Slow and Steady

When Miami DDA released its 2013 overview early last year, approximately 4,500 units were either pre-sold or under construction. From those figures, researchers determined the market’s construction pipeline could support an additional 1,000-1,500 units.

“We stand at 6,019 units under construction, with another 2,070 units in the contracting phase,” the report read. “We have reached the point where supply is meeting normalized demand.”

Normalized demand, unfortunately, doesn’t necessarily include Miami’s locals, who have historically been attracted to condo projects in secondary locations where investors have since fled. The problem, researchers pointed out, is that 50 percent deposit requirements are simply too big for domestic buyers.

As price appreciation tempers, those buyers may find more options in the condo market. For now, hungry eyes are fixed on attracting international interest.

China to Play a Major Role in South Florida’s Future

“The primary driver for the downtown Miami condominium market is foreign investment,” the report said.

Situated conveniently to Latin and South American buyers, and comfortably for those hailing from more temperate climates, the magnetism of Miami is hardly surprising. However, pre-sale absorption of units has slowed considerably among South American and European investors, and the reason is buying power; they simply don’t have as much anymore.

Researchers wrote: “The significant slide in currency exchange from 2011 to 2015 for Brazil (down 38 percent), Argentina (down 52 percent) and Venezuela (down 32 percent) could have an impact on projects that were heavily weighted to buyers from these markets as buyers will need to produce proportionally greater funds for the remaining 50 percent of contracted sale price to close on the units that were contracted in 2012 to 2013 and will be delivered in 2015 to 2017.”

Miami agents shouldn’t give up on chasing big international fish yet, though, as one country remains promising in providing the Magic City with a steady stream of new international prospects: China.

While other nations are feeling the sting of a strong dollar, China remains one of the few countries benefiting from increased buying power, as the Yuan has strengthened vs. the U.S. dollar.

Miami DDA reported that China is poised to become a major player in the Miami market, and already organizations are preparing for, what seems, an inevitable increase in interest from east Asia.