Reuters/Miami
Argentine developer Jose Luis Melo watched as Miami’s real estate market reeled from the US housing crash and thousands of the city’s condominiums sat unsold — and decided it was time to build.
It was late 2010 and Melo, who runs the Melo Group real estate company with his two sons, bought a $1.4mn parcel of land near downtown Miami.
Months later, the Melos lifted the first construction crane in the city’s post-housing bubble era, betting they could find buyers for condos in a new 17-storey tower.
“People told us ‘You guys are crazy. The market is awash in units and you are going to build?’” he said, adding that he preferred to sell his own new building. The building’s 98 condominiums sold out in just five months.
The condos were snapped up by cash-rich Latin Americans who have flocked to Miami real estate, helping to spur an unexpected rebound in a market that only three years ago stood as a poster child of America’s housing bust. The buying highlights the role investors have played in some major US cities showing strong signs of a revival after the crash.
Wealthy Latin Americans have long invested in south Florida property, but this time the resurgence in Miami is getting an extra lift from South American developers like Melo.
Increasingly developers from Argentina, Brazil, Mexico and Venezuela are getting into the act to meet demand from Latin Americans looking for a stable place to park their money and to make extra income through rentals.
“I’ve never seen them with the kind of clout they are carrying right now in construction and development,” said Peter Zalewski, principal of real estate consultancy Condo Vultures. ”
Buoyed by rising property prices and increasing sales, the real estate industry in south Florida is abuzz over more than 80 announced plans for new residential projects, and Latin American developers are involved in nearly one-third of them, according to Zalewski.
The developers are capitalising on Latin Americans’ long held view of Miami real estate as a safe haven against political and economic volatility at home.
Recent currency devaluations in Argentina, Brazil and Venezuela and fears that currencies in those countries may continue to weaken are driving the property buying, brokers say.
In 2012, Venezuelans worried about an inflation-wracked economy, soaring crime and political uncertainty at home, led all foreign buyers in Miami for a third straight year, accounting for 15% all sales. They were followed by Argentines and Brazilians.
A sharp increase in real estate prices in Latin America has also made Miami property more attractive. According to the real estate website Zillow, Miami property values are nearly 50% off their 2006 peak.
The increased presence of Latin American developers also reflects how their region has benefited from a healthy stretch of economic growth and has given them an unprecedented opportunity to look beyond their own borders to build.
“Before, we were more isolated and looking inward. Now we’ve started to think more globally,” said Eduardo Constantini, head of Consultatio, a major Argentine real estate developer and financial firm.