By Sunny Isles Real Estate Expert on April 20th, 2012
When a national leader decides to make wealth a “collective” issue, it often means that investing will start to head outside of that country’s borders. This is exactly what the new “Chavez Effect” is creating in the country of Venezuela. The president is actively taking control of businesses and property, and this is forcing the wealthier Venezuelans to seek ways of protecting their financial security. The most common response is to take their money to the United States and invest in either real estate or things like real estate of all kinds.
This has already had a tremendous affect on the Miami real estate market
where some realtors are describing their clientele as around “fifty percent Venezuelan”. What is so interesting is that the buyers are not simply purchasing a single family home or a luxury oceanfront condominium in Miami. Many are buying homes and businesses and beginning to establish themselves more in the United States than their own homeland.
For instance, a recent article published by Reuters quotes one Venezuelan citizen as saying quite plainly: “You can’t invest in Venezuela these days”.
This is not all that new and surprising to many real estate professionals who already understand that a huge amount of the condominium and single home sales are made to South Americans and Canadians. This has usually had to do mostly with the enormous differences between market prices. For instance, the average cost of an upscale condominium (whether existing or in the preconstruction states) in the Miami area is currently at $400 per square foot. The same properties are selling for around $1,000 per square foot in places like Toronto or Buenos Aires. This has been one of the primary reasons that investors have headed to the area.
The fact that this is a region that is dominated by Miami luxury properties is also a reason behind the increase in sales over the past year. In Miami, there has been a 36% increase in prices since 2011. This is because of the growing difference between the supply and the demand. For example, only around 15% of the “boom era” condominiums remain unsold, and many of the preconstruction projects are selling at a rate of 50 to 90% even before the ground is broken on the construction.
When you add some unpleasant financial conditions such as those created by President Chavez, it is easy to see that the Miami real estate market is going to continue to grow and remain dynamic into the coming years.