Here comes the next wave of condos

Brickell House; 1300 Brickell Bay Dr; Units: 374;
Height: 46 stories; Planned completion: 2014;
Developer: Newgard Group (Miami)
Newgard Development Group [Herald photo]

"Developers are preparing to launch the next wave of condo towers in downtown Miami, targeting international pre-construction buyers who can pay in cash." From The Miami Herald here.

The aftershocks of the last housing boom are still lingering, but developers are once again rushing to buy up land and erect new condo towers in downtown Miami’s burgeoning metropolis.

At least six new condo projects are slated to break ground in Miami in the coming years, with developers promising to announce several additional projects soon. . . .

The demand is coming, almost exclusively, from outside Miami. Buyers based in Latin America, Canada, Europe and the northeast United States have spent more than $3.8 billion on South Florida real estate this year, helping boost sales. International buyers account for about 90 percent of new condo sales, according to the Miami Association of Realtors.

Builders believe the surging international demand is strong enough to support new condo towers.

They are also using a more cash-focused financing model this time, hedging risk by requiring buyers to pay as much as 80 percent of the full price of a condo before construction is completed. Under the arrangement, buyers pay 20 percent at pre-construction, 20 percent at ground-breaking, and another 30 to 40 percent as the tower is topped off and approved for occupancy. . . .

William Hardin, a professor of real estate and finance at Florida International University, said some of the developers are simply testing the market. They might make splashy announcements and host lavish launch parties, but if the cash-buyers don’t materialize, the projects will never be built. . . .

Recession-weary South Floridians have become a minority of the market and developers acknowledge that the 70 percent deposit financing model virtually shuts all locals out of the market.

“I want a buyer that can pay cash — no financing,” said Hernandez, “Our buyers here [in South Florida], nobody has 70 percent. Nobody can afford that.” . . .

“A condo in São Paolo that was selling for $500 a foot in 2005 is now probably trading for $1,500,” said Studnicky. “A condo in downtown Miami that was selling for $1,000 is now selling for closer to $500 a foot. It’s completely flipped.”