Dec 07 2016

South Florida developers set sights on Chinese investors

As Chinese buyers surpass Canadians as the top foreign purchasers of U.S. residential real estate, luxury developers and marketers in South Florida have been eager to get in on the action.

Though Chinese buyers have purchased $27.3 billion worth of property in the United States in 2016, according to the National Association of Realtors, they account for only about 2 percent of international residential sales in Miami-Dade and Broward counties.
But with a combination of government initiatives, outreach by developers, and designs and amenities that appeal especially to Chinese buyers’ desire for luxury—along with beautiful beaches and clean air—the landscape is starting to change. According to the

National Association of Realtors, Chinese buyers represented 4 percent of residential real estate purchases in Florida in 2015, up from practically none in 2008 and only 1 percent in 2009.
Craig Studnicky, a principal with International Sales Group (ISG) in Aventura, Florida, told the Daily Business Review in August that he had recently sold six condos on Fort Lauderdale beach, with a total value of $7 million, to Chinese investors. He said he had never sold any property to a Chinese buyer before.

Mr. Studnicky singled out Echo Brickell, a curving, 60-story, glass luxury residential tower overlooking Biscayne Bay that is a collaboration of architect Carlos Ott and designer Yoo Studio. “We are living in a decade of Miami condo developers who are choosing to work with top architects from around the world to design world-class buildings with a modern touch,” he told Mansion Global. “Wealthy buyers from around the world, especially wealthy Chinese buyers, have noticed and are realizing that Miami has become an outstanding city.”

Designing buildings with an eye toward Chinese buyers

With panoramic ocean views, 9- to 14-foot ceilings, 6- to 8-foot-deep terraces with barbecue areas, iHome technology, marble floors, master suites featuring Dombracht and Grohe fixtures, Sub-Zero/Wolf appliances, built-in coffee and espresso machines, and custom Italian cabinetry, Echo Brickell is scheduled to open in September 2017 with prices ranging from $424,000 for one-bedroom units to $5.3 million for four-bedroom homes.

The distinctive look and luxury amenities found at Echo Brickell and other high-end towers being built across South Florida are particularly attractive to Chinese investors, architectural designer Carlos Zapata told Mansion Global. Mr. Zapata has worked in east Asia since the 1990s, with buildings including the Bitexco Financial Tower in Ho Chi Minh City, Vietnam—named one of the “25 great skyscrapers: icons of construction” by CNN—and Sculptura, Ardmore, a boutique building in an exclusive Singapore neighborhood.

“In Asia, it’s all about the amenities,” he said. High net worth Asians want exclusivity, Mr. Zapata said, and the architecture must be modern. While Chinese investors used to buy multiple mid-range properties to hold as investments, he noted, “now, in New York and Chicago, they are the largest group buying into high-end buildings. Because they have large families and travel with staff, staff quarters are necessary—something that developers in Miami, with its large contingent of international buyers, understand.”

Rentability is a major factor for many Chinese buyers, said Ninoska Fabbri, business development director of Asia for ISG International and owner of 5iMiami Realty, which specializes in Asian investment. As a result, she said, fully furnished and turnkey units are in great demand—particularly in new, high-quality buildings with modern, rather than traditional, interior designs and many luxury amenities.

One unique preference among Chinese buyers, she said, is for units that face southeast. Those with the numbers 8 or 9 in their address are the most desirable: Last month, she said, a Chinese investor from New York closed on 10 units in Miami’s Rise Brickell City Centre, all of them bearing the number 8.

The 43-story, 390-unit development has homes that range from $595,000 for a one-bedroom to $2.7 million for a five-bedroom penthouse. Some of the condos have service quarters; other amenities include a half-acre deck with tropical gardens, barbecue grills, an outdoor fitness area and a children’s play area; poolside beverage and cafe service; a library; a tech-savvy children’s playroom; and a spa with a blowout bar and a mani-pedi station. Features like these, Ms. Fabbri said, along with other conveniences like walkable distances to restaurants, make it easy to get a good return renting out investment units in the tower.

Another attraction, she said, is that Brickell City Centre was developed by a Hong Kong-based company called Swire, a name familiar to Chinese investors who prefer brands they already know. Mr. Zapata agreed: “The Chinese favor recognized, high-quality brands in products, cars—and buildings,” he said. “In Singapore, developers have started to brand buildings. The desire for ultra-luxury living with unique amenities now extends to properties in this country as well.”

Developer Property Markets Group has taken that concept and extended it across markets, building the strength of its brand in Miami and New York to appeal to distinctive buyer groups such as the Chinese and other Asians, said founder Kevin Maloney.

“PMG developments in New York have seen a rise of interest from Asian purchasers, a consumer demographic that is up and coming in South Florida,” he said. “In addition, a large number of New York buyers have purchased units in PMG’s South Florida developments, sharing in the same allegiance.”

Mr. Maloney added, “This new market of buyers looking to live or invest in Miami are looking for more amenities, more community-driven programming and smarter buildings, all at a value they can appreciate.” These include Echo Brickell and Muse Residences in Sunny Isles in northeast Miami-Dade County, a 68-unit residential tower opening in January 2018. Both are PMG properties.

With just two units per floor, Muse features private elevators, eight-foot Italian entry doors, wood and marble flooring, master bathrooms with Dornbracht and Duravit plumbing fixtures, smart technology, terraces with summer kitchens, master closets detailed in Italian leather, built-in weather-resistant entertainment systems, an infinity pool with beach club-style cabanas and a sky-garden penthouse. Prices range from $1.4 million for a two-bedroom unit to $18.5 million for a five-bedroom home.

Investment in residential properties

One example of community-driven development is a 65-acre, 4 million-square-foot city within a city called Metropica in Sunrise, Broward County. Metropica is envisioned as a pedestrian-and-eco-friendly environment offering a higher, healthier quality of life, based on the concepts of “new urbanism” and “human modernism,” according to its website.
The first phase, a 345-unit residential tower, is scheduled to open in the third quarter of 2018. When completed, Metropica will have more than 1,900 high-rise residential units with private balconies, high-end shopping and dining, a landscaped terrace with a salt-water pool, a beach club, tennis club, soccer fields, performing arts spaces and a park. Full completion is expected in five to seven years.

Though lower-priced—the most expensive units are three-bedrooms starting at just over a half-million dollars—Metropica is attracting interest, particularly among the Chinese, through a different avenue: a visa program that allows international investors to live and work in the United States if they invest $500,000 or more in a project and create 10 or more jobs within two years.

Of the 10,000 so-called EB-5 visas that the United States government awards every year, 85 percent go to Chinese investors.

Other local EB-5 projects include CCCC Miami Towers, a mixed-use project that is expected to pump nearly $1 billion into the economy and create some 10,000 jobs; the proposed $430 million SkyRise Miami tower featuring a restaurant, rides, viewing platforms, a nightclub and a ballroom; and a $9.5 million, 41,000-square-foot office center called the Riviera Point Business Center Doral.

Other government support has come in the form of development, communication and transportation. The City Council of North Miami has approved a plan to create a Chinatown in a busy commercial part of the city, in part to serve as a home base for hundreds of Asian students who attend Florida International University. The Greater Miami Chamber of Commerce created a Miami-China committee last year to boost contact and cooperation. And the Miami-Dade Aviation Department is in talks with Cathay Pacific Airways for nonstop service between Miami and Hong Kong.

Promoting properties in Asia

This sort of linking of East and West is key for ISG. In March, the company—which sponsors the University of Miami’s Asian student association—launched ISG Asia, a Hong Kong-based operation focused on promoting and selling properties in South Florida to high-end Chinese investors. The company also plans to open a Beijing office and last year formed a partnership with one of China’s largest real estate firms, Homelink—Lianjia, in Chinese—which has 3,500 offices in 17 cities and will showcase ISG’s properties to investors in its database.

“In addition to having the largest Mandarin-speaking sales force in South Florida, ISG Asia has built and is utilizing relationships with national associations like AREAA [Asian Real Estate Association of America] Global, the nation’s leading business-trade organization focused on facilitating international partnerships between real estate professionals in the U.S. and Asian investors overseas,” said Don Pingaro, managing broker and partner of ISG Asia.

In April, AREAA Global’s annual Global & Luxury Summit, which is held in cities around the U.S., will visit Miami for the first time. More than 1,000 brokers, developers and investors are expected to attend, according to the company, and more than 40 percent of attendees are believed to be first-time visitors.

“Interest, population and investment in South Florida from China and Asia will continue to increase,” Mr. Pingaro said.

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