More than three decades after establishing a link to East Asia, Miami is reportedly finally experiencing some success in appealing to foreign investors located more than 8,000 miles away in China — and the timing could not be better for the local real estate market.
A steady flow of news reports of the recent successes in China — a country of 1.4 billion people — comes at a time when South Florida’s residential real estate industry looks to be in need of an infusion of new buyers.
Condo developers are reportedly increasingly under pressure to find a new pool of investors to counter a “slow down” in buyers from traditional markets, such as South America, as the U.S. dollar has strengthened against most foreign currencies and concerns have risen about the health of the global economy.
Consider that developers have announced during this South Florida real estate cycle plans to build at least 375 new condo towers with more than 45,300 units on sites east of I-95 in the tri-county region of Miami-Dade, Broward and Palm Beach counties as of Tuesday, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure, my firm operates the website.)
An additional 11,400 condo units are currently available on the resale market east of I-95 in South Florida as of Tuesday, according to data from the Southeast Florida MLXchange.
Despite recent turmoil in China’s stock market, real estate industry and domestic economy, the country reportedly has the second largest number of millionaires — 3.6 million — in the world after only the United States. “China added two million millionaires in 2014 alone, a nearly 50 percent increase from 2013,” according to a Business Insider article published this summer.
South Florida’s real estate industry is betting that Chinese investors — who can withdraw their money from that country — are much like buyers from other nations in the world in looking at the U.S., and especially Miami, as a safe haven for investing their cash at times of economic and political uncertainty.
Within the last year, South Florida condo developers and real estate brokers have been traveling regularly to East Asia to various trade shows in hopes of convincing Chinese buyers of the value proposition associated with Miami real estate.
To formalize the effort in China, The Real Deal hosted the three-day event “U.S. Real Estate Showcase & Forum” earlier this month in Shanghai that was said to attract more than 6,000 real estate investors and professions.
Additionally, the Greater Miami Chamber of Commerce established an Asia Task Force in August to “organize Miami trips for Chinese journalists, investors and developers.”
Just last week, the newly formed Greater Miami Chapter of the Asian Real Estate Association of America held an installation ceremony and panel discussions on Sept. 18.
The concerted effort to attract Chinese investors appears to be working.
The Miami Association of Realtors has determined that investment activity in South Florida by Chinese buyers has doubled since 2012. “Chinese buyers represented two percent of all international closed sales in Miami-Dade and Broward counties in 2014,” according to a statement from the Miami Association Of Realtors.
The jump in Chinese investment in South Florida is encouraging given that the tri-county region is not known as a destination for Asian buyers. In fact, only about 152,000 residents — about 2.6 percent — designated as “Asian alone” are estimated to live in the tri-county South Florida region, which has a population of 5.9 million, according to the U.S. Census Bureau.
A Chinese presence in South Florida has been envisioned since at the late 1970s when Hong Kong-based Swire Properties first came to Miami. Since opening an operation back in 1979, Swire has “invested some $1 billion” in developing residential units, office buildings and retail space on the previously vacant land of Claughton Island – better known as Brickell Key — just east of Brickell Avenue in Greater Downtown Miami.
With only one vacant lot remaining at the southern tip of Claughton Island, Swire used the recent real estate downturn of the last cycle to accumulate enough land to the west of Brickell Avenue on which to develop the planned $1 billion Brickell City Centre project composed of condo towers, office buildings, hotel rooms and retail space.
A decade after the arrival of Swire Properties, an investor named Isaac Shih of the Miami Chinese Community Center Ltd. began in 1988 to assemble land on Biscayne Boulevard in for what was envisioned as a $52 million mixed-use “Chinese-theme complex” that would include a 200-unit condo tower, according to published reports.
The project was never built despite an April 1992 agreement with the city of Miami. But a Shih-controlled entity still owns the vacant 1.5-acre fenced-off site on the east side of the 1800 block of Biscayne Boulevard in Greater Downtown Miami, according to Miami-Dade property records website and the Florida Division of Corporations.
More recently in August 2014, Chinese developers and investors reportedly patronized with Canadian investors to plan a new mixed-use complex comprised of residential units, hotels room and retail space on the site of the former U.S. Immigration And Naturalization Service facility on Biscayne Boulevard at Northeast 79th Street, the Miami Herald reported.
Some nine months ago in December, an “affiliate” of the Beijing-based China City Construction Co. and New York’s American Da Tang Group paid $74.7 million for an entire block of developable vacant land totaling 2.4 acres in the 1400 block of South Miami Avenue in the Brickell Avenue Area.
American Da Tang Realty has subsequently opened a Florida real estate brokerage to compete with established local firms that are also attempting to bolster their teams with Mandarin speakers biding for Chinese clients.
The unanswered question going forward is whether buyers from China who come to South Florida in the short term will finally invest in real estate or simply take in the tourist sites.
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.