Things have changed quite a bit since way back in the early 1980s, when Miami Vice and The Golden Girls defined the south Florida city — meaning it was overrun with drug dealers and retirees. Thirty years later, things are considerably more diverse (and cool), and Miami has hit the radar for art, culture, entertainment, business and trade, and become a player in property investment, particularly for those with an eye to the future.
In the 2015 edition of its annual Wealth Report, Knight Frank ranked Miami sixth in its list of cities crucial to HNWIs, ahead of traditional investment hotbeds such as Sydney, San Francisco, and current darlings Tokyo and Jakarta. Its research also suggested that come 2015, Miami would only slip to seventh, indicating stability. The city also place in the top twenty for prime residential price growth, climbing 9.8 percent in 2014. Miami’s 400,000 (five million in the metro area) are witnessing a renaissance on several fronts, following post-2008 crashes that hit 70 percent.
“Based on what I’m seeing, and I’ve seen a couple of cycles, Miami has grown up. It’s offering a lot of the sophistication that was never there in the past. 2005 and 2006 were a huge lesson for Miami. There was a lot of building and when the crash came there were over 32,000 empty condo units that people couldn’t close. People were buying with 20 percent deposits and walking away,” explains Peggy Olin Fucci, CEO of OneWorld Properties. After banks like Corus, a major development lender, were rescued by the FDIC amid lengthy foreclosure proceedings Fucci was tapped to sell the stock. She spent the next few years travelling and educating investors on the value in Miami, how it changed, and eventually found Latin American buyers willing to take the risk. “Now that it’s more of a global player people are willing to pay more per square foot. And they’re buying cash, not financing, and [off-plan] with 50 percent deposits. No one is walking away from 50 percent.” Miami ticks several other investor boxes: it’s home to competitive private schools, the University of Miami just hired Harvard’s former dean and downtown Miami’s forthcoming Worldcenter will be a station stop on the planned high-speed rail link. Also? Florida has no state taxes.
Risk and Reward
While the city’s star is indeed ascending it remains something of a question mark, and South America is key to its future. “Miami has a strategy to make [it] a hub for finance, commerce and trade … The city has always been known for beaches, vacations, cruise ships and, if we’re being honest, drugs. That has changed over the last few years with government incentivising companies to set up in Miami and facilitate trade with Latin America,” says Sam Van Horebeek, director of East-West Property Advisors in Hong Kong. The expanded port is now one of few in the world that can handle large container ships, construction is up on the back of forecasts for population growth, and rumours persist about a China/Miami airline connection. “If you compare it to Hong Kong, 50, 70 years ago it was purely a port for trade, physical product in and out. Miami is the same today. Now they’re on to finance and a higher profile of people working in services demand more luxury and a higher quality of residences, dining and shopping.” Is Miami the golden child it’s being touted as? “There’s an oversupply of construction coming in Miami, compared with many other cites. However, the demand side is quite strong as well. The question is whether supply will exceed demand, meet demand, or under-deliver. That’s the question for the next five years,” notes van Horebeek.
While van Horebeek will argue Miami’s elite status he does admit it’s making progress and it has great potential. Some beg to differ. “Miami is a first-tier gateway city, it continues to accelerate in global recognition. It is the US’s second largest banking centre, and a city that continues to grow as a headquarter destination for many international companies,” states Stephen Owens, President, Swire Properties Inc., which is currently developing Brickell City Center. In addition to the port’s leading position, Miami’s airport is second only JFK in New York for passenger arrivals. Those, along with good value and strong yields are keeping the city in the spotlight. “It’s a bargain compared to other major cities. We’re much cheaper than Los Angles and San Francisco and half the price of New York, but quickly catching up. There are areas in Miami right now, on the beach, where you’re paying $3,000 per square foot,” adds Fucci.
None of this is hindering progress. Sitting on either side of the slip of Miami River that separates the two districts are Swire’s Brickell City Center, in the Brickell district, and Daniel Kodsi’s Miami Worldcenter in downtown Miami (which Fucci represents).
Brickell City Center broke ground in 2012 and unofficially kicked off the latest round of excitement. For Owens, Brickell stands out for its renowned financial district address and neighbourhood vibe. “It is the financial heart of the city and the home to visitors, tourists and professionals alike. It is one of the densest neighbourhoods in the country with an enviable walk score. It is also the city’s centre and transportation hub,” he says. “Many luxury hotels and dining and entertainment options surround Brickell. It’s in close proximity to Miami’s performing arts centre and a number of world-class museums.” The most recent residential phase to go up for sale was the Arquitectonica-designed RISE (REACH sold out last year). The 390-unit tower’s apartments started at 982 square feet and US$690,000 (HK$5.2 million).
The new kid on the block is PARAMOUNT, a 513-unit residence on nine acres of land — six of it open space and amenities. Part of the ambitious 30-acre Miami Worldcenter, the mixed-use project will also include one million square feet of retail in a podium, two hotels including a 1,400-room Marriott Hotel and convention centre, rental units and serviced apartments. PARAMOUNT’s units range from 1,294 to 2,376 square feet, and feature outdoor space, 10-foot ceilings, European kitchens and private elevators. The tower’s amenities include multiple in- and outdoor lounges, spa, fitness centre, entertainment centre, pool, soccer pitch, barbeque pit and much more. Prices begin at a rough average of US$700 per square foot (HK$5,500). Designed by Elkus Manfredi (The Peninsula Chicago) with interiors by ID & Design International, Fucci is quick to point out capital values and rental yields (currently 3 to 5 percent) have plenty of room to grow.
RISE and PARAMOUNT are just two manifestations of market confidence in Miami right now. Prices are still under 2008 peaks and banks are being more cautious, which is actually helping to stabilise the market. “Miami as a city is undergoing a great transformation. That’s not something that happens in a day, or a year. It’s five to 10 years,” finishes Van Horebeek. “It’s great for investors that are looking at medium to long-term investments.”