Although many people were pessimistic about the amount of time it would take for the Miami real estate market to recover after the crash in 2007-2008, the housing market has proven those naysayers wrong. Many people thought that for at least 20 years the real estate market in South Florida would suffer in economic despair, and that the Magic City would slowly disappear off the global map. Many people jumped on this bandwagon because South Florida was facing an overwhelming amount of foreclosures, the hospitality industry was declining and the local job market was declining significantly.
But despite all of the struggle, South Florida, and specifically Miami, has proven to be resilient through the downturn of the market and is continuing to show unprecedented economic growth.
At the time of the real estate crash in Miami, many Latin American, specifically Brazil, and the Chinese economies were booming, and investors from those countries were looking to place their money in the United States’ market. Miami and South Florida as a whole became a foreign investor’s dream-come-true. Foreign investors came into the distressed Miami market and began buying real estate in bulk and began building. Not too long after, the South Florida real estate market was back on the rise—and way sooner than the naysayers predicted.
But, now with many of the Latin American economies in major trouble and the plummeting of the Chinese markets recently, the same pessimists are starting again with predicting the demise of the South Florida real estate market.
However, South Florida, and specifically Miami, is actually in the middle of a perfect storm which will “further fuel its rise as a global epicenter,” according to the Miami Herald. Knight Frank Wealth Report now ranks Miami in the top 10 global centers for investments. In fact, Miami ranks in 6th place on the global map for investment, which is huge! The Knight Frank Wealth Report explained that the cities in their report, which include London and New York, are “cities where the wealthy congregate, work, invest, are educated and spend their leisure time.”
South Florida has and will continue to profit from financial and political instability around the globe. When the wealthy foreigners smell trouble they look abroad for investment opportunities. And, because of the similarities in culture and the geographical proximity, wealthy Latin Americans are particularly attracted to South Florida, mainly Miami. South Florida remains a safe haven for investments when compared to the instability of their respective countries.
South Florida should see the same effects from the downturn of the Chinese markets. Even though the prices in Miami have continued to skyrocket, the prices do not compare to other major cities in the U.S. such as Los Angeles, New York City and San Francisco. Moreover, the average price per square foot for brand new construction in Miami is approximately $700 (Downtown Miami/Edgewater/Brickell). But, in New York City for example, you are looking at paying upwards of $3,000 per square foot for a new construction luxury condo. The difference in price is quite astounding, not to mention here you get year-round tropical weather, beaches and unparalleled amenities.
South Florida’s Rise in International Banking & Private Equity
When the market crashed back around 2007-2008, foreign investors poured into South Florida and particularly Miami bringing businesses and lots and lots of money. As foreign money poured into South Florida, foreign banks were provided with the perfect opportunity to strengthen their presence in South Florida. Not to mention that Brickell has now become home to many private equity firms. The mix of international banking and private equity firms has allowed Brickell to become South Florida’s sophisticated financial district, skilled to cater to foreign investors.
The New Miami
Although Miami has been known as a real estate and hospitality mecca for many years, Miami has seen extraordinary exponential growth over the past few years and will continue to prosper with the materialization of technology and venture capital groups. Miami offers a better value for real estate when compared with other major cities and has all of the accommodations to attract wealthy individuals from all around the world.
With the unprecedented economic growth continuing in Miami, the sky really is the limit. The economy and real estate market in Miami is still on the rise.