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Miami, a city in full transformation

Le Figaro Magazine – Edition February 24, 2017

Miami is popular with the South Americans and European people who invest in stone.
And Asians are now gaining a foothold in the new Brickell district.

If you think that Miami is only a city of retirees, where the American people from the Northern States flee the cold to come to warm their old bones (the “snowbirds”), go for a ride in Florida. The climate has not changed, but retirees are far from being the only ones to benefit. Some hedge fund managers also leave New York and settle in Florida, attracted by soft taxation like some movie maker professionals. South Beach, the Art Deco district of the city, is still there with its pastel colors and its special atmosphere, a must for the tourists.

On Venetian Islands, an island just next to the district that has made Miami famous, Gary Lazarus, a real estate agent at Fortune, takes you for a tour on a dream home. The one that can be found in french reality shows that take noisy young people, familiar with the most bling-bling version of the American dream. And that can be rented $300k for a month. With its clean lines, its rooftop pool (a rarity in Miami Beach), its pontoon on the bay and its view of the Miami skyline, it is on sale for more than $14 million. But Miami has many other facets.

The city of tomorrow

A new district, Brickell, is thus in full moult. Easily accessible from the airport and served by the Metromover, one of the city’s few rail lines, it looks more like Manhattan than So Beach. In the heart of the old financial district of the city, which now comes alive at night, Swire Properties, a subsidiary of the Hong Kong group Swire Pacific Holdings, has just opened a new shopping center of 50,000 m², the Brickell City Center with luxury brands and restaurants. And as a bonus, an innovative technology to refresh the customers of the shopping center thanks to a “ribbon” of 15,000 km² which overlooks the premises and which alone cost a whopping $30 million. “This ribbon of steel, fabric and glass protects visitors, captures sea winds to regulate air and temperature and collects rainwater; it allows visitors to circulate in the open air with natural light” says Swire. The total budget for this real estate development, which is to create 3,700 direct and 2,500 indirect jobs, exceeds one billion dollars. It is the first in the United States on this scale for the group which has carried out similar in Asia.

This mixed program of almost 4 hectares in the city also includes the East design hotel, two office towers and two 43-story residential towers designed by Arquitectonica (the first is sold almost entirely) with American-style services (playroom for young children, library, spa). To live there, you have to count at least $2.1 million for a 268 m² penthouse and $755,000 for a dwelling of a hundred square meters. “It’s still much cheaper than in New York”, explains Edgardo Defortuna, the president of the developer Fortune International Group who markets the program and of which Savills is the partner for European buyers.

Investors who bet on Brickell are betting on the development of the city’s business district and rental in primary residences and not tourists. “Many South American companies are headquartered in Miami” said Barnes president. A stone’s throw from Cuba, Miami is the gateway for South Americans to the United States. The widening of the Panama Canal is expected to have a positive impact on port activity. Many South American developers are building the city of tomorrow. Many investors also come from this part of the world. “They buy here because they feel safe while at home they are afraid of being kidnapped” said a real estate agent. And like everywhere, luxury real estate remains a safe haven that allows you to invest in another currency and a real asset. “It remains an emotional choice: you can’t live in your equity portfolio” said Frederick Peters, president of New York real estate network Warburg, Barnes’ new partner.

An active market

However, the prices have gone up a lot in Miami in recent years. Are we at the top of the cycle? A question to ask, especially since real estate is much more cyclical in the United States than in France. In the worst hours of the last real estate crisis, prices had dropped 50% in Miami before bouncing even higher. Today, in New York as in Miami, the offer of new constructions, often luxurious, is important. “It’s a buyer’s market” says Thibault de Saint-Vincent. The buyers negotiate the prices and play the watch if the sellers are not accommodating. Some developers have already lowered some prices. Thus the residences at W in South Beach, which take advantage of the hotel’s services, saw their prices drop from $2.15 million to $1.99 million. “The market remains very active, it takes one to three years to sell a building, which is normal” says one at Fortune. Same feeling at Sotheby’s International Realty, which for example sold a 220 m² house with four bedrooms in Miami Shores for $715,000 and rented in ten days at $4,750 per month.

While Donald Trump has boosted the stock market, what will happen to real estate? “The Americans are waiting to see what the President will do and will change before making real estate decisions. The French clientele is still there and the Russians are coming back”. If Donald Trump carries out his tax cut program, it should work in favor of real estate, even if the strong dollar can weigh on foreign demand and if the rise in interest rates can be a brake.

The real estate excitement is not limited to Miami stricto sensu and some investors prefer to move away for a few tens of miles to find more affordable prices and a family atmosphere. To the north at Sunny Isles, once prized primarily by the Russians, is becoming international. And tower projects facing the ocean compete with each other. The one of the Ritz-Carlton (52 floors) offers buyers the assurance of being able to benefit from the hotel service of the chain, in particular a lounge, a club, and a restaurant on the 33rd floor. Two penthouses were sold for $16 and $21 million. Delivery expected in 2018. A stone’s throw is the Porsche Tower, where you can make your expensive car climb up to a garage upstairs in your apartment. Even in the 20th century, developers compete in a market which slows down. With sales offices that would leave Europeans speechless to convince buyers: strong salespeople, glamorous films and animated models in support. View over the Atlantic, geometric lines and XXL openings on the outside, all in transparency, the Jade Signature tower is a model of its kind.

Having become the playground for many developers, Miami is a city in full transformation. For investors, it is no longer just a holiday property destination but also a more traditional investment city. You still need to be well advised if you want to invest across the Atlantic: by an operator who masters tax data and who has sufficient experience in the local market.

Source : Le Figaro Magazine