Condominium and luxury real estate sales may slow down in Miami this year. That's due in large part to the fact that economies in Brazil, Argentina and Venezuela are collapsing. And billions in real estate purchases in Miami comes from South America. But not all real estate will be in bad shape in the coming year. Nick Nehamas of the Miami Herald wrote about real estate and other economic predictions for 2016.
This is actually looking pretty bad for Latin America. The IMF is saying that Latin America could have negative growth for the second straight year and that's the first time that this is happened since the early 1980s and that launched what economists call the lost decade in Latin America, a time of serious economic stagnation.
Will the struggling economies in Latin America have a long-term negative impact for us?
I don't think that Latin America will necessarily see this last a decade. You're already seeing some signs of economies down there coming back, and Miami isn't completely dependent on what happens down there. We also have a lot of people moving here from the Northeast and other parts of the country. And with gas and oil as cheap as they are we have a lot of visitors coming here and that's helping to prop up the tourism industry.
You pointed out in your story that a lot of the construction that we see going on downtown and really up and down the coast might take a hit, yet single-family home sales are still doing really well.
They are selling well. There's not a lot of room to build single family homes left in Miami-Dade. I think where you will see construction activity is commercial real estate. Office vacancies are low. Retail is extremely hot. We saw a block on Lincoln Road sell for $370 million; we saw a Maryland group come in for Cocoawalk in the Grove and for the shops at Sunset Place in South Miami. So you know big players are making a bet on retail in Miami.
You did a story recently on the feds cracking down on cash purchases in real estate in Miami. This in an effort to try to get after money laundering problems in Miami and New York. How does that now play a role in what's going on with real estate here in Miami?
Yeah, the federal crackdown probably came at the worst time for Miami real estate in terms of where the market is. They're really trying to crack down on people's ability to buy a condo in cash and hide their identity. They [federal investigators] want to know where this money is coming from because their fear is that it's coming from drug cartels or other organized criminal groups.
You look at downtown Miami and you see a lot of cranes that are sitting up there in the sky. What happens to some of these projects and then the projects that haven't even broken ground yet?
You know, developers and brokers say that the projects that aren't out of the ground yet, they are going to move slowly. No one wants to bring a project to market when sales are slow, so you won't see as many cranes going up in 2016.
How does that hurt employment figures, because so much of our area here, so much of our economy is construction; what happens to all those workers?
The construction industry alone accounts for more than 100,000 workers in South Florida, and then you have all the lawyers and accountants and engineers and architects who also support that industry. So I mean in Miami-Dade we did see unemployment which has fallen steadily since 2011, flatline over the last year. And that wasn't a trend that you saw in Broward and Palm Beach or Florida as a whole. Those areas were growing, so I think that you know our dependence on Latin America and in Miami-Dade specifically you're already seeing that in the labor market and that will likely continue in 2016.
How does all this news and these predictions help the locals?
That certainly helps locals and helps them compete. But at the same time there's such a lack of affordable and workforce housing in Miami-Dade that I don't think you're going to see that get to much better without a concerted effort from political and business leaders. We just saw yesterday [Wednesday] a developer bought 15 apartment buildings across South Beach for $59 million. Tthose are working- and middle-class buildings and he plans to significantly upgrade and renovate those buildings and raise rents by as much as 50 percent. So that means those people, many of whom work in the hospitality industry in South Beach, will be headed elsewhere in the near future.
