What a difference a few years can make. In May 2012, the Miami economy, driven in large part by problems in trade, tourism and the real estate market, was slumping badly. Unemployment was close to 10%, wage growth was flat and the housing market was less than 4% above its post-recession low.
Fast forward just 24 months, and the contrast couldn’t be more stark: wages are growing again, unemployment is below the national average and the residential property market is coming back in a big way, having now recorded 27 straight months of price increases according to the S&P Case-Shiller Indices.
MIAMI SERVES AS THE HEADQUARTERS OF LATIN AMERICAN OPERATIONS FOR MORE THAN 1400 MULTINATIONAL CORPORATIONS, INCLUDING AIG, AMERICAN AIRLINES, MICROSOFT AND VISA.
What’s changed? In a word, everything. As the overall US economy has recovered, the national housing market as a whole has begun to come back as consumer confidence picks up and mortgage credit becomes more accessible. As property prices in New York, Los Angeles and San Francisco have returned to pre-crash levels and beyond, international investors from Europe and Asia have begun to look to other major US metros to find value, Miami chief among them.
Meanwhile, wealthy families in Central and South America, rattled by political and economic insecurity in their home countries, have started expatriating their assets to safe markets like the US. Due to its role as gateway between the rest of the US and South America, Miami has been far and away the primary beneficiary of this capital flight, with the city’s housing market seeing particular notable benefit.
Institutional investors have taken notice as well. Property developers have been at the forefront of this investment, with the likes of Swire, Related, Starwood and other major players in the real estate industry having all recently begun major development projects in Miami. The action is concentrated mostly in two parts of the Miami metro area: Miami Beach and the Greater Downtown area.
Miami Beach has always been the epicentre of the Miami property market, and is one of the few places outside of Manhattan, Hong Kong, Singapore and London that can credibly command prices of over $2500 per square foot. This is an unsurprising fact when you consider that Knight Frank ranked Miami seventh in its Global Cities rankings in the Wealth Report 2014. Miami was one of only two cities in North America to make the list, with the other being New York.
While Miami Beach has caught the attention of millionaires and billionaires seeking trophy properties, many experienced investors have turned their eyes to the greater downtown area. Covering Downtown Miami (CBD), Edgewater and Brickell, it is here that the allure of attractively priced new-build condos and fast growing rents have caught the attention of opportunistic investors.
Among these fast-growing residential neighbourhoods, Brickell stands out as a particularly attractive part of the Miami market for investors to focus on. In addition to being Miami’s financial district – home to more international banks than anywhere else in the US other than Manhattan – it has become an increasingly desirable place for Miamians to live as well, as evidenced by the area’s fast growing residential rents.
Developers are taking notice of this trend and rushing to meet demand, with Swire’s USD 1 billion Brickell City Centre project being the most noteworthy by far. The nine-acre project currently under construction adjacent to the Miami River in Brickell is one of the largest property development projects Miami has seen in years and will eventually deliver 5.4 million square feet of office, retail, hospitality and residential space once complete in late 2015.
Despite all the good news coming out of the market as of late, the Case-Shiller Index still has the Miami housing market approximately 35% below its pre-recession peak. It’s no wonder investors have begun to take note of the property opportunities the market now presents.