Developers In Miami Utilize The South American Strategy For New Development Projects

Nowadays, real estate developers outside the United States have managed to develop
a way to avoid having to take too many risks. For instance, real estate developers that
are being seen within South America tend to only entertain buyers that are willing to
pay a significant portion of the total price of a property in a development that has yet
to be completed.

As a result, buyers within South America tend to place around 50 percent or more of
the total price of a property by the time the development is finished which is a system
that most Americans today will not even consider, especially since most buyers in the
country are used to having at least 80 percent financing with loan from a bank.

While most people would naturally want to know what would happen in the event that
something goes wrong with the project, most people in South America simply live by
the fact that it is a system which has been considered suitable in places like Argentina,
Brazil, and even Uruguay where a new residential tower by Donald Trump is soon to
begin in the Punta del Este area. The new development will require at least 40 percent
down payment from potential buyers even before entering the constructions stages of
the project.

Looking at the recent condo boom in Miami, such a way of dealing with things can be
rather different, especially since Miami’s conditions are very different from before the
market crash occurred. In fact, banks and other lending institutions are still careful in
terms of backing up new development projects which leads to the idea of trying out a
new approach — one that has proven to be effective in South America.

Many of today’s Miami condo developers are asking buyers to place initial deposits
of 40 percent or more, with higher payment values to be made the closer the point of
completion of the project is. By then, buyers will have placed around 80 percent of
the total price of the property.

Such a strategy has made it possible for new development projects to push through as
today’s buyers are providing the finances that are necessary for funding.

Even the Related Group of Florida has started using the South American financing
strategy in three new development projects that are currently under construction in
South Florida namely Apogee Beach, MyBrickell, and Millecento. Other projects by
the Related Group such as the Beachwalk, Icon Bay, and One Ocean are now selling
despite the fact that the actual construction stages have yet to begin.

All of the new developments by the Related Group require buyers to place at least 40
percent by the time that the construction stages begin so that buyers will have already
settled around 50 percent to 80 percent of the total property price.

While there are people who remain skeptical about the South American approach to
new development projects, people are actually quite optimistic about paying under
such terms. Argentines are now the top buyers within the market while Brazilians,
Columbians, Venezuelans, Mexicans, and Peruvians are also on the list.

A significant number of Europeans are seen within the region seeking out the finest
options that are available on the Miami luxury real estate market and many of them
seem to be willing to pay cash for their high-end condo purchases.

While the South American strategy has proven to be ideal for a lot of developers who
are trying to avoid taking major risks, there seems to be a number of downsides. One
downside is the apparent motivation for developers to work on luxury condo projects
that are focused on international property buyers instead of providing middle-class
individuals with property options that they can afford.

Given the market situation, banks and other lending institutions are less likely to go
back to their usual practices which many consider to be important for the market in
order to regain its optimum levels.

Nevertheless, real estate developers seem to be happy with the strategy. Of course, it
will only take time before people se beyond the potential flow of foreign money as a
breaking point is going to be needed to achieve a balance between foreign money and
domestic money going around on the market.

 

Selda KIRKAN