The pre-construction condo market in Miami showed a slight uptick in overall sales during the second quarter of 2016. As reported in the Real Deal, 77% of the 14,000+ units in the pipeline have been presold. However, some new developments are reporting to the contrary with fewer sales than expected. ISG principal, Craig Studnickey, claims, “Inventory is still getting absorbed, albeit slowly.”
A recent report published by ISG, which tracks sales of condo units in the pipeline, shows a slight loss of buyers at Elysee, Auberge Miami, and Aventura ParkSquare. Other projects such as One Thousand Museum, SurfClub Four Seasons, Turnberry Ocean Club, and Brickell Flatiron did not report a sales change from the first quarter to the second. A spokesperson for Brickell Flatiron said the project has 27 new units under contract in this quarter. That number brings the total units under contract to nearly 300 out of 540 – or 55%.
Studnickey further stated that overall sales are still dependent on buyers from Latin America and the Northeast as opposed to local investors. This has spurred some developers to offer closing deals and increased agent commissions in order to move inventory. In general, condo sales began slowing last year and continued to stagnate through first quarter of 2016.
South American investors are still dealing with a strong US dollar, and as a result are not buying as developers predicted. Boulevard 57, which had targeted Latin American buyers, recently suspended its condo sales. According to Studnickey, the move was a “by-product of high dollar and unfortunate timing.”
While Latin Americans are buying less, they are renting more. Experts predict in the near future that high rental costs will eventually lead to increased sales. Luxury units at the Apogee and Continuum in South Beach have rented for as much as $40,000 per month.
“Come September/October, we will see a big uptick in sales”, says Studnickey. The prediction is predicated on low mortgage rates and high rents. Blaming the relatively strong dollar for the market slowdown, Studnickey expects Brazilian buyers to return – if and when the Brazilian Real regains its value. As of last week, $1 is equal to 3.26 reals, an improvement from earlier this year.