Developer's Contribution to Make Miami Real Estate Market more Stable

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.

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