South Florida New condo sales

slump in 4th Quarter 2015

Most developers struggled to sell new condos in the Miami/Fort Lauderdale market during the fourth quarter and two projects with unimpressive sales totals were put on hold, according to a report by brokerage ISG World.


ISG World surveyed all major condos in pre-sales status in the eastern part of Miami-Dade County, plus Hollywood, Hallandale Beach and Fort Lauderdale.


It included all projects that started construction since the building boom resumed in 2011 and those that are currently taking pre-sales even if they have yet to break ground. The survey counts units as having hard contracts on them as sold even before they close, since most developers need 50 or 60 percent of units under contract before they break ground.

The Krystal Tower condo project in Miami was placed on hold.

By the end of December, 13,248 units were sold, an increase of just 302 units from the September report. That’s down from 537 new units sold during the third quarter, a number that was also considered disappointing.


“It’s very slow,” ISG Principal Craig Studnicky said. “The market is very, very quiet right now, particularly in South America because of the high dollar.”


The dollar has doubled or tripled in value compared to many South American currencies in recent years, making condos here more expensive. The Miami condo market relies heavily on South American buyers with the new 50 percent deposit model. Fort Lauderdale attracts more domestic buyers, so it hasn’t been impacted as much, he added. Yet, few domestic buyers are willing to put down 50 percent.


The latest Florida Realtors existing condo stats for December reflect that trend, with a big dive in Miami-Dade sales and a moderate dip in Broward County.


December and January are challenging months to sell to South Americans because they go on long vacations. Still, sales do not seem to getting much better until the currency situation gets more favorable for them.


The ISG World report said that 76 percent of the new condos on the market since 2011 were sold through December, the same percentage as in the previous report because some new projects launched sales. There were 4,105 new condos on the market that were unsold, which is over 13 quarters (three-plus years) of inventory at the fourth quarter’s anemic sales pace.


If that sales pace doesn’t pick up, a lot of developers could face tough decisions.
ISG World reported that Krystal Tower in downtown Miami and OceanBleau in Hollywood were both put on hold.


The 153-unit Krystal Tower was to be the first Miami project by Brazilian developer Rodolfo Ishak. It launched sales in November 2014, with an average price of $450 per square foot. It was to be located at 530 N.W. First Court, which currently has a five-story shell of a project that stalled during the recession.
In a previous interview, Ishak said he planned to start construction of Krystal Tower once pre-sales hit 50 percent.




 The Krystal Tower Project on hold now

The ISG World report from September pegged Krystal Tower at just 20 percent sold.

Roderyck Reiter, of Grand Floridian Estate Realty, said his firm is no longer the exclusive brokerage of Krystal Tower. Ishak didn’t return an email seeking comment.


The 48-unit Oceanbleau was planned at 6085 N. Ocean Drive by Maxwelle Real Estate Group.


A representative of the developer confirmed the project was placed on hold but wouldn’t say why.


The ISG World report from September listed Oceanbleau as 21 percent sold. When it launched sales in March 2015, units started at $1.6 million and ranged from 3,000 square feet to 6,000 square feet.


Studnicky said projects that have broken ground because they sold most of their units should be fine because they likely have construction funding in hand. Many of them are offering higher commissions, as much as 10 percent in some cases, to sell out their remaining units, he said.


“Most developers in Miami went from 6 percent to 7 percent. When commissions are that high it’s a buyer’s market; “If a project is mature and has its construction loan, it could drop the deposit requirements to 30 percent, but without enough pre-sales it must keep it at 50 percent for the project to work.”


The developers that haven’t broken ground and don’t have many pre-sales could have problems unless sales improve, Studnicky said. He expects more projects to be placed on hold.


Looking at the new condo projects with 50 percent of fewer pre-sales through December in the ISG World report, plus the change from September:


Auberge Beach Residences Fort Lauderdale South Tower – 10 percent of 114 units, launched sales during fourth quarter.


Four Seasons Private Residences Fort Lauderdale – 11 percent of 42 units, down from 20 percent.


32One in Fort Lauderdale – 17 percent with 23 units, launched sales during fourth quarter.


Aurora in Sunny Isles Beach – 20 percent with 61 units, launched sales during fourth quarter.


Elysee in Edgewater – 25 percent with 100 units, launched sales during fourth quarter.


Turnberry Ocean Club – 30 percent of 154 units, unchanged.


Estates at Acqualina- 30 percent of 264 units, unchanged.


Paramount Miami Worldcenter – 35 percent with 500 units, unchanged.


Brickell City Centre Tower II – Rise – 40 percent with 390 units, unchanged.


Brickell Flatiron – 45 percent with 548 units, up from 40 percent.


Aventura Park Square – 46 percent of 131 units, up from 38 percent.


AquaMar Las Olas – 50 percent of 20 units, up from 45 percent.


L’Atelier – 50 percent of 21 units, unchanged.


Louver House – 50 percent of 12 units, unchanged.


For some of these projects, the clock is ticking. Studnicky noted that all buyer contracts have deadlines when a project must begin construction and be completed.


If a developer can’t execute by that date because they haven’t generated enough sales, the buyers could demand their deposits back, he said.


Studnicky predicts there won’t be many condo ground breakings in 2016. This year will be about developers selling out the projects that already started construction and securing approvals for condos that could ramp up in 2017. If construction slows down, that could lower development costs and make it easier to build, he added.


“If the dollar was where it was a year ago, we’d be sold out,” Studnicky said.

On the bright side, some new condo projects had solid sales during the fourth quarter.


The Auberge Beach Residences Fort Lauderdale North Tower officially launched sales and reported 90 percent of its 57 units pre-sold.


Hyde Midtown’s 395 units went from 45 percent to 65 percent pre-sold.


The Zaha Hadid-designed 1000 Museum in Miami increased from 50 percent to 60 percent sold with 83 units.


The Surf Club Four Seasons Private Residences Miami Beach’s 150 units went from 70 percent to 80 percent pre-sold.


Oceana Bal Harbour’s pre-sales increased from 65 percent to 75 percent with 239 units.


Breaking down the fourth quarter new condo sales by area in the ISG report:


Brickell had 94 sales with 1,143 unsold units remaining. Since 2011, 81 percent of the new condos have sold.


Downtown Miami had a net loss of 10 units sold (impact of Krystal Towers placed on hold) with 358 unsold units. It had 62 percent of the units sold.


The Biscayne Corridor/Edgewater led the region with 119 sales and had 980 unsold units left. It had 78 percent of units sold.


The Beaches (Miami Beach, Surfside, Bal Harbour, Sunny Isles Beach, Hallandale and Hollywood) had 40 sales with 894 unsold units remaining. It had 74 percent of units sold.


Aventura had 19 sales with 184 unsold units left. It sold 67 percent of its new condos.


North Miami Beach/Key Biscayne/Coconut Grove sold 17 units with 194 units unsold. It has sold 86 percent of its condos.


Fort Lauderdale sold 23 units with 352 units remaining. It has sold 50 percent of its condos.

Studnicky said the projects with larger units that are suitable for families tend to sell better in this market.


Read in South Florida Business Journal, Jan 26, 2016


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