Miami: Rush to buy luxury property leads to rise in prices

The top prices for exclusive properties in Miami’s prime locations have risen over the past twelve months by around 25 percent. A consistently high level of demand is being met with a shortage of homes for which foreign investors in particular are willing to pay ever-higher sums.

Up to 50 million US dollars for prestigious villas in Miami Beach2.-E&V_Key-Biscayne-_19.8-M

Most desirable amongst international clientele are freehold apartments and mansions located directly by the ocean at prime addresses in Brickell, South of Fifth (SoFi), Miami Beach and Sunny Isles, valued at upwards of 1 million US dollars (approx. 718.000 euros). Prices for an exclusive freehold apartment in Brickell lie between 400 and 600 US dollars per square foot (approx. 3.100 to 4.600 euros per square metre).

In SoFi and Sunny Isle, between 1,500 and 3,000 US dollars per square foot (approx. 11.600 to 23.200 euros per square metre) are being paid for prestigious residential property. Residences in the highly sought-after high-rise towers right on the beach cost between 6 and 30 million US dollars (approx. 4.3 to 21.5 million euros).

In exceptional cases, extremely high-end new residential developments in Miami Beach right on the oceanfront are being sold for as much as 50 million US dollars (approx. 35.9 million euros). The most well-known and sought-after locations in Miami Beach include the Art Decó District South Beach. In addition, the exclusive neighbourhoods Bal Harbour, North Bay Road, Palm Island, Star Island, Venetian Island and Sunset Island are extremely desirable.

South of Miami Beach lies Key Biscayne, another small island just off the main coastline, which offers an appealing mix of grand freehold apartments and lavish beach houses. It is home to a particularly large number of families who hold close proximity to the waterfront in high regard and benefit from the security and informal way of life afforded by the community. A detached waterfront home here costs upwards of 10.5 million US dollars (approx. 7.5 million euros). Between 1.5 and in excess of 5 million US dollars (approx. 1.1 to 3.6 million euros) are reached here for freehold apartments.

1.-E&V_Coral-Gables_35-MioIn addition to an absolutely superb location, the most important criteria for purchase include the latest technical standards in security systems, lighting, windows and entertainment facilities such as a private home cinema, as well as a wine cellar and – in the case of apartment complexes – gourmet restaurants affiliated to the property.

High number of new developments in prime locations can hardly meet the demand

Premium properties that go onto the market in Miami’s best locations receive several offers to buy within a very short time, as availability of homes is short and the desirable new developments are usually already “off plan”, i.e. already sold prior to completion. Project developers are responding to this strong level of demand by intensifying their building activities to meet the veritable stampede from wealthy clientele based abroad for the most exclusive properties. In spite of this current building boom the level of demand can still hardly be met, which in turn is driving prices even higher.

E&V shops in Miami increase turnover by 150 percent

Thanks to the rise in prices and the increased number of transactions closed, Engel & Völkers in Miami can look back on a record financial year. The E&V Shops in Miami Bal Harbour, Miami Beach, Miami Brickell and Miami Key Biscayne increased turnover in 2013 by 150 percent and achieved a total sales volume of 300 million US dollars (approx. 215.5 million euros), compared to 120 million US dollars (approx. 86.2 million euros) in 2012.

Oliver Ruiz, Managing Partner at all four shops, attributes this development to several causes: “The property market in Florida and in the USA as a whole has recovered considerably from the financial crisis. At the same time, the upturn on the market in Miami has been even faster and stronger than on most other US submarkets.” According to Oliver Ruiz, the most striking sign indicative of the market’s stability in Miami is the consistently high level of international demand, due to the fact that the majority of foreign buyers are cash payers who are not reliant on any mortgage lending.

Brazilians and Venezuelans dominate the premium market

The market for premium residential property in Miami is dominated by buyers from Latin America, and by Venezuelans and Brazilians in particular. “For many South American buyers, the main motivation for purchasing real estate in the USA is their intent to make a secure investment. The stable political and economic climate in the country makes it an appealing location for investments. Miami attracts especially strong interest here, acting as a hub between South and North America,” said Oliver Ruiz. Alongside South America, international buyers come for the most part from Russia, China, Italy, France, Peru, Ecuador, Argentina, Mexico, Canada and, occasionally, from Germany as well. 

Outlook: “Miami is set to remain a growth market in the long term too”

Oliver Ruiz’s forecast for the future development of the residential property market in Miami is also decidedly positive: “The market recovered extremely quickly in the wake of the crisis and has been undergoing growth ever since. Buyers and investors from around the world are fuelling this remarkable reinvigoration of the property market and this means that it is set to remain a growth market in the long term too.”

Miami is one of the most famous and loved holiday destinations in the world. International guests are drawn by the pleasant all-year-round climate, as well as the superb transport connections and infrastructure. “Second home buyers find everything here that they could possibly want: the vacation feel of a beachside resort mixed with the cosmopolitan urban flair of a vibrant city,” Mr. Ruiz concluded.

Posted in Residential.