Surging property prices, impressive returns on high-end homes and new flight routes from Asia are attracting an influx of wealthy foreign investors
Home to golden beaches, plentiful oranges and balmy sunshine, Florida has long been a desirable destination for empty nesters and retirees from all over the US who either sell up and relocate full-time or buy vacation homes there.
The fact that Sunshine State residents only pay federal taxes, compared to the triple hit of federal, state and city taxes levied by authorities in other locations, represents an important saving for people seeking to relocate. A condo in Miami will typically cost around one-third of the price of a comparable property in New York and its year-round warm weather means that lifestyle options – namely water sports, boating, tennis and golf – abound.
The innate appeal of Florida, and especially Miami, its most celebrated city, coupled with an influx in newcomers have signalled a shift in many of the state’s key hubs, with sectors such as dining and entertainment in particular getting a shot in the arm. These enhancements, in turn, are helping to attract investment from all over the world.
“Miami is the most diverse city in the US,” says Fernando de Nunez y Lugones, executive VP of Development at ONE Sotheby’s International Realty and a specialist in Southeast Florida’s Miami-Dade and Broward counties. “For all of Latin America, [Miami is the point of] easiest integration; most people speak Spanish and it’s a good place to start something from scratch.”
While many buyers are lured solely by Miami’s economic opportunities, de Nunez y Lugones says others are also seeking to escape political, economical or social problems in their home countries. In recent years there’s been an influx of buyers from Mexico, Venezuela and Brazil, while more European, Middle Eastern and Asian citizens are making a beeline for the state.
It’s likely that direct flights will soon connect Miami with Asia. In September 2015 Miami-Dade aviation director Emilio González told Miami Today News that he was talking with EVA air and China Eastern about a route. The MIA Task Force is also reportedly targeting Japan Airlines, China Airlines, Asiana Airlines, ANA, Cathay Pacific, Air China, Korean Air, and Hainan Airlines.
These links are expected to attract an influx of Asian entrepreneurs seeking to establish a more permanent base in Florida, rather than traditional hotspot California, under the EB-5 Immigrant Investor Program. The scheme makes investors eligible to apply for a Green Card if they make the requisite investment in commercial enterprise with jobs for 10 or more US employees.
Florida’s strategic position as a gateway to Latin America and its markets is attracting mainland Chinese and Hong Kong investors to buy real estate in the state. In 2013, Chinese investment in Miami accounted for 3.7 percent of the city’s property sales, according to Charlie Rosier, a director of Blackfish, a consultancy that helps Asian clients invest in US property.
After peaking in December 2006 and plummeting during the economic downtown of 2008, Florida real estate prices are bouncing back with the state now firmly on a growth trajectory. According to realtors sales are trending up, listing inventories are falling, the supply of lender-related properties has stabilised and multiple offers on homes are being witnessed.
Experts credit the resurgence to a recovering economy benefiting from growth in the tourism and healthcare sectors in particular.
The luxury market – categorised as properties priced from USD1 to USD5 million – has also witnessed an uptick over the last few years. According to figures released by ONE Sotheby’s, the number of single-family homes selling for more than USD1 million increased 83 percent to 975 from 2011 to 2015.
Even the state’s most expensive homes in the sought-after Miami Beach area delivered impressive returns on investment. With its beachfront mansions boasting private berths, oversized infinity pools and celebrity residents, N Bay Road is one of Miami’s, if not the US’s, most exclusive addresses. Last year, properties on the strip sold for an average of USD25.8 million – a 53 percent increase in the same period.
Strong sales are in fact being reported across the board, and — despite media reports to the contrary — realtors, including de Nunez y Lugones say there’s no bubble forming.
There has however been a nationwide dip in demand, partly fuelled by the appreciation of the dollar and uptick in oil prices, which has impacted the affordability of properties in the US for buyers.
“Since demand has slowed, some properties were shelved, others were postponed and construction, in some cases, has taken longer than expected,” explains de Nunez y Lugones. “But this is good news because it will give us more time to absorb the units being delivered into the market.”
Industry experts are envisioning nothing but growth in Florida for the next five to 10 years.
The full version of this article appeared in Property Report magazine, issue 137