Miami, Fla. may be the poster child for the real-estate collapse in the Unites States, but cranes are finally again rising over the city as the new condominium boom has fueled foreign investors to park their money in the U.S. real estate again.
Several years ago the housing bubble burst and a glut of towing condo building sat empty and uninhabited. Now, condo values plunged nearly 60 percent from peak to trough, according to the Miami Association of Realtors, and financing for both buyers and developers dried up.
Now, nearly all of the vacant units are fulling up and demand is finally outdoing supply. As of this article, there are 118 condo towers proposed to be built in the Miami area, including 35 already under construction.
While the growth feels similar to fueled oversupply, developers have found that a robust international demand has created a new cash-financing model they believe is safer than simply getting bank loans that continued to drain the last housing bubble burst.
Under the newly developed payment arrangement, developers are relying more on buyers’ deposits, and less on debt. This helps to fund construction and give the developers the money they need to ensure the condos will not remain empty after they are finished.
Foreign investors are looking to pay cash and hold rentals, instead of flipping them for profit as the investors did in the last cycle. Now, 90 percent of new construction buyers are mostly Latin American, drawn to the cosmopolitan vibe and cultural offerings. They consider such investments more secure than leaving their money in less economical areas such as Argentina or Venezuela.
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