May 15, 2013
When Saskia Sasken devised the term “global city” to refer to urban areas vital to the world’s overall economic, cultural and political development, she was referring to cities such as London and New York. However, over 20 years later, the Columbia University sociologist declared Miami to be a remarkable example of global city growth- a notion supported by the city’s booming real estate market.
Real estate in Miami is currently flourishing at record levels. Luxury real estate prices rose by 19.5 percent last year, which is the highest in North America and the fourth highest in the world, only trailing Dubai, Bali and Jakarta. The luxury market (top 5 percent) now averages between 1300 dollars per square foot to 1440 dollars per square foot. Prices are predicted to grow even more this year, as buyers continue to enter the market and supply drops.
While domestic buyers are showing interest in the ultra-luxury properties, foreign buyers continue to make up 60 percent of Miami’s total real estate market. To drive sales and prices, developers are also associating their high-end projects with world-renowned architects. A well-known name, like Zaha Hadid at One Thousand Museum and Herzog and de Meuron at Jade Signature, can add 20 percent to the total price tag. To go along with innovative design, units are also getting bigger, as developers focus on maximum pricing instead of maximum capacity.
With a multitude of new projects in development and prices topping 3000 dollars per square foot at some of the newest buildings, questions have been raised about the market’s stability. However, due to scarcer bank financing, the majority of condo buyers are purchasing in cash with deposits of 50 to 70 percent. These new terms are leading to a stronger, less volatile real estate market.
Source: Financial Times
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