida MLXchange.
In the first nine months of this year, buyers acquired nearly 1,500 condo units at an average price of more than $510,000 per unit.
Based on the current monthly resale pace of 166 units, Greater Downtown Miami has more than 13 months of condo inventory available for purchase.
As a general rule, a healthy real estate market has about six months of supply of inventory. Less than six months of supply of units indicates a seller’s market and more months signal a buyer’s market.
The unanswered question going forward is whether the pace of acquisitions by foreign purchasers in Greater Downtown Miami’s preconstruction and existing condo markets will be hurt by international buyers who, if given the option, would decide to spend their funds on immigration-based investments rather than units to be leased out to unknown renters.
Thought Of The Week: Lawyers Prepare For “Wave” Of Condo Construction Litigation
The dozens of construction cranes dotting the South Florida coast have different meanings for every professional participating in this current condo boom in the tri-county region.
Realtors see commissions, developers eye profits and attorneys envision lawsuits.
“We construction lawyers know this wave of litigation is coming, and we are getting ready,” Jason Kellogg, a partner at Levine Kellogg Lehman Schneider + Grossman, told the Daily Business Review
Peter Zalewski is a real estate market consultant, non-practicing licensed real estate broker and columnist for The Real Deal who now answers reader questions about the South Florida real estate market in a new weekly Friday column. Questions and comments can be sent to firstname.lastname@example.org. The TRD editors will choose which submissions will be addressed.