1000 Museum

The real estate scene speaks about an unprecedented real estate boom. This time, it is fueled by rich foreign or out-of-town investors, eager to purchase projects lead by financially solid and experienced developers. On the other hand, the volume of condo sales has decreased in 2014 by 15.5% compared to 2013. One can wonder if it is directly linked to a decline of purchasing power for foreign buyers, due to the strengthening of the dollar?

But interest rates do not go up and customer confidence does not seem to drop. There should be nothing to worry about since the US economy is doing well. Indeed, it has been two years that big payers are continually arriving to Miami, which they qualify as an exciting place to own a condo. For example, more than half of the Biscayne Beach  owners are New Yorkers: Why so? Simply because in Miami, you can afford a condo unit for one third of the New York City prices and the cost of living is said to be half of New York’s.

This cycle also differs from the previous one to the extent that Miami is now more culturally mature and equipped in terms of infrastructure. Thanks to such development, Miami attracts a mix of investors from both Europe and Latin America. One Thousand Museum , designed by Zaha Hadid, sold 50% of its condo units to Brazilians and Venezuelans on top of Europeans and New Yorkers. The buyer’s deposit is now required to be over 50% which acts as a stabilizing factor.

The thing is that it is hard to assess whether foreign investors – which countries are undergoing recession – only buy condo units because they want to own hard assets rather than rental income. In that case, the pendulum might well swing the other way if economics change.

With new towers increasing the supply and making prices rise along with rental rates, the market is reaching a point of excitement that could start pulling the strings of a boom-and-burst cycle. The current situation seems to be healthier than the previous boom though, as nobody is taking insane risks anymore: investors are only backing solid projects lead by well-known developers. If the wind turns eventually, the landing should be softer that it has been before!