As I noted in one of my recent blogs, the South Florida real estate market is enjoying quite a healthy boom of new construction condominium projects.
And these projects are being spearheaded by interested foreign investors.
Why are foreign nationals deciding to invest their money here in South Florida? Here are the top three reasons:
- Their foreign currency is stronger than the U.S. dollar, which means a greater return on investment for them
- The South Florida real estate market is seen as a luxury destination for people all over the world
- South Florida real estate is so depreciated in value from the last few years that it magnifies the kind of return on investment these foreign nationals can get.
More Details on the Foreign Investment Boom in South Florida
It hasn’t been the easiest last few years for the South Florida real estate market, as detailed by a recent article I was reading. For instance, condo values dropped a staggering 60 percent from their peak, according to the Miami Association of Realtors. And available credit for interested home buyers was hard to come by.
But there’s a Renaissance of sorts taking place on the South Florida real estate market. It’s breathing new life in to the market, and a lot of that is thanks to foreign investors.
Here’s a look at recent activity in the condominium market:
- There are 118 condo towers proposed in the Miami area, which includes 35 under construction.
- The 41 towers that are proposed for downtown will add 12,100 new units. Although that’s a departure from the 22,000 units that were built between 2003 to 2008, it’s still a remarkable improvement!
- And recently, the Commerce Department released data that showed nationwide residential building permits increased to their strongest pace since June 2008.
- The department further reported that about one in three building permits issued this year has been for the large multifamily communities.
- In the South Florida region (which includes Miami-Dade, Broward and Palm Beach counties), about 70% of residential construction permits issued through October were for multifamily units.
- Meanwhile, about 85% to 90% of new-construction buyers are foreign, mostly from Latin America.
Experts are saying that developers have been encouraged by strong international demand that usually results in cash-financing. This model is viewed as safer than bank loans.
Consequently, a lot of developers are increasingly relying on buyers’ deposits to fund construction, versus debt from banks.
Experts are also saying that Miami is a microcosm that is being reflected on that national housing market. In truth, more markets are turning to multi-family buildings like the ones we’re seeing in South Florida because it was the single-family home industry that dominated during the bubble years before the market crash.
Although it’s true that most national construction is still single-family homes, the uptick in recent construction activity has been dominated by multi-family homes.
Buying and Selling South Florida Real Estate
It is definitely an exciting time to be navigating the South Florida real estate market, and that’s thanks in large part to all the interest we’ve been receiving from foreign investors!
If you’re thinking about buying or selling a South Florida property anytime soon, it would benefit you to work with a REALTOR® that has a firm understanding of the local housing market and its dynamics.
So contact me, Scott Patterson, today! I have years of experience working in this area and have helped scores of South Florida residents just like you!
Until next time,