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Miami skyscrapers: the next Manhattan?

21 Apr
Miami skyscrapers: the next Manhattan?

As time goes by, the Miami skyline becomes more impressive and stunning. The newest Miami skyscrapers considerably contribute to its world-class attractiveness. The Magic City is currently the seventh city, ahead of Paris, in the top ten of Knight Frank’s 2014 global-cities index. Tourism is at record levels too. Nowadays, everyone is relieved and also surprised by the speed of the recovery of the real estate market.

While Miami skyscrapers currently highlight the return of a healthy market, they were the symbols of the excesses of the city’s building boom back in a few years. This is what happened to the Icon Brickell for instance. This condo was supposed to be a flagship for the Related Group with 1,646 luxury units, a 91-meter-long pool and a hundred 22-foot columns in its entrance. But, the developer had to hand two of the towers to its banks. By 2010, the prices dropped to 60% and the vacancy rate increased to 60%.  Predictions flew that Miami skyscrapers wouldn’t come back before ten years or even longer.

But here we go! The cranes are working everywhere and new Miami skyscrapers projects are launched each month. The main factors of the market recovery are the followings:

  • First of all, the great location of the Magic City, near the ocean and with a lovely weather.
  • Miami still attracts a flood of foreign capital, especially from Latin America. Wealthy people in unsafe locations such as Venezuela or Argentina are looking for a safe heaven.
  • Miamians don’t pay any state or city income tax, unlike New-Yorkers for example. National investors also contribute more and more to the recovery of the market.
  • Concerning the rentals, Miami condo rents raised 40% since 2009. It’s a profitable income for owners who don’t wish to spend 100% of their time in the Magic City. Short term rentals are very attractive.

The next question is: how can we avoid a new bubble with the development of so many Miami skyscrapers? For now, only 3% of condos are unoccupied. The available supply of units for sale has fallen back from 40-months in 2008 to 6-to-9-months today. That range is considered as normal in the real estate market. On top of that, buyers of new condos typically must now put 50% down and banks agree to extend construction loans only if 60-75% of the units are already sold.For all these reasons, the ambition of the developers should be under control and Miami skyscrapers could one day become the next Manhattan… Or even better!

 

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Posted by on April 21, 2014 in News

 

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