MIAMI--The ultra high wealth and wealthy foreign investor class has not slowed down on their investment portfolio's in Miami. At least not from what Keith Marks, a newly minted director at Douglas Elliman, can see.
"Pre-construction sales are at an all time high with our South American clients and we are seeing a high turnover of inventory," Marks tells GlobeSt.com. "The form of turnover we are seeing is foreign investors selling properties held for more than several years and taking advantage of the rising dollar to increase their profit margin on investment when converted back to their own currency."
As an example, he says, a property purchased several years ago in Miami would have a dollar to Brazilian real conversion value of about one dollar to 1.5 real. When sold in today's market the same conversion is approximately one dollar to 3.85 real.
"The currency gain on sales in same dollars as purchased when moved to Brasil is 256%," Marks says. "Conversely, while foreign investors are more careful in their investment purchases of Miami real estate due to the strong dollar, they understand that a purchase in dollars is a strong hedge against further devaluation of their own currency against the dollar and thus still a needed part of their investment portfolio."
As Marks sees it, this is why there is such a strong foreign market in pre-construction opportunities which provide the best entry price into a condo while only having to lock in only 30% to 50% of the monies now. His conclusion: Pre-construction provides a hedge in either direction for their foreign currency as a stronger dollar in the future makes their initial monies down more valuable and if the dollar weakens their second closing payment will have a better conversion rate.
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