Even trophy oceanfront mansions haven’t escaped the long shadows cast by the clouds hanging over the Sunshine State’s luxury residential market.
Over the last year, many of the most expensive homes sold in South Florida closed only after long stints on the market and price cuts. When queried about this, brokers pointed to the difficulty in setting prices for often one-of-a-kind estates. Yet it’s tough to deny that luxury listings of all stripes — condos and gated estates — are lingering on the market longer than they did a few years ago.
“Fortunately and unfortunately, Miami is a very international city, and because the dollar is strong, the buying power of foreigners has weakened,” said Nelson Gonzalez, a senior vice president with EWM Realty International. “But I think that situation will be very short-lived.”
Overall, the average sales price of single-family homes in the costly residential markets on the islands in Greater Miami — including Miami Beach, Key Biscayne and Fisher Island — fell to $2.36 million in the second quarter of 2016, down by more than 5 percent from a year earlier. The volume of sales of non-distressed single-family homes fell to 86 closings, down by 31 percent from the second quarter of 2015, according to data compiled by appraiser Jonathan Miller for Douglas Elliman Real Estate.
Real estate pros say that Palm Beach and the tonier sections of Broward may be better poised to weather the storm than Miami-Dade because luxury homes in those markets are popular with domestic buyers who aren’t being buffeted by foreign exchange markets.
In Palm Beach County, where many money managers have set up shop, the average single-family home price soared by 41 percent — to reach $7.2 million — between the second quarter of 2015 and the second quarter of 2016, according to Douglas Elliman. (A small number of high-priced transactions might have skewed the average.)
Here’s The Real Deal’s tally of the top South Florida residential deals to close in Miami-Dade, Broward and Palm Beach counties during the 12 months ending in August 2016.
A contemporary home with 360-degree views at 775 South Mashta Drive on Key Biscayne sold for $47 million in December 2015. That tops TRD’s list for deals in South Florida over the last year, and ties with the all-time record to date in South Florida: the $47 million sale of a 10-bedroom home at 3 Indian Creek Island Road in Miami Beach in 2012.
Yet to close the Key Biscayne deal, the owner had to slash the price tag for the property, which was initially listed at $60 million in 2014. According to city records, the seller was Pitu Inc., a Cayman Island-registered corporation linked to Fernando Caballero, a Colombian businessman. His family used the property as a vacation home and also rented it out for $50,000 a month, according to news reports.
The six-bedroom, eight-bathroom house was built in 1991, and sits on two acres with a 2,000-foot Biscayne Bay frontage on a narrow spit of land, which was once part of an early 20th-century coconut farm. It can be subdivided into two more building lots, according to news reports. Jorge Uribe, a senior vice president at One Sotheby’s International Realty and the property’s listing agent, did not return calls for comment.
Institutions may be picking up some of the slack in Miami-Dade’s luxury residential market. Take, for example, the property at 3551 Main Highway, located in Miami’s Coconut Grove neighborhood. The sale of this home ranked fourth on the TRD list.
The waterfront La Brisa estate, a nine-bedroom Mediterranean-style home built in the 1920s, sits along a canal, convenient for docking boats. When it initially came to market in 2014, the property was listed at $65 million. After switching brokers and agreeing to a steep price cut, an unnamed international owner sold it in 2016 to Ransom Everglades, a private high school located next door, for $34.6 million.
The school seemed to see the value in the rare and unusual property. “This was like the last Coca-Cola in the desert,” said EWM Realty’s Gonzalez, the listing agent. He explained that the school had tried to purchase the property repeatedly over the years at lower price points, only to be outbid.
Gonzalez said that this go-around, the property received seven offers, including offers from developers who were interested in turning it into a residential subdivision. Ultimately, he said, the developers were put off by the mangrove swamp that obscured views on the bay side of the property. “It could have sold for $40 or $50 million if the mangroves weren’t there,” he added.
With the purchase of the property, which has 208 feet of bay frontage, Ransom Everglades can add nearly seven acres to its campus. But the school, which charges $35,900 annual tuition, has yet to announce specific expansion plans.
Palm Beach palaces
In Delray Beach in Palm Beach County, a sleek seven-bedroom oceanfront estate at 921 South Ocean Boulevard was snapped up after a little more than a month on the market. “We had several offers right out of the box,” said Pascal Liguori, an associate broker at Premier Estate Properties, the listing agency.
Buyer Richard Chaifetz, a Chicago-based entrepreneur, nabbed the house — equipped with such amenities as two elevators, a home theater, and an entryway with a glass bridge over a 6,000-gallon koi pond — for $34 million. That figure was about 15 percent below its original asking price when it was listed in January 2016.
The three-year-old residence, which has about 32,000 square feet, was the fifth most-expensive home in the TRD ranking. The seller is a trust, managed by local attorney Cristofer Bennardo, which has owned the property since 2010.
A home at 89 Middle Road, located in the city of Palm Beach, sold for $39 million in April, making it the third priciest home sale in the period surveyed. But the property sold only after lingering on the market for years. The 4.3-acre, five-building estate, known as La Casa Sin Nombre, was initially listed at $59 million in 2011. “We are all happy to have crossed the finish line,” said Carole Hogan, a sales director with Brown Harris Stevens, the co-listing agency with the Corcoran Group.
The estate was formerly the home of John Kluge, the chairman of Metromedia Inc., a defunct New York-based media company that owned radio and TV stations. He bequeathed the home to Columbia University upon his death in 2010. A 1937 graduate of Columbia, where he was a scholarship student, Kluge attributed much of his success in life to his alma mater, Hogan said.
The proceeds of the sale will go to the university’s scholarship fund, as specified in Kluge’s estate plan. The buyer was Peter Wood, a British insurance executive who founded the U.K.-based insurance companies Direct Line and Esure. Hogan said that Wood plans to subdivide the estate into a total of four or five lots. Efforts to reach Wood were unsuccessful.
“We knew it was risky to take on this listing, at this price,” Hogan said, adding that many of the hedge-fund types from New York and Greenwich, Connecticut, who dominate the Palm Beach mansion market , weren’t interested in the property at the $59 million price. The oldest structure dated to 1935, which might have been another strike against it in an era when many luxury home owners prefer new construction.
That sentiment might account for the swift sale of the property at 1695 North Ocean Way, which is located at the other end of the island of Palm Beach. It sold for $43.7 million in March, two months after being listed at $55 million.
The site was previously occupied by a 1937 ranch house, but its landmark status was revoked in 2004. The 2.5-acre waterfront spot now has a shiny new five-bedroom main house and a four-bedroom guest house built on speculation by local developer Pat Carney.
Carney has built and sold other spec homes in Palm Beach, including 800 South Ocean, which sold for $33 million in September 2015, and 390 North Lake Way, which sold for $31.4 million in December 2015.
James McCann, the associate broker at the Corcoran Group who listed 1695 North Ocean, as well as the two other Carney spec houses, did not respond to requests for comment.
Finding a bottom
Not every mega-mansion is finding traction in this market. Although the homes that made TRD’s price-cut ranking all slashed asking prices for their current listings, the owner of 1 Casuarina Concourse in Coral Gables decided to subdivide the land before reducing the asking price.
The 3.6-acre, nine-bedroom spread in the gated Gables Estates — which sits on a point with views of Miami’s high-rises across Biscayne Bay — has been on the market since May 2015. It was initially listed at $67 million. If that price had been obtained, it would have set a new record. However, after sitting on the market for more than a year, the property is being subdivided into two lots, said Jill Hertzberg, an associate broker with Coldwell Banker Residential Brokerage, who is one of the property’s listing agents.
The owner plans to offer a 1.5-acre lot as a development parcel. Agents are currently marketing the 2.1-acre parcel with the house at $39 million, and Hertzberg declared her optimism. “This is the kind of property where you literally drive up and look at it, and you stop,” she said. “It is one of the finest properties in the city.”