Miami’s condo market continues to be global magnet
Miami’s condo market continues to be a strong magnet for international investment, but many brokers say the line between residents and investors may now be fuzzier than ever.
Christian Kawas, director of luxury sales at Douglas Elliman, says condo buyers today fit into one of three categories that are about equally populated.
“From what I see and what I’m hearing from developers,” he says, “about a third are buying for their own use as a permanent residence, a third for a second home and a third as an investment to rent out.
“Over the past two years rental inventory had been extremely low, so this is a very sought-after alternative.”
That three-way split applies to the Greater Miami market as a whole, Mr. Kawas says; specific areas vary widely. Investors are much more prevalent in downtown, Brickell and Miami Beach, he says, “but if you go to Doral or Coral Gables or Coconut Grove there’s a much higher percentage of end-users – probably more like 60% end-users and 20% for each of the other categories.”
Investors, Mr. Kawas says, can be further broken down into several different types.
“Some,” he says, “are buying in the lower to midrange price point – under $1 million – and are looking for a return of 5% to 7% or 8%. Then there are high-end buyers who are looking for more upside and capital preservation; they are happy with a lower return.”
A third trend that is gaining momentum, Mr. Kawas says, is “a marriage between second homes and investment. For example, 60% of units at 6080 Collins Ave., which launched in August, are reserved, most of them by investors.
“There’s a very high demand for properties with very liberal rental policies that will allow them to use it for a couple of months as a vacation home and then rent it out the rest of the year.”
Edgardo Defortuna, president of Fortune International Realty, says the trend for foreign investors to live in their units part of the year is particularly strong in Miami Beach, where he estimates about 65% of condos are owned by buyers from other countries.
“They will spend two or three months here,” he says, “or the family will move here while the man of the house moves back and forth. This is happening much more, especially with investors from countries such as Venezuela and Brazil.”
As much as 85% of buyers of new product in the central business district and along the Biscayne corridor are investors, Mr. Defortuna says, and will likely put their units on the rental market.
“Doral, which is heavily populated by Venezuelans, is an exception,” he says. “Most plan to stay here if they can figure out a way to become permanent residents.”
ISG principal Craig Studnicky calculates that countywide the ratio of absentee to permanent condo owners is about 40/60.
“It was higher 10 years ago,” he says, “but many now have their green cards and live here permanently or are early retirees from the New York area.”
While Brickell buyers are almost exclusively from South or Central America, Mr. Studnicky says, “moving north to Aventura and Sunny Isles there’s a bigger mix of people from the Northeast.”
Miami sees two annual influxes of snowbirds, he says – “those from the Northeast, who are here now, and South Americans who come here to escape their winter in June, July and August. So none of these buildings is ever fully occupied.”
EWM’s David Siddons cautions against too much generalization. While he says his impression is that the downtown-Brickell market where he is active is about 80% either snowbirds or investors renting their units out, “that said, a number of buildings such as The Palace, Santa Maria or buildings on Brickell Key are not anywhere near that. They are family-friendly buildings that attract primary residents.”
Like many other brokers, Mr. Siddons says, he is seeing more clients in the past three years who initially planned to live in their unit for only a couple of months a year but “end up using it a lot more than they ever anticipated.”
Fortune International and Savills announce partnership
Global RE firm has more than 600 offices and 30,000 employees
August 13, 2015 09:45AM
London-based Savills PLC and Miami-based Fortune International Group have formed an alliance, Fortune announced on Thursday.
“The Miami real estate market is now one of the strongest and most international residential markets in the world, making Fortune’s membership of an international network all the more relevant,” Rupert Sebag-Montefiore, head of global residential for Savills, said in a statement.
Savills, which is listed on the London Stock Exchange, has more than 600 offices and 30,000 employees in Europe, Asia Pacific, Africa, North and South America and the Middle East. Savills acquired Studley in 2014, which is now Savills Studley.
Fortune International Group and its brokerage, Fortune International Realty, have about 1,000 associates in 15 offices in Florida, as well as a presence in Latin America. Eighty percent of its sales in the last two years have been to foreign nationals from 82 countries, according to a press release.
“Fortune International Group’s expertise in working with international buyers and sellers makes our alliance with Savills an exciting one,” Fortune President and CEO Edgardo Defortuna said in the release. “Our strong US and Latin American presence complements Savills’ reach into other parts of the world.”
Fortune has worked as the exclusive sales and marketing firm for projects such as Jade Signature, the Ritz-Carlton Residences Sunny Isles Beach and Hyde Resort & Residences in Hollywood.
South Florida Business Journal
Edgardo Defortuna came to the U.S. from Argentina simply to master English. But he ended up altering Miami’s skyline with his own projects and by finding foreign investors for others.
Defortuna’s Fortune International Group, which has more than 1,000 real estate agents worldwide, specializes in generating a buzz for Miami projects overseas. The brokerage also has a commercial real estate division.
Fortune International’s development arm is involved in projects with a cost of about $2.5 billion, including Jade Signature in Sunny Isles Beach, Hyde Resort & Residences in Hollywood Beach, Auberge Beach Residences & Spa in Fort Lauderdale and the Ritz-Carlton Residences Sunny Isles Beach.
Defortuna said the strengthening of the U.S. dollar against many foreign currencies has caused a slowdown of buyers in parts of Miami, but there’s still tremendous opportunity for growth in the city, and real estate there is a good value compared to other major world cities.
What was your first job? I was an electrical design engineer for my father’s company in Argentina. … I always looked forwarded to studying engineering – until I figured out this business was a lot more profitable.
How did you end up in real estate? My dad started diversifying in real estate and had some assets in different classes in his company. I helped him manage those assets, and that really increased my desire and understanding for real estate development.
Why did you move to the U.S.? I came with my sister about 30-some years ago to do an English as a second language course for three months. I thought I would go back to Argentina. I loved the lifestyle so much, they are still waiting for me to come back. The safety, the level of professionalism, and both the physical and financial security was significantly better than in Argentina, and the parameters to do business in the U.S. were more stable.
How did you start your U.S. business? I started a real estate brokerage and management firm. That led to a big real estate brokerage and marketing organization that developed into the development side of the business.
Who helped you learn the ropes? My first big development was with a joint venture, Jade Residences at Brickell with Swire Properties. Steve Owens was very helpful and open to teaching me the key components of real estate development.
Who are your favorite architects? I am somewhat biased, but I love to work with Herzog & de Meuron, the Swiss architects who are designing Jade Signature for us. I am also a fan of Carlos Ott, who designed Jade Ocean, [and] Bernardo Fort-Brescia from Arquitectonica. He always comes up with creative solutions.
Where are your favorite vacation spots? I love skiing in Colorado in the winter. The south of France – pretty much anywhere there – is beautiful in the summer. I must have been Italian in my past life because anywhere in Italy is wonderful for me.
Which areas in South Florida do you expect to have the most growth in property values over the next five years? I’m a huge fan of Sunny Isles Beach because, if you compare that on the ocean to values a few minutes south in Bal Harbour or South Beach, then it has tremendous growth appreciation potential. Edgewater and the Biscayne corridor from 21st to 36th streets is attractive for waterfront property. Fort Lauderdale is coming up and will eventually mirror the values we are getting in Miami.
How has your firm been so successful at reaching international buyers? [With] a lot of work and consistency … attending events, seminars and fairs, and being [at the forefront] for over 25 years. It’s about relationships and people trusting you to provide the right products and services. In some cases, we have offices in Argentina, Brazil, Mexico. In others, our international team of 12 to 15 brokers from Miami travel all over the world. We have people who understand their idiosyncrasies and speak their language.
Born: Buenos Aires, Argentina
Residence: Key Biscayne
Current position: President and CEO, Fortune International Group
Current boards: University of Miami, Argentine American Chamber of Commerce of Florida
Education: Electrical engineering degree, University of Argentina; M.B.A., University of Miami