ROUND TABLE Miami
spending several million dollars on a great property don’t just buy it as an investment or a bolthole. They come here to enjoy it, to show it off – and they pour huge amounts of money into the local economy.” She adds that the really wealthy Russians still prefer the South of France; they can get back to Moscow in a couple of hours. “But there is a growing number – all worth many millions – who now prefer Miami.”
Does this enthusiasm extend to the rest of Florida? “Not really,” say both Irina and Hercules. “The rest of Florida is a very diff erent market. Some South Americans and Russians buy there but they mainly favour Miami.”
What about other buyers in Miami? All of the realtors agreed that there were still lots of European, Canadian and other buyers. “In the recent past there has been a huge upturn in Spanish buyers and an increase in buyers from Italy.” Perhaps they have learned from Cyprus that their money is not safe at home. European buyers are more likely to buy with the help of bank fi nance – available up to about 60% loan to value – though most are still buying for cash. Where does all this cash come from? Is it dirty money? “Not at all!” Exclaimed all our guests, choking on their fi llet mignon, “A lot of the money might be what
They said 2012 had been their best year ever
you might call easy money – money earned from business contracts in chaotic states that might raise eyebrows in the US, but the money is clean in their own country – legitimate business profi ts. Several of the lawyers pointed out that you would have to be a fool to try to launder drug money in Miami. The enforcement authorities keep a very close eye on things. What about the Chinese? According to Pete and Jose Sr.
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there has, so far, been little sign of the private Chinese investor but there is certainly a lot of interest from South East Asia in the big projects. For example, a large part of the new development in downtown Miami is provided by a Malaysian consortium, which also owns a large chunk of Miami’s huge cruise industry. “The World Capital of Cruising,” says the sign at the harbour. Hong Kong money funded a large development at Brickell Key, including the Mandarin Oriental Hotel. The fi gures show that the Chinese don’t even fi gure in Miami’s top 25, despite being huge players elsewhere in the US. Perhaps they are put off by the very “Hispanicness” that makes Miami so attractive to the people of Central and South America.
WHAT DOES THE FUTURE HOLD? All agreed: much of the same. There is still considerable room for upward movement in prices, particularly in the more normal properties outside the luxury enclaves. Jose Jr explained, and John Ainsworth agreed, that these were still being held back by the banks. Tenants might be paying $2,000 per month in rent, which might suggest a value of, say, $250,000; but the banks will only appraise it for mortgage purposes at $175,000. So the owners won’t sell and the tenants can’t aff ord to buy.
Several of our guests told us that 2012 had been their best year ever – better even than the boom years in the mid ‘80s and early 2000s. They all expected 2013 to be as good or better. Why? Less competition. Although the market is still much smaller than in 2006, the number of realtors and lawyers is hugely reduced. They also run much tighter businesses. So what is happening to all
those empty apartments on Brickell? They are disappearing rapidly – often bought by doctors, lawyers, realtors and others coming to service this new boom. Are our guests frightened of another “boom turns to bust” scenario? No. Not unless the banks start stupid lending and generate another speculative bubble – and that isn’t going to happen any time soon. And, with that happy thought, our lunch came to an end.
Thanks
OPP would like to thank Marcell Felipe, of Marcell Felipe attorneys based in Miami (
www.marcellfelipe.com), for sponsoring a superb lunch at Morton’s steakhouse. We would also like to thank Marcell’s father Dr Felipe Felipe for treating your editorial director’s broken tooth at very short notice!
Miami Heat: league champions again
www.opp-connect.com
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