Jorge Pérez: Expect residential development in Miami to slow, not stop

Miami /
Sep.September 27, 2016 03:00 PM

Billionaire developer Jorge Pérez said he expects a slowdown, not a shutdown, in Miami-area residential development as land prices and construction costs rise.

“I do not think there will be a bubble or a collapse in the market,” Pérez said at a real estate conference Tuesday morning.

But residential sales and construction are going to slow down, he said, largely because “construction and land prices have skyrocketed.”

The founder, chairman and CEO of Miami-based Related Group said, for his company, “sales are still there. We are selling our product well, and pricing it based on what the market will give us.”

Pérez also said Related has avoided building highly leveraged developments: “We are very conservative. If we don’t have a project that is 70 percent sold with 50 percent deposits, we will not start that project.”

Pérez was the keynote speaker at Bisnow’s real estate conference entitled “Miami’s State of the Market 2016,” held Tuesday at the Private Key Club in Miami’s Wynwood district.

Another speaker, David Martin, president and co-founder of Miami-based development firm Terra Group, said long-term limitations on real estate development in the Miami area include a scarcity of developable sites as well as climate change and sea-level rise.

Although the impact of sea-level rise on the Miami area has been limited so far, “it’s impacting the perception of our city,” Martin said.

Other speakers addressed the availability of capital for real estate developments in the Miami area.

“Where we see some headwinds is in the capital markets,” said Ezra Katz, CEO of Aztec Group Inc. in Miami, citing regulatory pressure on commercial banks to limit their exposure to real estate loan losses. “I think you’re going to see some serious setbacks in construction lending … by regulated banks.”

Developer Nitin Motwani, a managing director of Boca Raton-based Encore Capital Management, said his company has raised capital internally in “three buckets,” including a private real estate investment trust, or REIT, and a private equity fund for discretionary, opportunistic property acquisitions.

In addition, Motwani, a managing principal of the partnership behind Miami Worldcenter, a $2 billion mixed-use development in downtown Miami, said his company also formed a fund to raise capital specifically for investments in Miami Worldcenter.


Related Articles

arrow_forward_ios
Location Ventures launches sales of co-living project in Miami Beach
Location Ventures launches sales of co-living project in Miami Beach
Location Ventures launches sales of co-living project in Miami Beach
A rendering of Alina Residences Boca Raton and El-Ad National Properties' Noam Ziv 
El-Ad launches sales of second phase of Alina Residences Boca Raton
El-Ad launches sales of second phase of Alina Residences Boca Raton
Selling out post-Surfside collapse
Selling out post-Surfside collapse
Selling out post-Surfside collapse
Eichner launches sales of waterfront Bay Harbor Islands condo project
Eichner launches sales of waterfront Bay Harbor Islands condo project
Eichner launches sales of waterfront Bay Harbor Islands condo project
Tara West joins Compass to manage new developments in Florida
Tara West joins Compass to manage new developments in Florida
Tara West joins Compass to manage new developments in Florida
From top to bottom: Edgardo Defortuna, Marcelo Kingston and Jose Isaac Peres with 57 Ocean (DBOX)
Brazilian billionaire developer completes 57 Ocean in Miami Beach with sellout of over $330M
Brazilian billionaire developer completes 57 Ocean in Miami Beach with sellout of over $330M
I’ll take it: David Martin sells waterfront Miami Beach home to his listing agent
I’ll take it: David Martin sells waterfront Miami Beach home to his listing agent
I’ll take it: David Martin sells waterfront Miami Beach home to his listing agent
Eighty Seven Park and the lot where the Champlain Towers South once stood (Douglas Elliman)
Italian investor sells Eighty Seven Park unit to hedge funder in first closing since deadly condo collapse next door
Italian investor sells Eighty Seven Park unit to hedge funder in first closing since deadly condo collapse next door
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...