A panel of three developers said they expect South Florida real estate sales will be slow but solid this year, despite concern about a dwindling number of foreign buyers.
“My crystal ball says it’s going to be slow, but it’s not going to be bad,” said Jimmy Tate, a partner at Tate Capital, speaking on a panel Thursday night at a meeting of Jewish Federation of Broward County. Tate Capital hosted the event at the Bahia Mar hotel on Fort Lauderdale Beach.
The recent collapse in the value of the Canadian dollar against the U.S. dollar has drained Canadian purchasing power, said panelist Patrick Campbell, vice president of the Related Group. But so far the impact of the unfavorable exchange rate on Related has been muted, Campbell said.
“It does affect us, but not as much as everyone thought at first,” he said. Real estate in South Florida is “still a bargain compared to New York, London and Paris.”
Campbell also said most South American buyers of condos in South Florida are not flipping them for a quick profit: “They’re parking it. They’re not buying a unit and closing on it and selling it. They’re parking it long-term as a safe haven for whatever money they’ve been able to get out of South America.”
He said 50 percent deposits discourage defaults on contracts to purchase units. “It’s very hard to walk away from 50 percent. So we don’t think we’ll have empty buildings, even if there is a correction in the market.”
Even if the residential real estate market sags, the commercial market may not. Sergio Rok, founder of Rok Acquisitions, said the development of office space is perking up. South Florida companies that retrenched during the recession of the late 2000s are now looking for space to expand, Rok said. So, “this past year you saw some new office space being built, and this year, I think you’ll see more.”
Campbell said the pace of condo sales at Related projects in Broward County is “a much more reserved pace than we’re used to” in Miami-Dade. Buyers in Broward tend to visit a condo development multiple times before reserving a unit, but in Miami-Dade, “they’ll buy off a piece of paper,” he said.
In Broward County, many buyers of condos near the ocean are “locals who are moving east,” not investors who flip units, Tate said. “That makes for a more stable market.”
Tate Capital hosted the event at the Bahia Mar hotel in Fort Lauderdale, which Tate and other owners control through a land lease with the city. The owners have been negotiating an extension of the city land lease and are planning to renovate the Bahia Mar hotel and build three condos on the 39-acre property, plus a public walkway, additional parking and a grocery store.
The Fort Lauderdale City Commission is scheduled to consider the Bahia Mar redevelopment plan at its meeting on Feb. 2. The land lease with the city requires the owners to maintain the Bahia Mar and its marina as the home of the annual Fort Lauderdale International Boat Show.
Trying to serve the interests of investors, the boat show and the general public “has definitely been an interesting battle over the last 16 or 17 months,” Rok said.