Loonie diving against the dollar? Sabbia Beach aims to have a fix for that
The developers of Sabbia Beach, a planned condominium tower in Pompano Beach, are trying to lure Canadian buyers who may be spooked by the idea of plunking down high-priced U.S. dollars for a deposit, The Real Deal has learned.
Through a deal with Bank of Nova Scotia, Canadians can borrow the U.S. dollars necessary for a preconstruction condo deposit — by placing the equivalent amount in Canadian dollars on deposit as collateral with the bank, Danny Salvatore, president of Fernbrook Florida and chairman of Fernbrook Homes told TRD. The buyers would pay 1.75 percent interest annually, while earning a small return on their money — 1.5 percent, for example, if the funds are invested in the Canadian government’s Guaranteed Income Certificates, he said. They can then wait to pay off the loan when the Canadian dollar strengthens again or reaches par with the U.S. dollar.
Sabbia Beach, an 18-story, 68-unit tower at 730 Ocean Boulevard, is being developed by Fernbrook Homes, based in Ontario, Canada, and Grupo Fernandez, based in Venezuela. The project, Fernwood Homes’ first in Florida, launched sales last year. To date, 39 units or 57 percent of the units are under contract, Salvatore said. Of those sold, 50 percent are to domestic buyers, 45 percent are to Canadians — mainly from Ontario and Quebec — and 5 percent are from Venezuela, he said.
“We Canadians, we are snowbirds and we like Florida because of its proximity and because of the amenities that are here,” he said.
Sabbia Beach’s condos are priced from $1 million to $5.3 million. The units range in size from 1,850 square feet to 4,900 square feet, or an average of $685 per square foot. “The biggest lure is we are on a wide pristine beach, so it’s for that buyer that wants to be in a boutique condominium right on the sand,” Salvatore said.
Instead of the typical 50 percent deposit required by the vast majority of South Florida preconstruction condos, Sabbia Beach requires a 20 percent deposit initially, then another 15 percent at groundbreaking, then the rest at closing. Sabbia Beach is expected to break ground next month and be completed in the first quarter of 2018, Salvatore said.
“So the purchaser can borrow 20 percent, as long as they collateralize it with the equivalent in the Canadian bank,” he said. “Then when the dollar goes back, or whenever they want, they can pay it off.”
One U.S. dollar is currently trading for $1.31 Canadian dollars. So if a Canadian buyer chooses a $1 million condo and has to pay a $200,000 deposit, the bank will lend the purchaser the $200,000, and they would have to put down $262,000 in Canadian dollars as collateral.
Salvatore said two Canadian buyers have already taken Sabbia Beach up on its offer. “Our problem is making people understand it,” he said.
It’s not the first project that is trying to lure Canadians who may be scared off by the strong dollar. Last week, Ritz-Carlton Residence, Miami Beach held and event in Toronto, offering four units priced in Canadian — rather than U.S. — dollars for one night. A spokesperson for developer Lionheart Capital told TRD Wednesday that 20 people expressed interest in the units, and four of them are flying to Miami Beach in the next two weeks to view the development.