Foreign condo buyers rush in for bargains
By Marilyn Bowden
As the last of its distressed inventory is absorbed, the Brickell condo market is booming with buyers who want in before prices appreciate further.
"What is happening in Brickell is exciting," said Ron Shuffield, president of EWM Realtors. "Distressed properties are evaporating, and with three new buildings that have sold out in preconstruction, that's a solid forward-looking projection."
Of the units that were available for sale via the multiple listing service, or MLS, on Sept 30, he said, only 30 units — 6% of the total inventory — were listed as foreclosures or short sales. Two years ago, 27% of the inventory was listed as distressed, and distressed units accounted for 60% of closed sales.
"MLS inventory includes mostly re-sale units," Mr. Shuffield said, "but there are essentially no existing units left for sale that have not been previously occupied, so it appears that we have seen the last of these problem units."
As a result, he said, the average price per square foot rose from $270 in September of 2010 to $305 a year later to $329 in September 2012.
An analysis of prices at 1050 Brickell is typical of market activity over the past several years, Mr. Shuffield said.
At completion in 2008, units were priced at $383.30 a square foot. In March of 2009, the developer slashed the prices by 50% on the remaining one-half of units that had defaulted from the original sales. These remaining units were sold out in five months.
Since then, he said, the average price has steadily increased — to $222.91in 2010, $260.75 in 2011 and $302.15 in the first half of 2012.
Now, Mr. Shuffield said, "the average asking price for nine remaining units is $374 a square foot, very close to the original pricing per square foot before the downturn."
When the market turned, said Edgardo Defortuna, president of Fortune International, "almost every new building had a significant inventory of units that were never sold. Now, pretty much everything has sold, and there are few units remaining."
The effect of this rapid absorption is that prices are recovering soon than expected, he said. "At 1060 Brickell, units sold in the $240-$260 per square foot range in 2009; now it's going for $350 and up.
"In Icon, we started sales at $330-$350 a square foot, but the final units went for about $500, so we ended up with an average of $460-$470 a foot for the entire project, which was significantly more than we expected."
Today, Mr. Defortuna said, prices in premiere existing buildings such as Asia, Santa Maria and Jade Brickell exceed $360 a square foot.
Preconstruction prices at new properties on Brickell — The Related Group's My Brickell and 1100 Millecento and Newgard Development Group's BrickellHouse — are north of $400 a square foot, said Alicia Cervera Lamadrid, managing partner of Cervera Real Estate.
As for existing properties, "at the bottom of the market we were seeing prices even below $200 a square foot," she said. "Now you cannot find anything for under $300. That's still below what we saw at the top of the market, but also significantly above the bottom."
Mr. Defortuna said buyers today "are somewhat different from the buyers we saw before. They are very strong buyers paying all cash or a significant amount — and in new construction, they're paying significant deposits. So in that sense it's a very healthy market."
Many of these buyers, he said, are from Latin America.
"They see they need to jump into the dance now," Mr. Defortuna said, "because prices will continue to appreciate. In addition, although right now their currency remains very strong against the dollar, they know that situation won't last, either. That's why we're seeing many people participate in this market now."
When Brickell CitiCentre, Swire's mammoth mixed-used project, is completed, Mr. Shuffield said, "all the pieces will be in place, and in well-located condo buildings, we will probably see a 10% increase in price."
In addition to these factors driving prices up, Ms. Cervera said, the completion of the new museums designed by world-class architects now under construction in Museum Park will enhance Miami's status internationally.
"Miami is still extremely underpriced compared to other cities in the world," she said. "During the construction years it was just not that pretty; it was dusty, noisy and inconvenient. Now people are coming to Miami, and that is driving prices up."
While most Brickell condos are largely occupied by renters now, Ms. Cervera said, "Renter to owner is a natural progression. We're not seeing that yet because banks have not come into the equation as aggressively as they should, but when they do, we will begin to see that happen, especially as rents are getting pushed up."
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