Miami attracts the world’s ultra wealthy
Cityscape investigates how Florida’s popular seaside destination has rapidly developed into a flourishing real estate market, drawing significant international traffic.
Miami has an “intoxicating real estate market” – this is in the words of W. Allen Morris speaking in March at the annual real estate summit organised by the Greater Miami Chamber of Commerce. Morris is currently building his 80th project in Miami, the luxury condominium SLS Lux that he says is 78 percent pre-sold with buyers putting down 30 percent of the purchase price in non-refundable cash payments.
Although he has seen four major cycles in his career as a developer in Miami, today Morris finds a good foundation “for sustained positive growth” thanks to the cash deposits and the international clientele.
In the annual Knight Frank Wealth Report only two American cities are in the Top 10 as targets for the very wealthy: New York in second place, Miami in sixth place. Jay Parker, CEO Florida Brokerage at Douglas Elliman Real Estate, calls Miami “one of the finest residential markets in the world” due to the “increasing quality” and “much more highly curated product” available.
Florida leads all 50 states in residential sales to foreign buyers with 23 percent of apartments and houses; California is second with 14 percent and Texas third with 12 percent.
Within Florida Miami attracts the most foreign homebuyers with 68 percent of them coming from South America. Venezuela, Argentina, Brazil, and Colombia precede Canada, France, and Mexico. For the first time in 2014, China appears on the list.
According to a recent report from the National Association of Realtors, 2014 was the fourth straight year of record-breaking real estate sales in South Florida. “The difference between Miami today and Miami of a year or two ago is the ultra-high net worth individual,” said Teresa King Kinney, CEO of the Miami Association of Realtors, who presented the report.
That individual is also a target for the hospitality industry. While Miami has seen business and resort hotels develop over the years, it is now also being used as a testing ground for luxury hotel concepts.
Two major real estate brands came together three years ago in a joint venture to launch the 1 Hotel South Beach, described as an industry game-changer. In March Starwood Capital Group’s Barry Sternlicht and developer Richard LeFrak opened the first property for the new 1 Hotels brand.
After three years of construction at the site of the old Gansevoort Hotel at a cost of USD 150 million, the 426-room 1 Hotel “plans to truly upend the world of hospitality through a socially and environmentally conscious platform in celebration of the beauty and preservation of nature.” Speaking at the opening, Sternlicht said that more 1 Hotels were already on the drawing board for New York, Brooklyn, and China. In the meantime, he said, the 1 Hotel is unique: “There’s nothing like it in Miami Beach.”
The development of commercial real estate is another factor behind the attraction of Miami. During her presentation, Kinney said that commercial projects follow residential projects by two to three years. Morris who has developed many commercial and mixed-use projects in Miami says the city holds 1 million square feet of office space and 11.6 percent vacancies.
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