Updated 4:05 p.m., July 28: The preconstruction condo market in South Florida saw a tiny uptick in overall sales during the second quarter of 2016, though some projects are struggling amid an overall slowdown in the residential market.
While 77 percent of the 14,316 units in the pipeline have been presold, an increase from the 76 percent of 13,808 units in the first quarter, some new developments are reporting less sales than before, according to ISG’s “Q2 New Construction Update.”
“Inventory is still getting absorbed, albeit slowly,” ISG Principal Craig Studnicky told The Real Deal.
The report, which tracks sales of condo units in the pipeline and currently built east of I-95 in Miami-Dade and Fort Lauderdale since mid-2011, shows a slight loss of buyers at Elysee (from 32 percent to 27 percent), Auberge Miami (from 24 percent to 15 percent) and Aventura ParkSquare (from 56 percent to 55 percent). ISG gets its figures by contacting the projects’ sales centers, a spokesperson told TRD.
Projects like One Thousand Museum (60 percent), the Surf Club Four Seasons (80 percent), Turnberry Ocean Club (30 percent) and Brickell Flatiron (45 percent) did not report a sales change from the first quarter to the second, according to the report. But a spokesperson for Brickell Flatiron said the project has 27 new units under contract this quarter, bringing the total number of units under contract to nearly 300 out of 540 – or 55 percent.
Overall sales, Studnicky said, are still dependent on buyers from Latin America and the Northeast. Some developers are cutting deals and offering higher commissions to move inventory. Condo sales started slowing down last year and stagnated from the end of 2015 to the first quarter of 2016.
“South Americans are still dealing with the [strong] U.S. dollar. Consequently, they’re not buying as developers had hoped,” he told TRD. Boulevard 57, which was targeting Latin American buyers, suspended its condo sales earlier this month. Studnicky said it was a byproduct of the high dollar and unfortunate timing.
While Latin Americans may be buying less, they are renting more, according to Studnicky. And high rents will eventually lead to increased sales. Luxury condo rentals are listed for as much as $75,000 – a month, he said. (The Real Deal recently took a look at units priced up to $40,000 a month at the Continuum, Apogee and more.)
“Come September/October, we will see a big uptick [in sales],” he said, citing low mortgage rates and high rents.
Studnicky, who has blamed the strength of the dollar on the market slowdown, expects Brazilian buyers to increase again if and when the country’s currency, the real, regains its value. As of Wednesday, $1 is equal to 3.26 Brazilian reais, an improvement from earlier this year.
“As soon as the real appreciates, expect to see a lot of Brazilian buyers,” he said.
Here’s a market breakdown from the report:
|Submarket||Percentage sold||Total number of units|
|Brickell, Miami River||85%||5,899|
|North Miami Beach, Key Biscayne, Coconut Grove||86%||1,432|