There are about 100 condo projects in the pipeline in the
greater Miami area and right this moment 21 are under construction.
Different
developers have been reinventing themselves and been changing their strategies
to be more versatile and flexible. They don’t want to put all their eggs in the
same type of building.
Related
group is one of the leaders of this shift that many developers are implementing
in their new business strategy. The changes come at various leves, for
example, Related group is not focusing exclusively on Brickell and downtown
Miami but instead the company's projects are sprinkled around the Miami area,
targeting different buying groups. Related's roster of on-going projects
includes towers in Aventura, Hallendale Beach and Hollywood Beach. And they are
launching a new project every four months according to President Rosso.
With bank financing for condo developments scarce, Related is
largely funding developments with pre-sales to buyers. Like many
developers, Related has changed its payment structure, requiring buyers to pay
up to 50 percent of the total cost in the early stages. In the past buyers
typically paid 20 percent upfront and the balance on handover. "It
is a very, very safe way of developing," Rosso said. "Get a bigger
deposit down and they [buyers] don't walk away." The low deposits famously
encouraged flippers and speculators, who looked to quickly resell the project,
in many cases before it was built. When the market turned, many buyers walked
away from their deposits rather than purchase a unit that had already lost a
large chunk of its value. Today Related typically won't start
construction on a project until 80 percent of the project has been sold, Mr.
Rosso said.
This is not definitely the same Related that made
international headlines when the condominium market in Miami collapsed. Related
struggled to repay lenders on several ambitious projects, including the $1
billion Icon Brickell, which completed in 2008. They are showing they have
learned some lessons, done their homework and acting smarter to make our local
real estate market much more secure and firm.
Off
plan sales have dried up in many parts of the world, where buyers are reluctant
to commit money to a project until there is proof it will be built. But South
Florida continues to be bolstered by a steady stream of customers from Latin
America, who typically account for 50 percent or more of a condominium
project's sales. Related has collected more than $300 million in deposits, Mr.
Rosso said. "It's a big sign of
confidence in Miami," he said.
* Some notes taken from Miami Association of Realtors.
