The 171 units at the Auberge Beach will range in price from $1.5 million to $8 million, or about $1,000 a square foot.
“The US buyers have made up an increasing share of luxury beachfront condominiums and, like our foreign buyers, they have shown little resistance to larger deposits,” Perez said in an e-mail. “Most feel that if they can’t put a 50 percent down payment, they probably should not be buying.” South Florida condo builders are turning to US clients as development moves north from Miami, a city attractive to Latin American buyers, whose purchasing power has weakened as their currencies sag against the dollar.
But even as the US economy strengthens, those who come south for the winter from Northern states and Canada are a harder sell, because they’re accustomed to smaller down payments and may worry that Florida’s condo market will crash again, said Peter Zalewski, principal of Condo Vultures LLC, a Miami real estate consulting firm.
“A 50 percent deposit is something domestic buyers and especially Canadians aren’t comfortable with,” Zalewski said.”The biggest challenge isn’t the product.It’s not the pricing .It’s the risk of your money being used to construct this tower and something goes wrong.”
Buyers from Latin America and other regions abroad have been purchasing about three-quarters of the condos sold in top Miami-area locations like South Beach, where oceanfront units command $3,000 a square foot, or as much as what luxury Manhattan real estate costs, according to Zalewski. Overseas clients are willing to put cash up front because they can’t get US financing or want to move money to a haven safe from social, political, and economic instability,he said.
The US buyers have made up an increasing share of luxury beachfront condominiums and, like our foreign buyers, they have shown little resistance to larger deposits.
“Miami is all Latin American flight capital,”said Jack McCabe, a real estate consultant in Deerfield Beach, Fla.The projects being built north of the city are of less interest to Latin American buyers, he said. “They really want to be in Miami. They don’t want to be 35 or 40 minutes away.It’s a different world.”
Perez’s company built about 18,000 condo units in South Florida from 2003to 2008, earning the 65-year-old his Condo King title as prices doubled and tripled, fueled by speculators. When easy credit dried up, Miami-area values plunged 51percent , and buyers walked away from 20 percent deposits on real estate worth less than they expected. Related Group was forced to restructure $i.5 billion in debt in 2010 while losing four condo projects to foreclosure.
South Florida’s recovery began that year, fueled by money from Latin American countries such as Brazil, with buyers seeing US real estate as inexpensive, compared with properties in Rio de Janeiro or Sao Paulo.Those deals are now gone.Miami-area prices are up 37 percent since a post-crash low in April 2011, according to the S&P/Case-Shiller index.The dollar has gained about 60 percent against the Brazilian real in the past three years.
Related Group has announced plans for or begun construction of almost 4,000 condo units at 18 South Florida towers since the crash.Initial financing has come from buyers rather than bankers. Construction usually starts only after So percent of the units are presold with buyers depositing 10 percent of the condo’s cost to reserve a space and then committing to add installments in 10 percent increments as the project meets benchmarks such as groundbreaking and tower-topping, said Carlos Rosso,president of condominium development at Related Group.
The process is a little bit more complicated, but it’s good because it insulates us from a potential crash, you’re finding real buyers and not the flippers and the speculators that we had in the past.”Rosso said
Credit: John Gittelsohn, Bloomberg News