Booming Miami Real Estate Market Led By High-Class Waterfront Condominium Developments
An extensive story published in USA Today on April 20, 2005, attests to the growing appeal of the Miami luxury realty market to the wealthy and well-to-do from all over the globe. As the value of the dollar has declined, Europeans, Latin Americans, and others have become active in the Miami market. Hot beachfront property has yielded a much better rate of return than the stock market in recent years, and with a favorable currency exchange rate further sweetening the deal, investors from other countries are really cashing in.
With this all these new residents, the landscape of downtown Miami is evolving. There are the more obvious changes - within a 50 block area near Biscayne Bay, approximately 50 major condominium developments have either been proposed or are already in the midst of some stage of construction, leading some to comment that the "downtown looks as if it has been bombed." But there are subtler changes going on, too, as new capital spurs on new development, a world-class new downtown performing arts center, and new marketing strategy for selling condos.
In order to fetch the $500,000 to $1,000,000 that waterfront condominiums can currently command, sellers need to offer more than just property. They have to sell an image. And more and more, image and luxury are the most obvious selling points, as condo communities with names like Nirvana, Platinum, Emerald and Acqualina go up all along the waterfront. And the strategy seems to be working, as prices for comparable lots have gone up five-fold, from $19 million for the 2.5 acre lot that is now home to the Jade Beach community in the Brickell Avenue neighborhood of Miami in 2001, to $100 million for a similarly sized piece of land in the same locality advertised earlier this year.
But beware. Some people estimate that approximately 70% of the market is now owned by speculators, some of whom are putting down razor-thin deposits on their purchases - only 10% in some instances - with the hope that a fast sale will allow them to recoup their costs. If the market takes a hit, however, more than a few of these speculators might opt to simply cut their losses, sending the market into a downward spiral that could reverse many of the improvements the city has made over the past few years.
With this all these new residents, the landscape of downtown Miami is evolving. There are the more obvious changes - within a 50 block area near Biscayne Bay, approximately 50 major condominium developments have either been proposed or are already in the midst of some stage of construction, leading some to comment that the "downtown looks as if it has been bombed." But there are subtler changes going on, too, as new capital spurs on new development, a world-class new downtown performing arts center, and new marketing strategy for selling condos.
In order to fetch the $500,000 to $1,000,000 that waterfront condominiums can currently command, sellers need to offer more than just property. They have to sell an image. And more and more, image and luxury are the most obvious selling points, as condo communities with names like Nirvana, Platinum, Emerald and Acqualina go up all along the waterfront. And the strategy seems to be working, as prices for comparable lots have gone up five-fold, from $19 million for the 2.5 acre lot that is now home to the Jade Beach community in the Brickell Avenue neighborhood of Miami in 2001, to $100 million for a similarly sized piece of land in the same locality advertised earlier this year.
But beware. Some people estimate that approximately 70% of the market is now owned by speculators, some of whom are putting down razor-thin deposits on their purchases - only 10% in some instances - with the hope that a fast sale will allow them to recoup their costs. If the market takes a hit, however, more than a few of these speculators might opt to simply cut their losses, sending the market into a downward spiral that could reverse many of the improvements the city has made over the past few years.
