With Florida’s real estate boom and the lack of available land, particularly oceanfront land, Florida developers are making a bold move: repurchasing old buildings. The initiative requires that all apartments in the same building be sold by their owners, a consensus that is not always reached, among other bureaucracies, which makes the process reasonably difficult. However, the buyback of old buildings is already taking place in Florida and, in place of the original construction, larger and luxurious complexes are being built.
While not new, this trend is attracting more and more attention from developers as land becomes scarce and more out-of-state residents move to South Florida in search of luxury homes. And the owners of these older apartments are considering the opportunity, as the purchase offers are made at remarkably attractive prices.
The replacement of old buildings with new ones has been going on for some time. In Sunny Isles Beach, one of the finest communities in Florida, construction company Dezer Developments has already been responsible for some new projects in this format. One of them is the Residences by Armani Casa tower, with 55 floors, a “branded” condo in partnership with the renowned Armani brand. The project, which began in 2016, came after developers occupied a site that housed the Seashore Club, a 170-unit low-rise complex they purchased.
The same developer recently announced the launch of the Bentley Residences tower, another “Branded” luxury condo in Sunny Isles Beach, which will be built on the site where the Days Hotel by Wyndham Thunderbird Beach Resort recently operated.
Old buildings with high maintenance costs are the most sought after
Not all old buildings are in the sights of construction companies. There are several buildings by the sea, well managed and with good infrastructure, which are not candidates. For this type of negotiation to work, condominiums need to have some specific characteristics, otherwise they are not attractive for builders to buy or for owners to sell.
The building condominiums that most attract the interest of developers in Florida are those built in the 70s and 80s and became obsolete. In some cases, the administration of these buildings postponed maintenance and repair work for many years, due to the high cost that these works bring. Now, these condominiums find themselves in a critical situation where homeowners will have to add considerable amounts to the condominium’s construction fund to be able to cope with the activities, which are crucial.
Champlain Towers episode sparked review of security protocols
This concern came to light with the tragic episode of the Champlain Towers condominium in Surfside, which collapsed and claimed 98 deaths in June 2021. Although it was an isolated event and another similar situation is unlikely to occur, the collapse awakened the need to review security and maintenance protocols for buildings in Florida. Local lawmakers and leaders are considering proposals to ensure that coastal condominium associations have sufficient funds to make certain repairs, which can make life very costly and, in some cases, prohibitive for homeowners.
Pressure for regular and costly maintenance will also come from insurers, which can make it difficult to cover older buildings by the sea. Likewise, banks can create obstacles to granting credit (mortgage).
All these aspects make life by the sea in Florida more expensive. Report released by Bloomberg shows that Miami will be a city for millionaires or billionaires, especially those who intend to have a lifestyle by the sea.
Old buildings will be replaced with solid anti-hurricane constructions
Miami oceanfront condos are more exposed to natural phenomena such as hurricanes, which require special care and constant repairs. New constructions in Florida for oceanfront condominiums already bring new technology, with hurricane protection and pillars that go underground for tens of meters. One example is the solid Porsche Design Tower condominium in Sunny Isles Beach, which made headlines during the threat of Hurricane Dorian in Miami. The condominium was built with a solid concrete structure and anti-impact windows that can withstand winds of more than 200 km/hour. It is a protected hurricane fortress. The news highlighted the fact that not only the owners would be protected from the strong winds, but also their luxury cars, as the building offers the option of parking the vehicle inside the apartment via a high-tech car elevator.
Opportunities for investors
Seeing this trend of lack of available waterfront land and the projected strong appreciation for apartments near the coast, investors can benefit from this one-off moment in Florida real estate.
Apartments in condominium buildings in Miami suffered a sharp devaluation during the pandemic, unlike residential homes, which remain in strong demand and low inventory. Over the past few years there has been a perception that moving from an apartment to a house would be better in times of confinement and also safer (less risk of contamination). As a result of this movement, a large number of apartments were offered for sale on the market at the same time, increasing inventory and pushing prices down. Houses, on the other hand, suffered a strong appreciation and the inventory plummeted.
It so happens that there are several buildings in Miami with low density of residents, the so-called low-density condos. Many of them by the sea or a few blocks away from the beach. Most luxury buildings in Miami offer infrastructure and leisure areas that are true clubs. The risk of contagion in these condominiums has also been considerably minimized, as they all follow strict security protocols. With the arrival of vaccines, the great attraction of the houses in front of the apartments lost its strength. At the same time, with the inventory of homes at very low historical levels, it is increasingly difficult to find the ideal home. It is natural, therefore, for the reverse movement to occur…and it is already happening.
Gradually, people are realizing value again in luxury condominiums in Miami, which are still at low prices. It’s a great opportunity for investors.
Interested in buying apartments in Miami?
AMG International Realty is a global real estate company specializing in Florida. If you want to know about investment opportunities in Miami, get in touch right now and chat with me by WhatsApp: +1 (305) 318 6968 (Heloisa Arazi).