Will Miami’s Real Estate Market Keep Growing?
Ocean Drive Magazine
CEO of Douglas Elliman’s Florida brokerage Jay Parker has a bird’s-eye view of the real estate boom in Miami.
“The demand on South Florida is more real than it has ever been,” says Douglas Elliman’s Jay Parker, here at the Herzog & de Meuron–designed 1111 Lincoln Road parking garage.
Toronto native Jay Parker went to law school in Miami and built a real estate title insurance company in Miami Beach, before Douglas Elliman lured him away in 2013 to be CEO of the real estate firm’s Florida office. Here, Parker assesses the 2015 Miami market. Good news—he thinks it’s still growing.
How do you see 2015 shaping up for real estate investments in Miami?
I don’t think it will be particularly different than 2014, although there may not be as many significant grand slams. There are not as many opportunities out there today, so it’s harder to get the kind of returns you could get coming off the recession—10 or 12 percent gains are more realistic.
How sustainable is the supply of wealthy foreigners willing to buy high-end condominiums in our city?
The flow from Europe, Latin America, and Russia, as well as New York, is steady enough to satisfy that development opportunity. The question is what’s going to happen with the rest of the stuff, and where do those buyers continue to come from? Global currency is going to be an interesting factor [on the Miami market].
Do you see the condo bubble expanding or bursting?
I don’t foresee a burst. Here we have a market that will only be built if a developer has satisfied a pre-sale requirement threshold with significant deposits in place. If everybody closes on their units, then the worst that we can expect is a decrease in value. The demand on South Florida is more real than it has ever been.
Are there still a lot of developers champing at the bit to put up new condo projects?
I have no doubt there will be many projects that won’t be built—and that’s healthy; that’s okay. I have discouraged people from even engaging in the costs associated with launching a sales program if we don’t feel that their product will sell at this point. I tell developers all the time that if you can’t sell your project, then don’t build it this cycle; wait until next cycle. Don’t go out there and try to steer people to your project by luring them with things like inflated commissions or alleged discounts, because Miami doesn’t need to be on sale.
What should investors be wary of in 2015?
People have to be sensitive to their entry point. The cost of construction is continuing to rise, and the cost of real estate is continuing to rise.
Read more at http://oceandrive.com/living/articles/will-miamis-real-estate-market-continue-to-grow-in-2015#tREWi0Ew7fHMz7L0.99
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