The Miami Herald recently published an article describing a surge of homebuyers from Argentina, Chile, Colombia, and Mexico snapping up the majority of units at a new Miami condominium project, with a headline that asked, “Are Latin American home buyers back?” As a South Florida real estate professional who has worked with South and Latin American real estate investors for nearly five decades and experienced the ups and downs of this market across that same time span, I thought it might be useful to examine the dynamics that are compelling this recent trend. Some of the factors are the same ones we know very well, while others are fascinating and unique.
A quick history lesson: while Miami always enjoyed a steady flow of buyers and investors from Latin America before the turn of the century, most of the 2000s have been marked by an explosive boom in condo development, supercharged by wealthy foreign buyers from that region. While there was some drop-off during the “Great Recession” between 2007 and 2009, the degree of foreign homebuyer influence is staggering: between 2009 and 2017, more than 20% of Florida’s real estate buyers each year were foreign (putting Florida well ahead of California and Texas, the next two states most popular with international buyers); by 2019, that percentage had risen to about a third of all buyers.
Foreign buyers spent about $4.4 billion on South Florida real estate in 2010, and by 2018 that number had nearly doubled to $8.7 billion (between August 2017 and July 2018.) Again, while “foreign” is the general term used to track this phenomenon, the vast majority of these investors originated from South and Latin American countries.
The COVID-19 pandemic diminished foreign investment in local real estate, but that vacuum was more than filled by the rush of U.S.-based buyers eager to relocate from cities and states with higher taxes, costs of living, and more stringent regulation. (In my 49 years in real estate, I have seen many ups and downs…but nothing even close to the activity on sales and rentals over the last few months!)
As the world slowly emerges from the pandemic, it was only a matter of time before South American buyers rediscovered their fascination with South Florida. What’s motivating them to sign contracts today?
Data clearly shows how well the vaccines have reduced COVID cases, hospitalizations, and deaths here in the U.S., where they are readily available — but that same availability does not exist in our neighboring continent, which continues to be devastated by the pandemic. As the New York Times recently reported, “Frustrated with the lagging pace of vaccine campaigns at home and seeing a surplus of doses in the United States — where tens of millions of Americans have opted not to get inoculated — wealthy and middle-class Latin Americans with American tourist visas have been flocking to the United States in recent weeks to score a COVID-19 shot.”
Many of my own clients chose to start or further their investment in Miami real estate during those “vaccine visits” out of concern for another pandemic, further outbreaks, vaccine shortages or lower-quality vaccines from Russia, India, and China. The situation has improved somewhat in recent weeks, but these clients of mine have no regrets over their choice to be vaccinated or to invest in the U.S. Historically, South American buyers prefer healthcare in the U.S. over their own countries to a large degree.
Political volatility in Latin America has always been a major influence for investment in Miami real estate, and I predict the current situations in many of these countries — particularly Peru, Argentina, Venezuela, Mexico, Nicaragua, and Colombia — will drive this trend even further in the coming years. Individuals in those countries with the means to invest see worsening crime, social upheaval, economic inequality, the confiscation of private sector assets, and of course, the ravages of the pandemic on their doorsteps, and naturally look to South Florida real estate as a safe beacon to park their money and relocate their families should the need arise.
While the U.S. is experiencing societal, economic, and healthcare problems, it is still by far the best, strongest, healthiest and most stable country — and the rest of the world knows this. The challenges we face are much less acute than those encountered by Latin American countries, where too many people struggle with the problems of violence, corruption, and general disarray. By contrast, America balances “law and order” with extraordinary freedoms that we too often take for granted. Combine this stability with a Hispanic-friendly culture, a thriving economy, and a track record of real estate profitability, and you can see why South Florida will always hold special appeal to buyers from South and Latin America.
A recent discussion with one of my Argentinian clients illustrates two of the three factors I mentioned. He was in Miami to receive his vaccine, and called me about possibly selling his existing Bal Harbour condo unit and purchasing a smaller one. (The political situation in Argentina had motivated him to move to Uruguay, where he feels more secure and anticipates spending a little less time in Miami.)
With Miami enjoying great success in recruiting U.S.-based technology and finance companies to the region, it seems reasonable to expect that heightened job creation will follow, leading to waves of domestic buyers continuing to flow from places like California and New York. As interest from South American buyers resumes its “normal” pace post-COVID, it will be fascinating to see what impact these two different pools of buyers will have on South Florida’s real estate market, and the ever-maturing identity of the region.
Emilio Palomo is the past chair of the Master Brokers Forum, a network of top real estate professionals in Miami, and the owner/broker of Riteway Properties III. He can be reached at firstname.lastname@example.org.