Thu Feb 23, 2012 3:12pm EST
* Venezuelans, Brazilians are top foreign buyers
* Miami is a top U.S. destination for international buyers
* Cash purchases dominate Miami market
By Kevin Gray
MIAMI, Feb 23 (Reuters) – Many Latin Americans have
long had a love affair with Miami, but rarely has it been so
intense — as least judging by the property market.
Cash-rich Latin Americans, spearheaded by Venezuelans and
Brazilians, have led a charge into Miami real estate, helping to
spur a recovery in a market that once stood as a poster child of
America’s housing bust.
Enticed by what they view as cheap real estate prices and
paying in cash, Latin American buyers have snapped up
condominiums, apartments and houses as investments or second
homes. They are cashing in on recent heady economic growth their
region, which also weathered the global downturn fairly well.
Many are not only house hunting. They are also descending on
Miami’s glitzy shopping malls, buying up everything from iPads
and designer clothes to expensive jewelry.
The wave of property buying has re-energized Miami real
estate developers who are rolling out new projects even as
Florida remains among the states hardest hit by the housing
collapse. It has also transformed Miami into a top real estate
destination for international buyers.
“Latin America has really helped to breathe new life into
our market,” said Jorge Perez, the chairman and chief executive
of Related Group, a leading South Florida developer.
The influx is being led by Venezuelans, who like many Latin
Americans, have historically turned to Miami real estate as a
safe haven against political and economic volatility at home.
According to the Miami Association of Realtors, Venezuelans
were the top foreign buyers in 2011 and accounted for 15 percent
of all sales to international buyers, followed closely by
Brazilians and Argentines.
Last year, sales of houses and condos in the Miami area rose
a record 46 percent compared with 2010, the association said.
Condo prices finally began to rebound in the second half of last
year, and December also saw an appreciation in single-family
homes for the first time since the recession.
Wealthy Venezuelans, faced with dwindling investment
opportunities back home and worried about what they describe as
a crackdown on the country’s domestic housing market by leftist
President Hugo Chavez, have become sought-after clients for real
estate developers and brokers.
“They pull out their checkbooks right away,” said Harvey
Hernandez, a Venezuelan-born managing director of the Neward
Group, which is developing BrickellHouse, one of the first condo
towers scheduled to be built since the real estate crash.
At BrickellHouse, more than half of the tower’s 374 units
have been sold, with Venezuelans representing around 40 percent
of the buyers. The tower, located in Miami’s financial district
with views of Biscayne Bay, is slated to start construction
later this year.
CHAVEZ EFFECT
Venezuelans have also helped reinvigorate real estate
markets in Miami suburbs like Doral and Weston, home to large
Venezuelan expatriate communities.
“It’s the Chavez effect,” said Cleto Puzzi, a Venezuelan who
sold an apartment he owned in Spain and bought two in Doral that
he now rents. “You can’t invest in Venezuela these days.”
The Venezuelan leader’s penchant for expropriations has
rattled many well-to-do Venezuelans. Last year, Chavez
introduced legislation that makes it more difficult for
landlords to evict delinquent renters, spooking property owners
and chilling interest in one of the few investment options in
Venezuela.
“Chavez basically has served as the greatest backstop the
South Florida and Miami condo market has seen,” said Peter
Zalewski, a principal with the real estate consultancy Condo
Vultures.
Other South Americans are turning to Miami real estate as
property prices across Latin America have soared.
A recent report by Miami-based RelatedISG, a real estate
sales group, said prices of downtown Miami apartments and condos
trail those at newly built properties in several South American
cities, including Rio de Janeiro, Sao Paulo, Buenos Aires and
Bogota.
Prices in downtown Miami average more than $400 a square
foot, the report said. That compares with $1,000 a square foot
for properties in Rio de Janeiro, $900 in Sao Paulo and $550 in
Buenos Aires.
Surging real estate prices in Brazil have sent Brazilians on
the hunt for Miami property.
Benefiting from gains in Brazil’s currency, the real,
against the U.S. dollar, Brazilians are also prodigious shoppers
in Miami, where Portuguese can often be overheard in malls,
along with Venezuelan, Argentine and Colombian Spanish accents.
For Brazilians, “everything is so cheap. Going to dinner,
buying a shirt, buying a condo,” said Jacques Claudio Stivelman,
the president of Miami-based Shefaor Development and a native of
Brazil.
Big-spending Brazilians are drawing particular interest
among Miami realty agents who say they come looking for high-end
oceanfront properties.
“Brazilians are buying in the million dollar plus range,”
said Zalewski.
Foreign interest is not only limited to buying real estate.
Foreign developers are also heavily involved in more than 20
planned building projects, many of them likely to be marketed to
international investors.
The interest from Latin Americans has led real estate
developers, many of whom were stung during the U.S. housing
crash, to adopt new financing and sales models.
Before the bust, Miami condo and real estate developers and
property buyers relied heavily on bank financing. But as the
market unraveled, developers watched as clients walked away from
their deposits and banks, worried about falling housing prices,
shut off lending.
Empty condo towers soon dotted Miami’s downtown skyline.
With Latin Americans and other non-U.S. buyers now
representing a majority of real estate sales in Miami,
developers have unveiled a more cash-focused financing option
familiar to foreign buyers.
The pay-as-you-go model means buyers pay at certain stages
of construction. It is used widely in Latin America and requires
buyers to pay as much 80 percent of the property’s final price
before construction is completed.
“I don’t think this is a long-term approach, this is a
reaction to the way this market is in its current form,” said
Perez.
Ivan Martinez, a 40-year-old lawyer in Caracas, recently
bought two apartments at BrickellHouse for $250,000 and
$400,000.
“Miami is like a second home for me,” he said, rattling off
trips he had made since he was a child. Venezuela’s political
instability, he said, was a key factor in his decision.
Some realtors who work frequently with Venezuelans said they
expect their interest in Miami real estate to remain strong,
particularly if Chavez wins a presidential election later this
year and extends his 13 years in power.
Eli Santurio, a sales manager at Keyes Realtor, said many
realtors were joining Venezuelans in keeping a close eye on the
run-up to the October vote.
“That’s what everybody is talking about,” she said. “If
Chavez wins, then sales could increase big time.”
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