Off-Plan Miami Condo With A Sea View? That Will Be $34 Million Sir

Marina Palms Maimi Beach CondoI’m sure you don’t need me to tell you that Miami is the USA’s hotspot when it comes to 24-hour nightlife, city life – and property. Who wouldn’t spend millions on property in this city?

Miami is one of those cities that has a natural advantage. It has its beach, its close associations with Latin America and, at the moment, its historically low property prices.

Just like having a workout in the gym and going through that pain of trying to build muscle or fitness, it looks like those cities that felt the pain most in the US housing crisis are the ones that are coming back strongly.

In 2012, property prices in Phoenix rose 23%, in San Francisco 14.4%, nearly 13% and in Miami and Los Angeles, 10%. What wouldn’t you give for those sorts of numbers back home?

In a city that is only just in its recovery phase. It made interesting reading to find that a new record was set this month. A wealthy investor paid a cool $34 million for a Miami beach apartment and whoever it was, actually bought it off-plan.http://www.businessinsider.com/miamis-priciest-condo-sells-for-34m-2013-3

Now either this particular investor loves Miami and sees it as a lifestyle investment, or they see it as a serious investment in in a property market going places.

When it comes to the latter, there are signs that the spectacular growth in property prices is underpinned by some sound economic numbers.

Miami’s development officials have been working hard to attract companies into Miami from the US and South America. There are signs their hard work is paying off with unemployment down to 9.1% in the city in December from the 13.3% it was in August 2010.

South American property developers are also moving in to build homes for the growing number of people from their own countries who see Miami property as a sound investment and something of a status symbol.

Wealthy Brazilians and Venezuelans have been part of the reason why Miami property prices have recovered to the point where the city once again offers a real return on investment.

Looking at the bigger picture, I watched with interest news on Bloomberg TV this morning. They were discussing the potential impact of low mortgage rates currently at 3.5%.

These low rates mean that buyers can afford a home that is 34% more expensive than in 2008 and if they stay this low home prices could potentially rocket within the next two years.

One thing that may slow things is that the local population would have been forced to take on additional credit when times were tough post – 2008 and this will still be working its way through.

Many people will still find it hard to raise finance for property even at these low rates. However this is not necessarily bad news for investors in Miami property when you consider that these people also need a place to rent.

The ongoing difficulties in raising finance to buy property means that cash investors are able to benefit not only from capital growth but also rapidly rising rents. The median rental rate for a residential property in South Florida increased by 4 per cent year-on-year basis to $1.22 per square foot in 2012 compared $1.17 per square foot in 2011.

This brings the best of both worlds in Miami, property that pays for itself with high tenant demand. So even if you don’t have $34 million to spend, Miami offers some of the best real estate return in the world this year.

If you had $34 million to spend where would you invest?

Kind Regards

Loxley McKenzie
Managing Director

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