The mention of “Miami” immediately evokes thoughts of beautiful beaches, warm weather, international flare, and an exciting lifestyle. The city has international first name familiarity one of the indicators used to categorize world class cities. Other commonly applied, and met by The Magic City, include a major international airport, international cultures and communities, an exciting entertainment scene, influential media outlets with an international reach, great shopping, and a strong sporting community with major sports facilities and venues.
These important characteristics, coupled with great weather, luxury hotel accommodations, strategic location between Latin America and Europe, and top international cuisine among others keep tourists, US residents, and second and vacation home buyers coming to the most international city in the US. Miami has a distinct edge over its world class counterparts… the availability of affordable real estate as compared to cities like Paris, London, Rome, New York and San Fransisco.
For European buyers, local properties are even more affordable. Not only do Europeans pay less here then they would in their own countries, they also get 25 to 50 percent discounts thanks to currency exchange rates. That’s why South Florida and its real estate market are unique and will generate demand long into the future.
Teresa King Kinney, CEO of the Realtor Association of Greater Miami and the Beaches (RAMB), recalls a panel discussion on the luxury home market a few years ago that forever changed her way of looking at Miami. The panel was comprised of the heads of famous design firms that had recently chosen Miami as one of their locations, along with other world class cities. While each panelist shared their view of the city and its unique opportunities, they also commented on why they chose Miami. They cited the unlimited design choices, styles and architecture, Miami;s energy, diversity and culture, its exciting and interesting blend of international residents and guests, the cities unique market position, vibrancy and strength, and noted how it is not reliant on any single industry, market or country for stability and success. Waterfront, water view, ocean, bay, yacht & boat access and other features and amenities were also referred to as major benefits to the market.
“One of the panelists, designer Tui Pranich, spoke of how inexpensive Miami’s waterfront real estate was,” says Kinney. “Seated in a $14 million home on a waterway in Indian Creek, we all laughed because we thought he was joking.” Then he asked his audience to think of a property they consider buying five years ago, but didn’t because they thought it was too expensive. After a thoughtful pause he said, “Don’t you wish you had bought it then?” Pranich had the groups full attention as he compared the affordability of our real estate to other international cities, many of which don’t even have waterfront property. Citing the French Riviera and other world renowned waterfront destinations, he declared “Miami has the cheapest waterfront real estate in the world.”
“Seeing Miami through the eyes of the panelists’ eyes, and hearing their perceptions, was enlightening and extremely valuable.” says Kinney. “We tend to compare ourselves to the rest of Florida and the United States, which only works geographically. For all other intents and purposes, we are that world class city known as the Capital of the Americas, and more appropriately grouped with Paris, London, Rome, Madrid and other exceptional destinations that have earned the right to be included”
Capital of the Americas Granted, by world city standards, Miami is an infant. But youth has not deterred Miami from blossoming beyond a tourist destination and “fun capital” to an important business metropolis. Tourism and a diversity of industries contribute to South Florida’s strong economy and job markets, which consistently outperform markets across the US. We are home to almost 1,200 multinational companies from more than 50 nations, employing roughly 180,000 locally.
Along with “Capital of the Americas,” Miami’s monikers include “Cruise Capital of the World” and “Cargo Gateway of the Americas.” The Port of Miami is hailed as one of the largest and most influential in the nation. Miami International Airport is among the busiest airports in the world. More than 80 airlines connect MIA to approximately 150 destinations around the globe. It is ranked first in the nation for international cargo traffic and third for international cargo traffic and third for international passenger traffic. More than 20 million international passengers deplane in Miami each year. According to the Greater Miami Convention & Visitors Bureau, 2007 was a record year for tourism in South Florida. Approximately 12 million people visited the are last year, an increase of 3.3 percent over the previous year. Miami and its surrounding cities welcome the highest percentage of non US visitors anywhere in the country. Forty five to fifty percent of our visitors were from outside the US.
The greater Miami area contributes substantially to the State of Florida’s mega economy, which is supported by strong population growth, a strong job market and international migration. South Florida is an international marketplace, attracting buyers and businesses from around the world. From mid 2004 to mid 2005, Florida added some 225,000 new jobs and ranked first in the US in job creation. It is expected to pass New York as the third most populous state by the year 2011. With 5.5 million residents, Miami and South Florida form the largest metropolitan area in the Southeastern United States, and the fifth largest urban area in the entire United States.
A Silver Lining Population drives real estate and all factors indicate that South Florida’s population will continue to increase, thanks to international and second home buyers, migrating US residents, and retiring baby boomers. According to the latest National Association of Realtors (NAR) profile of the international home buying activity, Florida is the top US destination for international buying. For purposes of the survey, an international or foreign home buyer is defined as one who principally resides outside the US. The numbers would actually be significantly higher if we were also to include foreign born residents of the US.
Despite the housing market downturn, international clients still accounted for a significant share of Realtor’s business in the US from April 2006 to April 2007, confirming that foreigners are still purchasing properties. International buyers are recognizing the benefits of buying property in South Florida, especially in the current market. In addition to a varied inventory of properties, buyers can take advantage of the lowest interest rates in 15 years and healthy rates of long term appreciation. Lower mortgage loan interest rates and recently passed tax reform legislation provide additional savings.
Many people don’t think of “leverage” when they think about real estate. But leverage is an important concept in the real estate business, building wealth and maximizing profit. Put $40,000 into stocks, if they appreciate 10 percent over time, you earn $4,000. Put a $40,000 down payment on a $200,000 residence, and when it appreciates 10 percent, you earn $20,000… a 50 percent return. Add the tax breaks, when applicable, and the percentage of return is even higher.
Baby boomers around the world are entering their peak earning years and investing in second, third and fourth homes. As a top market for second or vacation homes, Florida is a logical choice. During the next 10 years, 78 million baby boomers will retire and many are expected to purchase homes in Florida. The South Florida commercial real estate market is showing strength in several sectors even with a slowing economy. According to the latest survey by the University of Florida’s Bergstrom Center for Real Estate Studies, the Florida commercial market is thriving. Analysts say that commercial respondents continue to report stable, healthy conditions in the state. Put it all together and the local real estate market takes on a much more positive spin than most news outlets have so widely reported of late. Miami’s national and international appeal is a silver lining that cannot be underestimated.
Reprinted by RAMB’s MiamiMonthlyMagazine.com and written by Lynda Fernandez, VP of public relations for the Realtor Association of Greater Miami and the Beaches (RAMB). April 2008