We already talked about how influent are the Latin Americans investors in the Miami real estate market. Let me remind you that they represent 35% of the buyers in Florida. We can say without doubt that they succeed to keep the market alive and to absorb the inventory.
Let’s try to understand where their powerful buying power is coming from. The first explanation is that their strong currency pushes them to invest abroad. In addition, the Floridian market is still less expensive than European or Latin American markets. In these regions good areas are in excessive demand meaning that the prices are increasing. That’s how, in 2011, the price per sqft for a waterfront property in Brazil was reaching $2-3 K when in Miami, in the Murano Grande for example, it was only $1K/sqft.
The other thing we know about these investors is that they buy all cash and are looking for their second, third or fourth properties. Of course with these kind of investments they are stimulating both sales and rentals markets. Finally, the Latin Americans buyers are also transforming the way developers finance their projects. Indeed, developers don’t need to lend money anymore because the Latin American buyers are used to deposit payment through the construction. That process is called pay as you go and is creating a healthier market because there is no lender in the picture.
Without these new kinds of buyers there will not be 12 towers under construction right now so we can just hope that Latin American investors will stick to Miami.