After the real estate crash a few years ago, no one was willing to offer financing on big projects in the Miami area. There was simply too much risk for any financial institution to take since there was a very good chance that developers wouldn’t be able to sell all units in their new build. For the first time since that crash, a major financing deal has taken place, leading to a definite upswing in the Miami real estate market.
According to the Wall Street Journal, lenders from Birmingham, Alabama put together a financing deal for a $160 million construction loan. The deal is offered by Regions Financial to develop a new condominium in the Sunny Isles Beach area.
The new condo that will be built out of this deal is the Mansions at Acqualina. This new condominium will feature a 47 story tower that will overlook the waterfront. This is planned to be a luxury, high end condo option and the units will begin in cost at $7.75 million. These types of luxury Miami Beach condos have not been built in recent years. There simply was not enough of a demand and developers couldn’t get financing. It seems that things are turning around.
The First Big Loan
Since the Lehman Brothers collapsed a few years ago, which had a drastic impact on developers, condo owners, and investors alike, no bank has been willing to offer a loan for more than $100 million. This essentially stalled out any developments in the area.
There are a few things that this financial deal indicates:
• Banks are willing once again to take risks.
• Despite low interest rates, financial institutions are once again seeing a chance for profit.
• Experts indicate that a real estate boom is happening across the country, especially in South Florida.
Because the demand for luxury condos in Miami is on the rise, the demand for more available spaces is also going up. That means, developers are scrambling to propose new options.
Since banks seem to be once again willing to take a risk and provide high cost financing for the developments, there is a good chance that more condos will be proposed in the coming year.
In fact, in the Sunny Isles area alone, a dozen different condos have been proposed. If they do get approved, then developers have a better chance of securing the financing that they need.
It has been a few years since anyone was able to secure a large loan, and the Birmingham financial institution backing the Mansions at Acqualina may be the first to step out and take a risk, but it likely won’t be the last. The good news is that no one foresees a drop in the real estate upswing, and that means banks will be even more willing to take a risk since they know they have a better chance of profit in the long term. Permanent and visiting residents will now have the chance to choose brand new, luxury condos in the coming months.