Ladies & Gentlemen, we have already arrived at the second week of May, which can only mean two things:
1. The Miami Marlins are almost out of the playoff hunt (already); and
2. First Quarter market reports are out for real estate markets around the world.
These reports are certainly useful to industry insiders and real estate brokers/agents, particularly because it helps them get a quick picture of the current health of any given market. However, the information in these reports can also be valuable to prospective buyers, who are looking for insights on which types of property to buy, where to buy them, and even how they should go about negotiating on prices. Many buyers tend to make emotional decisions in their real estate purchases, so using the information contained in these reports can help those buyers make analytic decisions based on real-world, real-time information.
According to the ISG World Miami Report as of the end of 2016,
“The tight supply of homes paired with the exponential population growth in the region has resulted in a South Florida real estate economy that has never been as robust as it is now. More ultra high-net-worth individuals are discovering Miami as a place they want to live, work, and play, and this is only the beginning.”
The excerpt above represents a very broad view of the South Florida market as a whole, but nevertheless, it is certainly an accurate outlook.
For the purpose of being concise while still providing you with a few particulars, we will consider the first quarter report for 2017, specifically the information regarding pre-construction condominium projects.
Throughout the first quarter of this year, developers in Miami sold just 212 units, which account for less than 1 percent of the total condominium units available in the pipeline. This fact, no doubt, represents a slowdown. On the other hand, this is not unexpected. Craig Studnicky, one of ISG World’s principals, saw the writing on the wall, and explained the slowdown was mostly the product of two main contributing factors:
1. The recent resurgence/strength of the U.S. Dollar; and
2. The increased supply of preconstruction condominiums.
Both these factors have led to a lack of urgency with investors/buyers. That said, Mr. Studnicky expects that the market will rev back up towards the end of 2017, beginning of 2018. He considers that once investors come to the understanding, in the next 18 months or so, that supply/inventory is waning, we can anticipate prices will begin to rise.
Does this mean developers will be sitting around waiting for sales and prices to pick up?
Far from it! In fact, developers are pulling out all the stops in efforts to kick-start sales, and attract high-net-worth investors.
So, what is the new marketing/sales tool that is taking South Florida by storm?
Interestingly, and somewhat unexpectedly, the answer is… Music!
Specifically, developers are spending a lot of money to put on highly exclusive concert performances in an effort to catch the attention of high-net-worth, well-funded clientele. Just in the last two months, world renowned artists such as Andrea Bocelli and Alicia Keys have performed at “secret” events inside a couple different luxury condominium developments, attracting a select crowd of potential investors.
So, while we have seen a bit of a slowdown from the end of last year through the first few months of 2017, we consider the overall state/health of the real estate market in South Florida to be positive.
Jordan + Pascale, P.L. has over two decades of combined experience in the field of real estate law, with a strong emphasis in real estate transactions and litigation. Our experience in residential condominium development is a valuable resource to seasoned and first-time developers, investors and particularly the investor’s real estate agent and broker.
If you need assistance in analyzing a particular real estate opportunity, do not hesitate to Contact Us at 305-501-2836 for a consultation. Our offices are conveniently located in Coral Gables and Boca Raton, Florida.