The evolution of the city of Miami into an international center for business, arts, education and recreation, along with a significant public investment in cultural facilities and transportation infrastructure over the last two decades has put South Florida on a path to attract a more steady infusion of individual and corporate dollars from around the world over the long term.
The Art Basel event that has been running for a decade is getting credit for bringing together the world's top artist and collectors every December as a linchpin to introduce the world's elite to invest in Miami luxury real estate.
It doesn't necessarily mean that prices will not go down in the future in South Florida luxury real estate, but rather that the luxury market would be backstopped by wealthy investors with the capital to deter many of the dramatic swings of the past. The hope is that the infusion of international capital, particularly for real estate, will protect Miami against future luxury real estate volatility.
For those of us who went through the 2007 bust, our reaction is to simply ignore such talk by developers who are just looking for new business. The long history of South Florida's luxury real estate booms and busts goes way back to the 1920s. In spite of the shrinking luxury residential inventory in as of late, some argue the tri-county region of Miami-Dade, Broward and Palm Beach, which is burdened by an unknown amount of shadow distressed real estate, is still living through the bust that began in 2007. It can be pointed out that the recovery is coming very quickly, more quickly that anticipated as it was believed it would take over a decade to recover. This is happening in a difficult mortgage market too. Most of the oversupply of new condo units has been bought by buyers for the most part from overseas with strong currencies. They have acquired about 95 percent of the nearly 49,000 new luxury real estate condos created in South Florida's seven largest coastal markets from Greater Downtown Miami to Downtown Fort Lauderdale to Downtown West Palm Beach.
Now that the condo inventory from the boom-era on pace to sell out in early 2014, developers are starting to propose more than 120 condo towers with nearly 16,400 units. Some of these buildings are to be designed by world-class architects in Miami's coastal region.
Almost 40 percent of the planned condo units in Miami are being proposed by developers who come from outside of South Florida. As it unfolds, it will become clearer how many of these proposed towers will eventually be built. At this point, the majority of the new condo towers are being bought by Latin American investors in search of value and wealth preservation.