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
Forest Development's Peter Baytarian and Nautilus 220 (Palm Beach North Chamber of Commerce, Nautilus 220)
Two-tower condo project in Palm Beach County’s Lake Park launches sales
Two-tower condo project in Palm Beach County’s Lake Park launches sales
David Martin and Russell Galbut with a rendering of 500 Alton Road
Miami Beach developers nab $345M construction loan for 500 Alton
Miami Beach developers nab $345M construction loan for 500 Alton
Rendering of Baccarat Miami (Credit: ArX Solutions)
Miami condo craze returns as developers look to seize the moment
Miami condo craze returns as developers look to seize the moment
PMG principals Kevin Maloney (middle), Ryan Shear (left) and Dan Kaplan with a rendering of Waldorf Astoria Miami (PMG, Muse Residences, Rendering via ArX Solutions)
Waldorf Astoria Miami, planned as the tallest resi tower south of Manhattan, launches sales
Waldorf Astoria Miami, planned as the tallest resi tower south of Manhattan, launches sales
Property Markets Group's E11even team and Waldorf Astoria team (PMG, iStock)
Property Markets Group launches in-house brokerage for new developments
Property Markets Group launches in-house brokerage for new developments
An aerial of the property with Avra Jain and Terra's David Martin
David Martin, Avra Jain, Joe Del Vecchio sell Miami industrial dev site for $8M
David Martin, Avra Jain, Joe Del Vecchio sell Miami industrial dev site for $8M
Jorge Pérez with One Park Grove (Getty, Robin Hill)
Related developer Jorge Pérez buys condo at one of his Miami projects
Related developer Jorge Pérez buys condo at one of his Miami projects
Photos of Apogee 2004
French real estate family sells Apogee condo to former hedge fund manager
French real estate family sells Apogee condo to former hedge fund manager
arrow_forward_ios

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

Loading...