For the last two years, house prices in Miami have continued to climb. Although cyclical, like the North American real estate market in general, this exceptional market looks unlikely to change course
Miami is one hundred years old this year and is still a jet-set destination. Congratulations, Miami! With its fabulous beaches, sun and streetscape improvements, it has never looked more glamorous! Of course, the subprime crisis resulted in a spate of mortgage foreclosures. But, like a good, upstanding American, the pearl of Southern Florida, quickly got back on its feet. Today, top-ranking architects compete to build the most futuristic architectural designs in the city. They’re all there, or almost: Frank Gehry set the tone in 2011 with the New World Symphony, one of the world’s most beautiful symphony halls. Swiss architects, Herzog & Demeuron built the Pérez Art Museum and Zaha Hadid extols the virtues of the condo in her One Thousand Museum Tower project. They’re all obsessed by one idea: how to lend a contemporary sculptural aesthetic to what used to be just a simple skyscraper. In a short space of time, the old Latin city has been transformed to a Mecca for sophisticated living and luxury.
An iconic city
If New York is a big apple then Miami is a fine bunch of grapes with each grape representing one of Miami’s small, discrete districts – often islands, such as Miami Beach. Amongst the most popular districts are: South Beach, an art deco picture postcard area, south of Miami Beach; and Bal Harbour, a luxury village, home to the 3,000 or so lucky few; also fashionable is Coconut Grove, in the past a favourite hippy haunt but today popular with artists; and Coral Gables with its colourful Hispanic atmosphere and condos, often in private, gated communities. In Miami, “condos,” are the norm, as opposed to “co-ops,” which are common in New York, where any prospective purchaser has to be interviewed by the co-op board before being allowed to take ownership. The most highly sought-after properties are obviously penthouses. Perched on the top of a skyscraper, they offer the most superb views. Sailing enthusiasts go crazy for waterfront houses with pontoons. Serviced building land is an extremely rare commodity. “My finest property on the market is a 6,000 m2 waterfront plot on sale for 20 million dollars,” states Stéphane Zerdoun, a negotiator with One Sotheby’s International Realty. “The plot includes a 1950s house which requires extensive renovation, involving a huge amount of work. I showed it to a family who were considering knocking it down and replacing it with a large, modern house.” There are numerous new blocks of flats, sold off-plan or recently built, such as L’Atelier, Oceana, the Ritz Carlton residences and the Murano etc. Prices for penthouses are soaring, reaching as much as 25 to 30 million dollars. Waterfront properties are also highly prized such as the one owned by singer, Billy Joel, which sold last year for 14 million dollars. Or the fabulous Jasmine villa, which belonged to Enrique Iglesias and which has been put on the market by Coldwell Banker Previews International for 25 million dollars (the owner paid 7 million euros for it in 2004.) But the prize goes to La Brisa, in Coconut Grove where a 28,000 m2 tract of waterfront land with a fully renovated 1920s house is on sale for 65 million dollars. This is the most expensive property listing in the area; yet, at the same time, a two-room pied-à-terre on Ocean Drive, the famous South Beach avenue, costs just 700,000 dollars. Market prices fluctuate between the insane and reasonable. That’s typical Miami.
A downtown revival
A recent phenomenon in the US is the transformation of city centres into residential communities, whereas previously they were given over to businesses. Hence the emergence, or rather, resurrection of the city’s central districts such as Edgewater, Brickell and, more recently, the Design District, which with its happy blend of the luxurious and fashionable could soon resemble London’s Bond Street. The construction of the Brickell City Centre, a large shopping centre – the kind that only Americans know how to build – is nearing completion. The flats, which are as luxurious as anything you’ll find in Miami Beach, are being sold for between 550,000 and 2,700,000 euros. A range of residential properties, with interior designs by Philippe Stark, are available within the slightly older Icon Brickell, which comprises three towers, starting at 500,000 dollars. “Opportunities won’t be as attractive in five years’ time. You won’t be able to find anything in this price range,” predicts Stéphane Zerdoun. “The sale season is already over,” confirms Elisabeth Gazay, associate director of the Barnes Miami office. “Prices may stabilize when it comes to your average property but they’ll continue to rise for exceptional dwellings,” she warns. Properties sell quickly. 2013 and 2014 saw some record transactions. On average, a house in Miami is on the market for 51 days and sells for 94% of its asking price. A flat takes no longer 66 days to find a future owner. Traditionally, buyers are from Latin-America, attracted by the safe haven that Miami represents. However, there are increasing numbers of Europeans (French, Italian, British etc.) There are also a fair few Canadians and Americans from Boston and New York, looking for a pied-à-terre or second, or even third, home. The co-founder of Kayak, the travel search engine, has just purchased a condo in South of Fifth, the southern tip of Miami, for 9 million dollars. This is no up-and-coming district but a tourist area where properties sell at inflated prices. However, for a North-eastern American, prices are still reasonable … at least, compared to New York!
Property outside of Miami
But what if the best potential investment, the sure-fire bet was neither in Miami Beach, nor “downtown,” but rather one hour from Miami? This is what Marc Foujols, founder of the Parisian agency and Florida office of the same name, implies. “I’m still a great fan of Palm Beach and islands, such as Jupiter Island,” he confesses. Powder-fine sand, the sun 365 days a year, houses with real character but prices that are still breathtakingly low. For example, on Jupiter Island you can buy, a charming 325 m2, Keys style, wooden house with 9 main rooms and an indoor pool with waterfall, for 550,000 euros. Or even this exclusive two-storey property with lift, CCTV, heated pool, in Palm Beach, just 15 minutes from the international airport, for 780,000 euros (8,700 euros/m2). If you’re after an investment, being outside of Miami is often an advantage. “Lots of French want to invest in the US but they’re looking for something that doesn’t exist,” laments Victor Pagès, founder of My us Investment. “And, you don’t come to Miami, a city where it’s so expensive to buy, expecting to get a return on your investment. You come here for the sun, the beach and the holiday atmosphere.” In his view, the most profitable investment strategy would be to buy a house on the outskirts, which you can rent to middle-class Americans, in towns where there’s a strong and constant rental demand, for example around Atlanta and Orlando. This is a view that is also shared by Greg Orquera, investment sector manager for the Orquera group. His preferred location is Sarasota, an American-style Cannes, on the west coast of Florida, about 60 miles from Tempa, the third most populated city in Florida. In Miami, you can only really judge if you’ve purchased wisely, in the long term. Or if you undertake a demolition/construction project on a well-placed plot of land, on the waterfront with an impressive view. This is the real-estate “coup” that tempts numerous investors, creating profit that is exempt from tax if reinvested in property. But is this still a luxury market? The key issue here relates to Miami’s future development - something that is, of course, unavoidable. Will this legendary seaside town become a millionaires’ playground, like Monaco? Or will it be a Mecca for arts by day and a party town by night? The future alone will tell. Whatever happens, Miami has lots of potential to satisfy its appetite for growth.