The Latin American market is one of the most important real estate markets in Miami, it has been that way for more than 15 years and the trends vary according to the reality of each country.
By MiamiDiario Newsroom
Between the years 2009 and 2015, the Miami real estate market had a historic run as most Latin American countries were buying at the same time, from Argentina to Mexico. Each one of them had its peculiarities, but Latin America was experiencing a very positive economic moment that translates into the huge presence they had on the market during that time.
"Today, that situation has changed and the markets that were previously protagonists have now temporarily decreased their participation, including Argentina and obviously Venezuela," said Ryan Shear, principal of Property MarketsGroup.
South Florida has been and will continue to be an attractive destination for foreign buyers, who accounted for 65 percent of real estate purchases. "The Latin American buyers will continue integrating into the Miami real estate market because they are culturally, financially and spiritually connected to the city of Miami," said CEO of KAR Properties, Shahab Karmely.
“The total value of properties sold to foreigners increased in 2018 to $ 8.7 billion, compared to $7.1 billion in 2017. Most of those foreign buyers they are Latin Americans, who continue to trust Miami as an investment opportunity.
the players change
According to the report of the Miami Realtors Association published in April, Brazilians accounted for 17 percent of buyers, followed by Venezuelans with 13 percent, that Argentines with 10 percent and Colombians with nine percent.
Brazil has started to grow and there are interested Brazilian buyers who are closing contracts between $1 million and $5 million dollars. Argentina will have elections at the end of this year and its results will bring Argentines back to Miami. Colombia is a more stable market and permanent, although not in the same volume as in 2002-2007, when it was undoubtedly the largest market together with Venezuela.
On the other hand, the strong US dollar is affecting sales and the prices. “For example, for Canadians, the exchange rate for the dollar has increased by 30 percent, so it is much more expensive to buy or transport a property here. Therefore, the Canadians have hesitated to jump into this marketsays Liz Hogan, executive director of Luxury Estates of Compass Florida. “However, for Latin American countries where there is political turmoil, the desire to move money out of their countries and into a safe haven like the United States outweighs the exchange rate problem.
He maintains that there is currently an oversupply of inventory so it has definitely become a buyers Market, making it a great time to buy. “I don't think prices will be affected until inventory stabilizes. properties with a price less than $500k are still in high demand, and this sector of the market is still very strong, so there may be pressure on escalating price levels."
Over the years, Latin American buyers have always been strong in South Florida, but the countries of origin have shifted and rotated due to many factors. The devaluation of currency, high inflation rates and populist governments in Latin American countries have had a critical effect on the Miami market.
The market, once dominated by Venezuelans, has seen these investors shrink due to its isolation and strict political structure. "Today we see Venezuelan buyers being replaced by Brazil, Argentina, Mexico and Colombia," said Kenneth Baboun, managing partner of BGI Capital. "Latin American buyers seek to move their assets to a safe market and economic and political problems in the respective countries continue to be what pushes them to invest in the United States.”
According to these sources, the Mexicans are increasingly interested in buying properties in Miami, due to the change in a left-wing populist government that causes many new investors to see Miami as a possible residency market. Mexico is becoming a great power player.
Now there is a more active Mexican market driven by the political reality of their country since the surge of López Obrador. "Brazil and Mexico are the most powerful markets in Latin America, and we believe that in the coming years they will continue to consolidate as the most important markets for Miami real estate," says Baboun.
This is one of the most recent trends that is being seen in the real estate market in Miami. The new wave of foreign investors is upon us and Mexicans are projected to be the main contenders of the main international countries that are investing in the Miami real estate market.
New proposals for investors
One of the projects that has seen this recent trend is YOTELPAD Miami, a mixed-use hotel and residential development to be realized in Downtown Miami. OneWorld Properties, the development's sales team brought the project to market in June 2018 and it has become one of the fastest-selling projects in the state, with a 80% in less than 9 months, and Mexicans are its main buyers with 28%.
«YOTELPAD Miami's attractive short-term rental options, without any restrictions, and its retroactive Leasing Program, they offer homeowners flexibility and the opportunity to earn a return on their investment,” said Peggy Fucci, CEO of OneWorld Properties. “By offering efficiently sized units, the minimalist product is becoming increasingly popular with buyers looking for affordable prices and Latin American buyers facing the economic crisis in their country».
Smart Brickell, developed by HabitatGroup, it is another mixed-use development that has also seen very rapid sales. The three-tower smart project, due for completion in 2021, will integrate smart use, smart design and technology into each of its towers. The developer has found that the rental restrictions on most condos are limiting for many buyers who want more options.
At Smart Brickell, unit owners they will be able to rent their condos up to 24 times a year using popular home sharing apps and programs like airbnb or participate in a optional fixed annual lease program of two years that guarantees two years of rent at a fixed interest rate.
“Smart Brickell starts at a price much lower than most luxury projects in Miami, while providing the added value of high-end services and healthy and sustainable options,” said Santiago Vanegas, CEO of the Habitat Group. “Smart Brickell is setting the tone for the kind of developments that Miami needs. The buyers seek flexibility and ease of use from its properties, and Smart Brickell offers just that.”
Another change we are seeing is that investors today are much more sophisticated and market experts. They are coming to South Florida with a focus and they have a good understanding of this market.
Ten years ago, the Latin American buyer was strictly focused on condominiums and was looking to park his money in a difficult asset. "Today's buyer is very different, he is looking to diversify his investments and is open to commercial and multi-family properties where he can get a return on his investment," said Robert Barthelmess, Managing Partner of BGI Capital.
“Buyers are also buying more and more with a combination of cash and financing (30%-40% cash) so they can make their investment stretch further." This allows them to diversify and purchase more than one property or make a larger investment.
All the funding rates remain very low and these smart new investors are recognizing the opportunity to take advantage of loan funds instead of buying everything in cash.
As a result of the opening to buy properties that offer cash flow and return on investments, These new buyers are looking for commercial properties such as shopping malls, offices and multi-family homes with no rental restrictions, so projects like YOTELPAD Miami and Smart Brickell have been able to sell quickly. They are not afraid to look beyond the traditional condo purchase and are ready to make your money work for them in South Florida.
are still important
"The real estate market is cyclical and so are the markets that buy and invest in Miami from Latin America," said Ryan Shear, principal of Property Markets Group. “My prediction is that Miami will continue to grow in terms of buyers from Latin America. Different markets will manifest differently because their realities and motivations to buy or invest in Miami are different, but none of those markets will disappear from Miami.”
The pace and dynamics of purchases will change, but they are markets that they are here to stay. If we analyze the reality of the last 15 years, we see that Miami has not stopped growing in many aspects and we encourage Latin American buyers to invest in this market.
Today we have daily direct flights to and from almost every major city in Latin America. Connectivity has multiplied, making traveling not only more efficient but also much more attractive to come and settle in Miami.
The element of security is also a fundamental issue for Latin Americans with high purchasing power, and Miami is a very safe city. Therefore, the future is very promising.