With renters lined up, foreign buyers snap up downtown Miami condos
By Marilyn Bowden
From the Miami River to Midtown, downtown Miami condos are hot commodities among international buyers, brokers say, not least because renters are lining up to lease them.
"Gentrification is in full force in the triangle of Midtown, Wynwood and the Design District," said Rita Regev, broker associate at Optimar International Realty.
Carlos Villanueva, district sales manager for The Keyes Co., said the multiple listings service shows 430 resale condos on the market. Over the past six months, 263 units closed, having been on the market an average of 135 days, and 166 closings are pending. That pace yields an absorption rate of 9.8 months, close to a balanced market.
Mr. Villanueva quoted an average sales price of around $213,394.
In new condo buildings, many of which still have developer units on offer, "sales are very good," said Jeff Morr, founder and CEO of Majestic Properties.
"The Marquis is selling at an average of over $300 a square foot. Soon Paramount Bay will hit the market in the high $300s and will set a new bar for the neighborhood."
He said HSBC Bank recently took back 532 units at Midtown Miami. "They haven "t discussed what they are doing with them," Mr. Morr said, "but they are occupied by renters, and I imagine they will come to market in two or three years at about $300 a foot and will sell immediately. It's a very popular neighborhood, and when a short sale or foreclosure comes up it sells for cash instantly."
While prices are rising in some buildings, he said, they're still only about half of preconstruction prices, "so the values are tremendous. Besides South American buyers, we're also seeing a lot of Europeans.
"Miami real estate is becoming a commodity like gold and stocks."
But banks are still being cautious, Ms. Regev said, and most transactions are still cash deals.
With large blocks of units no longer available and prices creeping up, bulk buyers have been out of the market for a couple of years, Mr. Villanueva said. "What has been driving it are two main factors — international buyers buying up units and leasing them out, and young professionals migrating primarily from Miami Beach or outside the area, from places like New York, Chicago, California."
The multiple listings service shows 132 private rentals on the market in the area, he said, with 384 units leased in the past six months and 142 leases pending, at an average rate of $1,935 a month.
"Rentals are up 10%-12% this year," Mr. Morr said. "One-bedrooms are leasing for about $1,500, two-bedrooms for $2,300 and up."
New restaurants and nightclubs help attract a "young, hip, pioneering demographic," he said.
The area has sprung to life thanks to "hip restaurants, great restaurants and clubs," Ms. Regev said, and the Performing Arts Center, shows as well as sports at AmericanAirlines Arena and the Design District's ArtWalk are bringing crowds to downtown.
"That all trickles down to real estate," she said. "As a result, sales prices are on the rise. Both sales and rental rates are competitive, and if you want to be in a key location you have to move quickly when a unit becomes available."
Some developers are once again offering incentives to Realtors, she said, as they did pre-recession. "They might offer a 5% commission instead of the regular 3%," she said, "and they're starting to stage elaborate broker parties again."
While nobody knows how much distressed inventory banks may be holding, Realtors aren't worried that they will dump large numbers of units on the market at one time.
"Banks prefer to short-sell over foreclosing," Mr. Villanueva said, "and are trying to work out loan modifications as much as they can.
"It's not to their benefit to flood the market, because that would drive prices down. A lot of units are introduced as structured short sales already pre-packaged by the bank."
The shadow inventory of bank-held units "is all conjecture," Ms. Regev said. "The only reality is right now."
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