Recent studies and surveys have shown that most millennials cannot afford to buy a home in major U.S. real estate markets, let alone a pricey condo in a luxury tower in Miami. Yet, real estate experts who participated in the Asian Real Estate Association of America 2017 Global Luxury Summit this past weekend claim a small, high net-worth segment of the coveted demographic are increasingly shopping for homes in South Florida. Karen Chau, Asia general manager for real estate tech company Investorist, told attendees at the Four Seasons Hotel in Brickell that Chinese millennials are bullish on real estate. A recent study by HSBC found that nearly 70 percent of young adults in China are already homeowners. “Many buyers in China are millennials who have been educated in the U.S. and have gone back to China to further careers but still consider U.S. real estate a desirable and sound investment,” Chau said. During a panel discussion on millennials and luxury real estate, Coldwell Banker’s The Jills sales associate Danny Hertzberg said he’s had success with young entrepreneurial buyers looking to acquire luxury properties in Miami. “They are in their mid-twenties to early thirties and come from a start-up, tech background,” Hertzberg said. “And they are expecting a very high standard from the brokers they hire.” Hertzberg said millennial clients he has worked with are proactive buyers who conduct listing searches on their own, as well as compile market data on neighborhoods where they want to buy. “They have done their due diligence on everything,” he said. “That means you have to come in with more. They want someone who can add value and not someone who just comes with a bunch of listings.” Panelist John Jones, a private mortgage banking and area sales manager for Wells Fargo, said roughly 54 percent of millennials who seek home financing are college-educated women. “Lenders have to differentiate themselves by customizing the types of products they are offering,” Jones said. “For instance, they want to know what different payment options are available. They want to know how they can maximize their home ownership.” Hertzberg added that real estate experts must have a savvy social media strategy to interact successfully with millennial buyers. “Their worlds have shifted to Instagram,” he said. “International luxury millennials may not have a Facebook account, but they certainly have Instagram, which is something everyone should put their energy into. After all, real estate is all about images and video.” This was the first year that the association, known by its acronym AREAA, hosted its annual global summit in Miami. More than 700 real estate professionals attended the three-day event. “Our goal is to provide educational opportunities to Miami’s local community that is interested in servicing the Asian American market,” said AREAA Greater Miami chapter president Jesse Ottley. “I think in the next 10 years, we will see a shift in Miami, and a big part of that will be the influence of Asian investors settling down here.” This article originally appeared in The Real Deal
Miami is a town of visionaries, from the original pioneers like Julia Tuttle and Mary Brickell to modern-day trail blazers like Tony Goldman, the urban place-maker responsible for emerging neighborhoods like New York’s SoHo, Miami Beach and the Wynwood Arts District. The “Magic City” has been erected on the dreams and determination of few. It has been built on a philosophy embodied in Goldman’s immortal words: “If you just look at what you see, you won’t go anywhere. You’ve got to look beyond what you see to be able to know you can realize the dream you imagine.” Before it was one of the most valuable destinations in the world, Miami Beach’s South of Fifth neighborhood was a rundown neighborhood. Those of us in the industry who have been around Miami real estate long enough will remember that 20 years ago, the tall glistening towers that welcome cruise passengers to our city were but a glimmer in the eye of a few forward-thinking developers that saw the potential of this area. Alongside those developers, our firm’s strategic sales and marketing efforts contributed to the transformation of this neighborhood, which runs south from Fifth Street to Government Cut. Apogee, Icon South Beach, Murano Grande, Ocean House, 321 Ocean, Portofino Tower and Yacht Club at Portofino were among the 90 percent of the waterfront buildings we represented in the South of Fifth area. In the process, we helped brand this exclusive neighborhood, now known as SoFi. It wasn’t easy, but the developers, brokers and buyers who believed in SoFi’s potential were the beneficiaries. For example, the residences at Apogee, the pinnacle of SoFi luxury living, had an average price per square foot just more than $1,000 at launch in 2004. Today, Apogee’s residences average $2,500 per square foot, with penthouses well over $4,000 per square foot. Two decades removed and two miles west across the shimmering waters of Biscayne Bay, another SoFi is emerging. East Edgewater, with its strategic waterfront location, proximity to Miami’s most in-demand zones and amazing value proposition, is the best opportunity Miami has seen since abandoned dog tracks and retirement homes called South Beach home. We find ourselves again staring down opportunity and potential. East Edgewater is immediately north of downtown, between the Venetian and Julia Tuttle Causeways, east of Biscayne Boulevard adjacent to Biscayne Bay. With the beaches to its east, Wynwood Arts District and the airport to the west, downtown Miami to the south and the Design District to the north, it sits at the crossroads of luxury retail, high-end dining and world-class arts and culture. In the 1930s, East Edgewater was home to the city’s most affluent individuals. By the 1980s, as other areas of Miami developed, the once highly regarded zone had fallen into disrepair. In the early 2000s, with the zoning changes allowing high-rises, came forward-thinking developers: Quantum on the Bay set the pace for the resurgence of this area, and today it sits as the only neighborhood in downtown Miami with waterfront that is zoned for high-rise condominium residences, presenting a rare opportunity. Miami’s major developers — Terra Group, Melo Group, Two Roads, OKO and RELATED, among others — have doubled down. When the smart people of Miami set their eyes on an area, smart money follows. Since 2011, 10 pre-construction projects have launched in East Edgewater, putting it among Miami’s fastest-growing neighborhoods. Of those, Crimson, Paraiso Bay, Icon Bay and Bay House have been delivered. Another five projects are expected to be delivered by the end of 2017, bringing 1,500 new residences to East Edgewater. As demand for the neighborhood increases, so has the level of ultra-luxury offerings. Elysee Miami (starting at $1.5 million) and Missoni Baia (starting at $2 million), which my firm represents, have launched sales in the last 12 months. 10The number of pre-construction projects that have launched in East Edgewater since 2011. neighborhoods. Buyers have flocked from all around the world: Venezuela, Argentina, Brazil, Colombia, Mexico, France, Italy and Turkey being among the top international countries of origin. Emerging Latin American markets such as Ecuador and Peru, as well as markets farther east from China, Singapore and UAE, have also begun to take interest in the area’s ultra-luxury inventory. Easy access to major transit links, spectacular waterfront views and close proximity to Miami’s in-demand zones only add to the appeal of East Edgewater’s value proposition. By far, the major motivator for buyers has been the opportunity to purchase ultra-premium luxury residences significantly below comparable premium waterfront in Miami, Miami Beach and most of the world’s leading global cities. The average per-square-foot for ultra-luxury waterfront residences in East Edgewater ranges from the low $700’s to the high $800’s, more than three-times lower than SoFi’s $2,805 average per square foot. Simply put, East Edgewater offers an unprecedented value proposition, with an outlook toward exalted appreciation. We need look no further than the thriving Wynwood Arts District to realize the power of Goldman’s words. From his singular restaurant (Joey’s) has emerged an epicenter of art and culture. This history, this promise for the future, is all around us. It was the case in SoFi, and it is the case today in East Edgewater. This article originally appeared in The Miami Herald
In this special New Year’s edition of the Cervera Newsroom Market Snapshot, we’re taking a look back at 2016’s major market movements and what to expect in 2017. This, plus everything you need to know about last week: Jan. 2-9. A YEAR IN REVIEW Early on in 2016 the markets struggled as oil prices and China’s yuan crashed. The S&P followed the same tune by hitting its low on February 11. The year progressed, and so did the markets. Both the S&P and the price per barrel rebounded and began their rise. By mid-year Brexit became a reality and the U.K. stunned the world by voting to leave the European Union. The pound plummeted 20%, the dollar surged, and the S&P fell again slightly. November brought a new President-elect and market highs. The Dow, S&P and Nasdaq all reached closing highs. They called it the “trifecta.” Something which hadn’t happened since 1999. In December, Janet Yellen and the FOMC closed the year by raising interest rates by a quarter of one percent, the first increase all year. WHAT TO EXPECT IN 2017 In a recent Fortune.com article 5 Trends that Will Shape the Housing Market in 2017, Chris Matthews wrote “If the U.S. economy is to hit escape velocity in 2017, you can expect the real estate sector to serve as rocket fuel.” Here are the five trends that Matthews believes will influence the residential real estate market in 2017, along with our perspective on the local impact to Miami’s real estate market: 1. Rising Interest Rates In December the Fed raised interest rates by .25%, only the second time that has happened since 2006. Experts are forecasting 3 to 4 more increases in 2017. Should this forecast prove accurate mortgage rates will rise, increasing the monthly cost for prospective home buyers and those looking to refinance their existing mortgage. Rates have already started to increase slightly, but will likely only increase to about 4.5% on a 30 year fixed rate loan, according to Chris Matthews. 2. More Lenient Lending Guidelines A possible bright spot on the lending front, while forecasts call for interest rates to rise, the ability to secure a mortgage may improve, says Matthews. Some think that the Federal Housing Administration may lower fees it charges first time homebuyers, a trend that began 2015. Further government-owned Fannie Mae and Freddie Mac will begin backing larger mortgages in 2017 for the first time in over 10 years, making it easier for buyers of high-end luxury homes to obtain a loan. 3. More New Homes The annual rate of new homes reached 1.163 million as of December 2016. This figure reveals an increase of approximately 5% from 2015. Home builders expect this to continue in 2017, encouraged by an increase in employee income wages, relaxed credit requirements and continued strong demand from buyers. 4. Medium-sized Cities Continue to Rise As property values increase in major cities due to the influx of new workers that move there, residential availability has greatly been effected and created upward pressure on the real estate values. As a result, buyers are increasingly considering up-and-coming cities such as Miami, which offer more affordable real estate. Some cities have seen building permits soar over the past several years as they attract younger members of the working class seeking less expensive rents and home purchase prices, says Matthews. 5. Foreign Buyers Aren't Going Away “One trend that is helping drive prices beyond the realm of affordability in places like New York and Los Angeles is an influx of foreign buyers of U.S. real estate,” writes Matthews. “This has only increased of late, fueled in particular by buyers from China who are looking for safe places to store their wealth, away from the slowing economy of the homeland, where repressive financial policies make it difficult to earn decent returns on savings.” CERVERA INSIGHT "Latin Americans will always be attracted to Miami and continue to be a primary feeder marke. More and more we are seeing interest from Europe and other countries that have been experiencing internal turmoil, including Turkey. With hundreds of direct flights to countries across the globe, Miami is a very good and accessible destination for people that are looking for a getaway – or permanently relocate – from troubled spots. Given the strength of the U.S. dollar and the direction in which U.S. mortgage rates are heading, we expect to see an increase in local and U.S. buyers of Miami real estate. That said, we believe that Chinese buyers of U.S. real estate will become increasingly prevalent in Miami. Traditional gateway markets have become oversaturated, leaving Miami poised to emerge as the single-most attractive opportunity to Chinese buyers in 2017." - Alicia Cervera Lamadrid, Managing Partner - Cervera Real Estate Stay in the know, click here to sign-up for our weekly newsletter. MARKET SNAPSHOT Week of January 2 – January 9 ECONOMY Dow Jones: 19,963.80 (+1.02%) S&P 500: 2,276.98 (+1.7%) Nasdaq: 5,521.06 (+2.56%) Stock Market Winners of 2016 The award for best performer of the year goes to chipmaker Nvidia of the S&P 500. High expectations for artificial intelligence shot the stock up an astounding 238%. The top 5 performers of the Dow in 2016, according to Jim Cramer: Caterpillar was up 36% last year, however Cramer fears that a strengthening dollar and China’s growth could hurt Caterpillar. UnitedHealth, up 35% last year. Cramer predicts President-elect Trump will call on UnitedHealth to assist in his healthcare reform, which could potentially be huge for the health insurance provider. The third was Goldman Sachs, which rallied 32%, and Cramer thinks the stock could do even better in 2017. JPMorgan up 30% and could benefit greatly from deregulation and the Fed’s expected multiple interest rate increases. Chevron soared 30% and is viewed as the most aggressive of the major oil companies since it cut back on spending and maintained its dividend. Stock Market Losers of 2016: Prior to Trump’s win, the worst performers would have been a mix of retail, healthcare and energy stocks, however the “Trump Bump” pushed each company out of the lowest position on Fortune’s 2016 list of biggest stock market losers. Instead, hospitals stocks took last place. Top 3 losers, according to Lucinda Shen in a recent “Market Intelligence” report for Fortune.com: Community Health Systems: -74.8%. The hospital operator shed $2.36 billion in market cap over the course of 2016. Hertz Global Holdings: -59%, primarily because more consumers are leaning towards ride-sharing companies like Uber and Lyft. Tenet Healthcare: -50%. The hospital operator missed earnings expectations in the past two quarters of the year. Other Market News: S&P 500 is on track for biggest recovery since the Great Recession, according to Financial Times, who believes that Donald Trump’s pledge to fire up the US economy has changed investors’ psychology. Financial stocks were among the leaders after the presidential election. Look for this trend to continue in 2017, especially if regulatory burdens decrease in the banking sector. Small cap stocks performed well after the presidential election, however look for exchange traded funds (ETF) to become a riskier play in this sector in 2017. Stay in the know, click here to sign-up for our weekly newsletter. MIAMI As of the third quarter of 2016 there were more than 14,000 units proposed in the area, and more than 6,600 under construction in Downtown Miami and Brickell. The average condo-leasing price dropped 3.2% to $2,590 a month in the third quarter of 2016, from $2,677 in the first half of the year. Average condo leasing prices have largely been increasing since 2012, when the overall monthly rent for a two bedroom unit was $2,255. Esteban Santiago, the 26-year-old military veteran charged with killing and injuring nearly a dozen travelers with a handgun at Fort Lauderdale-Hollywood International Airport, was ordered detained before trial by a federal magistrate judge on Monday. The Miami Dolphins lost 30-12 to the Pittsburgh Steelers on Sunday in the first round of the 2017 playoffs. While the loss ends their season for the year, most fans are rejoicing in the fact that these Dolphins were fun to watch in 2016 and turned what started as a disappointing season into a playoff trip. WORLD An exciting time for Euro travel lovers- economists predict Euro-Dollar parity for 2017. While parity means less expenses for US travelers to Europe, it also means a potential surge in European investment in income producing commercial real estate. Russia’s Rouble outperforms major currencies- Rising oil prices and hopes of warmer relations with west boost currency against dollar. A cease fire agreement in Syria is keeping a tenuous hold, with sporadic fighting still taking place in Mosul, the last stronghold for ISIS in the country. TRENDING Six steps to turn 2017 into a year of ongoing career success (Forbes) 2017 Golden Globes Awards Winners: The Complete List (The New York Times) Nvidia is working with Audi to get you a self-driving car by 2020 (The Verge) This $99 gadget gives your MacBook a touchscreen (The Verge) The first look at HBO’s Debbie Reynolds and Carrie Fisher documentary is bittersweet (Town and Country Magazine) Maybelline debuts its first-ever male ambassador, Manny Gutierrez (Elle) Apple sets new app store record with $3 billion in December sales (Buzzfeed) QUOTE OF THE WEEK "But as long as we remember our first principles and believe in ourselves, the future will always be ours.” Ronald Reagan # # # All the opinions expressed by Ms. Perkins in this newsletter are solely her opinions. You should not treat any opinion expressed by her as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of her opinion.
Knowledge is power. And your time is money. So, naturally, we want you to have more of each. In our new weekly series, the Cervera Newsroom team organizes everything the modern real estate professional needs to know this week: from global economies and foreign affairs to local trends and expert real estate insight backed by 47-years of experience in South Florida. We've got it here for you. November 2016 was a real "November to Remember." Donald Trump won the presidential election, Republicans took control of Senate and House, the four major averages all hit record highs, Gold saw its worst month since 2013, financials had the best month since 2011, treasury yields rallied to multi-year highs, and oil increased over 9% on the last trading day in November. December started off on a high-note as Miami's Little River was declared Zika-free and Art Basel Miami Beach 2016 drew over 75,000 attendees. Sadly, football fans of Miami's hometown team ended their week on a low note as the Baltimore Ravens snapped the Dolphins' six-game win streak. All this and more in this week's Market Snapshot, powered by the Cervera Newsroom. U.S. ECONOMY Market Snapshot: Week of November 28 – December 2 Dow Jones: 19,170.42 (+0.095) S&P 500: 2,191.95 (-0.9668) Nasdaq: 5,255.65 (+7.918) Stock Market Winners: On Wednesday OPEC agreed to its first production cut in 8 years. WTI Crude rose 9.3% during the trading day as a result. Southwestern Energy shares rose 8.9% Thursday after BMO Capital Markets announced they believe the company, which drills natural gas, is performing better than the majority of its peers. Similarly, shares of Devon Energy, an independent natural gas producer focused on onshore exploration and production, soared 13.5% on Wednesday in morning trade. Other companies such as Marathon Oil and Transocean jumped over 10.5% on the same day. Stock Market Losers: Shares of well-known dollar store, Dollar General, fell 5.5% on Thursday after surprising weak quarterly reports were announced. Starbuck’s shares fell 3% in after hours trading on Thursday after the company’s CEO, Howard Schultz, surprised consumers with the announcement he would be stepping down to become Executive Chairman and focus on the firm’s new ultra-premium retail formats. Other Market News: The yield on the 10 year US Treasury note soared to 2.44% Thursday, the highest level since 2015, which put upward pressure on residential mortgage interest rates. The US trade deficit for October showed a trade balance (deficit) of $62 billion, $3 billion more than expected and the 5th largest of the year. The Real Deal reports that while some are hoping that with the passing of Fidel Castro opportunities for U.S. investment in Cuba will increase, analysts suggest caution, especially if President-Elect Trump reverses the recent change in policy by the current administration. LOCAL Chinese buyers of Miami real estate increased 1% YOY, according to Miami Association of Realtors President Teresa Kinney. The 2016 International Homebuyers report will be released January 2017. Florida Gov. Rick Scott says the state’s Department of Health has cleared Miami’s Little River area of local Zika transmission, according to the Associated Press. Scott said in a statement last Friday that the timing is great news as visitors are pouring into Miami for the annual Art Basel festival, which features poolside parties, blocks of art fairs and outdoor red carpet events. Colombia rings in as the top foreign country searching for South Florida real estate for the 10th consecutive month, according to new data from the Miami Association of Realtors. South Florida also remains the most searched market in the US for international buyers. Keep a look out for Canada. The country placed second for the most searches for Miami property. To put this into perspective, America’s northern neighbor placed 6th in the same ranking just last year. Hoping that people from all over the world are coming for the art but staying for our stunning city, brokers and developers in Miami took full advantage of Art Basel’s opulent crowd this past week. From decadent boat lunches to helicopter rides, Miami brokers pulled out all the stops. The Miami Dolphins’ six-game winning streak came to a crashing halt on Sunday on the heels of a devastating loss to the Baltimore Ravens. The loss puts instant doubt in the minds of “Dolfans,” wrote Miami Herald’s Barry Jackson, fearing Sunday may be a sign of another Dolphins December debacle. Since 2009, the Dolphins are 13-18 in December and have had a winning record in just one of those seven years — 3-2 in 2013 — and even that year ended miserably with consecutive losses to Buffalo and the Jets, foiling a potential playoff berth. FOREIGN AFFAIRS The Italy referendum vote was held on Sunday, with a resounding “No” vote. As a result, Italian Prime Minister Matteo Renzi resigned moments later, making him the 64th Prime Minister in Europe’s third largest economy in just 70 years. The referendum question revolved around the idea of changing the current decentralized government to a more centralized approach. A yes vote was a vote for a change to centralized power and a no vote was a vote to keep the status quo. Being that the no vote prevailed, some analysts predict this increases the possibility of Italy withdrawing from the European Union sometime in the future. This could result in the increased risk of currency devaluation and the increased possibility of high net worth individuals investing in US income producing commercial properties as well as luxury residential real estate to protect themselves from a fall of the Euro. The Euro continues its decline relative to the U.S. dollar with some experts forecasting parity in 2017, which would again impact the likelihood of increased European investment in income producing commercial real estate and luxury residential real estate. Bloomberg reports increased optimism for a rise in US equities due to President-elect Trump’s policy of lowering taxes and regulations. Big banks like Goldman and JP Morgan Chase believe that Trump’s policies at large will be “pro-growth”, even while uncertainty about the specifics of these policies remains high. TRENDING How AT&T Is Challenging Net Neutrality With Its New Internet TV Service GoPro Cutting 15% of Workforce, Closes Entertainment Unit Pilot in Soccer Team Tragedy Reported Fuel emergency in Moments Before Crash QUOTE OF THE WEEK “Your imagination is your preview to life’s coming attractions.” - Albert Einstein Stay in the know. Click here to subscribe to the Cervera Newsroom weekly newsletter. All the opinions expressed by Ms. Perkins in this newsletter are solely her opinions. You should not treat any opinion expressed by her as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of her opinion.
Everything the modern real estate professional needs to know this week: from global economies and foreign affairs to local trends and expert real estate insight backed by 47-years of experience in South Florida. We've got it here for you. U.S. ECONOMY Market Snapshot: Week of November 21 – November 25 Dow Jones: 19,152.14 (+1.506%) S&P 500: 2,213.35(+1.44%) Nasdaq: 4,870.02 (+1.289%) Stock Market Winners: Deere & Company, a company that provides equipment operations and financial services, stock price soared 11% due to a fourth-quarter earnings beat. Shares of Chinese travel site Ctrip.com surged over 9% on Friday after announcing strong quarterly reports, stating transportation ticketing revenue grew 101% year-over-year. The company also experienced an analyst upgrade and acquisition news. Stock Market Losers: Eli Lilly’s announced on Wednesday that the company’s promising Alzheimer’s treatment has failed in a late stage clinical trial. As a result, Lilly’s stock plummeted approximately 12% in morning trade. This setback is also a blow to the pharmaceutical companies at large as companies developing similar drugs have also experienced negative impact. Shares of retailer, Urban Outfitters, also dropped 12% on Wednesday after disappointing sales results from all but one of its apparel brands caused a recent run-up in its stock. Two of the company’s chains, Anthropolgie and Free People, reported a 2.7% and 1.5% decrease in sales, respectively. Other Market News: The Dow Jones, S&P 500, Nasdaq, and Russell 2000 all hit all time highs this week. The Russell 2000 experienced its fifteenth consecutive winning session Friday, the highest consecutive winning steak since early 1996. The US Trade balance as reported on November 25 showed an October deficit of $62 Billion, $3 Billion more than expected. This deficit represents the fifth largest deficit of 2016. The US Dollar index at the opening of the trading day on November 25 stood at $101.47, an increase of $0.13 as compared to the close the previous Friday. The 10-year US Treasury note yield at the opening of the trading day on November 25 was 2.373%, an increase of 1.41% as compared to Friday of last week. Oil prices for WTI crude dropped to $1.63 per barrel, a decrease of over 4% as compared to Thursday’s closing price. LOCAL Mid-Market sales for Miami single-family homes continued their steady rise in October according to the MIAMI Association of REALTORS. This trend follows an increase in prices for all resale properties of the same price range. This October, “Sales for mid-market Miami single-family homes, or properties listed from $300,000 to $600,000, increased 18.9 percent in October, from 317 to 377”. Due to our high percentage of international homebuyers, cash buyers in Miami represent a total of about twice the national average. Although the percentage of cash buyers in Miami is decreasing, transactions of the kind comprised 43.3% of October closed sales. The national average rings in almost half as much, at 22%. Cervera Real Estate announced this week an exciting partnership with Stribling, who is based in New York. This strategic alliance allows Cervera and Stribling to increase their market presence and service to the South Florida and New York marketplaces. FOREIGN AFFAIRS On the residential front, interest rates spiked to approximately 4% for the first time in several years, impacting residential sales transaction volume. While transaction volume decreased, prices continue to increase. This week France held its presidential primary elections. The projected front-runner, Sarkozy, finished a surprising third, and is now out of the presidential race. Le Pen and Fillon will have a two-person run-off for the office. President-elect Donald Trump named South Carolina governor Nikki Haley as the US representative to the United Nations. TRENDING The Basel Beast: Art Basel Miami Beach's impact on the local art scene (TimeOut.com) 7 Essential Tips for Attending an Art Fair (Forbes.com) Donald Trump’s Cabinet Picks: What We’ve Learned So Far (CNN.com) Black Friday Sales Up 9% Over 2015 (ABC News) 9 Things Most Companies Are Allowed To Do Even Though They Seem Illegal (BusinessInsider.com) QUOTE OF THE WEEK “Courage is resistance to fear, mastery of fear, not absence of fear.” - Mark Twain Stay in the know, click here to sign-up for our weekly newsletter. All the opinions expressed by Ms. Perkins in this newsletter are solely her opinions. You should not treat any opinion expressed by her as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of her opinion.
Knowledge is power. And your time is money. So, naturally, we want you to have more of each. In our new weekly series, the Cervera Newsroom team organizes everything the modern real estate professional needs to know this week: from global economies and foreign affairs to local trends and expert real estate insight backed by 47-years of experience in South Florida. We've got it here for you. U.S. ECONOMY Market Snapshot: Week of November 14 – November 18 Dow Jones: 18,867.93 (+.108% ) S&P 500: 2,181.90 (+.806%) Nasdaq: 5,321.51 (+1.61%) Market Behavior Throughout Election Announcements Markets: U.S. equity markets experienced another positive week with the Dow Jones and Nasdaq both reaching intra-day all time highs. The Russell 2000 has risen 10% since the election. US Dollar: The US Dollar continued to rise over the week, closing at $101.34, an increase of 2.3% from last week. This puts the Dollar index is at its highest since 2003. Stock Market Winners: Target shares skyrocketed 6.4% on Wednesday after the discount retailer reported earning results that were better than anticipated. Nvidia Corp., the makers of 3D graphics processors and related software for the gaming market also reported earnings results that exceeded forecasts. The stock soared 6.31%, from $67.77 to $87.97. Stock Market Losers: Gap shares plunged over 15% on Friday after reporting declining sales for the seventh straight quarter. The clothing retailer also announced plans to close more stores than originally anticipated. Shares of drug maker Mallinckrodt tanked 12.02% upon claims that CEO, Mark Trudeau, commits securities fraud. Accusations also included alleged lies about the firm’s dependence on the Medicare system. H&R Block shares dipped 7% after Jim Cramer gave his take on a few caller favorite stocks. Negative comments about the company’s misconceived “valuable worth” led to a rapid sell off of the shares. Cramer’s advice? Invest in Intuit instead, as the company is “taking the world by storm”. Other Market News: Fed Chair Janet Yellen spoke to Congress Thursday, indicating an interest rate hike of 0.25% is imminent, likely during the upcoming December meeting. The 10-year US Treasury yield continued its significant rise, closing at 2.34%, its largest two-week increase since November 2001. Inflation saw a slight increase, in part as a reaction to President-elect Trump’s economic plans and possible infrastructure initiative Oil prices for WTI crude rose to $45.58, an increase of $2.17 over last week. LOCAL The Real Deal and EWM International Realty CEO, Ron Shuffield, warn readers about Miami’s biggest October slowdown for luxe home sales since 2011. Shuffield urges luxury sellers to drop prices, as, “roughly 37% of sellers have taken the hint, reducing prices by an average of 14%”. On the other hand, The Miami Herald projects positive news for South Florida’s economy, due to the fact that industrial Real Estate is thriving as new companies continue to enter our regional market. According to a new construction update published by JLL research, “Our inventory of industrial space has grown by 9 million square feet in the past three years”. These figures offer a more comprehensive measure of our local economy’s well being, in comparison to the residential sales activity indicators. WORLD President-elect Trump named several Cabinet posts, including Senator Jeff Sessions as US Attorney General; Lt.General (retired) Michael Flynn as Security Advisor and Representative Mike Pompeo as CIA Director. All three accepted the posts. TRENDING 10 Things to Know about Sen. Jeff Sessions, Donald Trump’s Pick For Attorney General Leonardo DiCaprio’s Private Island Resort Takes New Direction Chinese Investors Snapping Up Unprecedented Amount of Resi Property Overseas Here’s The Real Reason Thanksgiving Makes You Sleepy QUOTE OF THE WEEK “Never give up on a dream because of the time it will take to accomplish. The time will pass anyway.” – Earl Nightingale Stay in the know, click here to sign-up for our weekly newsletter. All the opinions expressed by Ms. Perkins in this newsletter are solely her opinions. You should not treat any opinion expressed by her as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of her opinion. # # #
Like any plant, growth of the Chinese Bamboo Tree requires nurturing – water, fertile soil, sunshine. In its first year, we see no visible signs of activity.In the second year, again, no growth above the soil. The third, the fourth, still nothing. Our patience is tested and we begin to wonder if our efforts (caring, water, etc.) will ever be rewarded. What can we learn from the famous proverb of the Chinese bamboo as Miami brokers and real estate professionals? Understanding Dynamics of Chinese Investment in U.S. Real Estate China was the source in aggregate of at least $350 billion in U.S. real estate holdings and investments by the end of 2015, according to a 2016 report by Asia Society titled Breaking Ground: Chinese Investment in U.S. Real Estate. This figure includes the direct purchase of real property and indirect investment through the purchase of agency mortgage-backed securities and provision of debt financing, among other channels. Produced by Rosen Consulting Group, Asia Society’s comprehensive report examines a broad range of direct and indirect investment to compile what it calls the most comprehensive analysis to date of Chinese capital in U.S. real estate. Among its eye-opening findings, the report projects that Chinese direct investment across existing U.S. commercial real estate assets and residential purchases, excluding new development projects, could total at least $218 billion, cumulatively, from 2016 through 2020. Beyond 2020, it also suggests Chinese investment in U.S. real estate could accelerate further. Interestingly, the report also points out that investment in markets outside the traditional U.S. gateway markets of New York, Los Angeles, San Francisco and Chicago is on the rise. An examination of the consulting group’s findings suggest that Miami is poised to become the most attractive investment opportunity among secondary markets for Chinese buyers. What interests today’s Chinese buyer? Globally diversifying their investments while seeking better yields in under priced markets is a key motivator for Chinese buyers. Aforementioned gateway markets have become over saturated, making elevated returns difficult to achieve. Simply put, Miami offers much lower prices than the traditional U.S. hot spots for Chinese buyers. For example, $1 million USD buys you 828 square feet in Miami, compared to 700 square feet in Los Angeles and 290 square feet in New York. Education, emigration, and lifestyle also ranked as high priorities for these buyers, according to a 2016 report by the National Association of Realtors. High net-worth Chinese may also view overseas real estate as a means to provide international opportunities for their children and a safe haven from political and economic uncertainty in China. Similarly, real estate investment and ownership can potentially offer an expedited path to Chinese families who want U.S. residency for work and educational opportunities. Poised for Rapid Growth Miami, with its advantageous geographic location together with its infrastructure, access to trade, technology, communications, tropical lifestyle, thriving financial center and gateway status to the Americas makes it an obvious choice for both Chinese individuals and investment groups. The one missing link? Direct flights to and from Miami and the Chinese mainland. However, many signs suggest that direct flights are in sight. The Miami Herald reported earlier this year that officials at Miami International Airport have said they hope to land a regular direct flight from Cathay Pacific or another airline within the next 24 months. Over the course of the last 18 months, executives from our brokerage firm Cervera Real Estate have participated on various trade missions to Beijing, Shanghai and other key cities, in an effort to forge ties with government and business officials and lobby direct flights. We predict the announcement of a direct flight from Guangzhou to Miami by a major Chinese airline before the third quarter of next year. The City of Miami has also made significant strides in forging a relationship with China and the Far East. Over the last two years, slow but steady progress led by forward-thinking individuals and organizations have laid the foundation for rapid growth. Among those, the Asian Real Estate Association of America established its Greater Miami chapter in September 2015. Since then it has become the fastest-growing chapter in AREAA. In another encouraging sign, Miami was selected as the host city for AREAA’s 2017 Global Luxury Summit, a three-day conference that brings together representatives from chapters around the U.S. to discuss best practices for the local and global Asian community. New distribution channels for brokers and real estate professionals looking to do business with the Far East have also opened. Investorist, an Australian-based startup described as a “global MLS,” chose Miami as the home for its first US-based operation. It is currently China’s most popular paid brokerage platform. The Miami Association of Realtors established a partnership with Chinese web portal Juwai.com, making additional resources available. Earlier this year, our firm signed a marketing agreement with HomeLink, China’s largest real estate brokerage. We worked alongside the Miami DDA and Beacon Council to host a delegation including top executives and 17 top producers. “Just look at this,” said Gene Shi, HomeLink’s president of international operations, as he gestured toward the shimmering waters of Biscayne Bay during their trip to Miami. “This is something you could never dream of, even for a millionaire in New York City. But this is a typical view for a citizen of Miami.” The Tree Begins to Sprout Finally, in its fifth year, the Chinese bamboo grew a staggering 80 feet in just six weeks. As someone who has spent years forging relations with the China market, I know first-hand that the relationship requires patience and persistence. As brokers, real estate professionals and ambassadors for the City of Miami, we must do our part to build the strong internal foundation to handle this sudden impending growth; a tremendous opportunity for our industry and community. Encourage local government to get behind lobbying for direct flights, educate yourself on the Chinese culture, support the organizations like AREAA, and embrace our new friends from the Far East. If you are interested in learning more about Asia Society's report on Chinese investment in U.S. real estate or you would like get involved with the Greater Miami Chapter of AREAA, join us tonight at Centro Rooftop Lounge from 5 to 7 p.m. for "The Art of Working with Chinese Investors." For more information on the event contact RSVP: AREAAGMiami@gmail.com Jesse Ottley is the president of Cervera Real Estate’s Development Division. and member of the Master Brokers Forum. He can be reached at email@example.com. A version of this story originally appeared in The Miami Herald.
Nearly 20 top real estate brokers from Chinese brokerage firm, HomeLink, toured several Miami luxury condo projects this weekend during a visit organized by Cervera Real Estate. The trip comes on the heels of a newly established partnership agreement between both firms, which forges the bond between South Florida's and the Far East as Asian buyer interest in Miami continues to climb. The attraction of Miami is clear to Chinese buyers. “Just look at this,” said Gene Shi, president of international operations for China’s massive Homelink brokerage, as he gestured toward Biscayne Bay, its waters shimmering out the window of the Missioni Baia sales center in Edgewater. “This is something you could never dream of, even for a millionaire in New York City. But this is a typical view for a citizen of Miami.” In addition to offering much lower prices than Manhattan and San Francisco, the traditional U.S. hot spots for Chinese buyers. Mayor Tomas Regalado, Miami Downtown Development Authority executives, Commisioner Russel, and Miami Association of Realtors CEO, Teresa Kinney supported Cervera in welcoming the delegation to the city. The tour itinerary featured visits to several ultra-luxury pre-construction condominiums exclusively represented and sold by Cervera, including: Missoni Baia, Elysee Miami, Aria on the Bay and The Ocean Conrad Resort Residences Ft. Lauderdale. Cervera's president of Development Sales, along with Vice President of Asia Buisiness Development, Frank Peng, led the company’s efforts to ink the strategic marketing partnership with Beijng-based HomeLink. With more than 60,000 agents in China, it is the largest real estate sales brokerage in the country.
In a bid to further tap markets abroad, Cervera Real Estate has hired Frank Peng as its new vice president of Asian business development. Peng is a veteran of the cruise industry, where he helped leisure giants like Royal Caribbean International and Norwegian Cruise Line expand their businesses as a corporate strategist. Most recently, he started his own firm facilitating Chinese investment with a focus on U.S. real estate. His new role at Cervera will be much the same: Peng will lean on his existing contacts to bring in business for the brokerage. He’ll also help lay the groundwork for Cervera to open a pipeline to China, making sure that a potential buyer’s cultural needs are met, Jesse Ottley, Cervera’s president for development sales told The Real Deal. The hire comes amidst economic turmoil in Asia, where a volatile stock market has brought the health of China’s economy into question. That in turn has bred fear of Chinese investment dollars drying up after two years of heavy outflow into U.S. markets like New York City. Ottley said the opposite could be true. He said the “true motivators” — security, quality education for their children and economic stability — will continue to drive Chinese buyers into the U.S. “The second there was a bump in the markets we saw a significant jump in interest,” Ottley said. “For the real buyer, this country represents tremendous stability.” In Miami, brokerages and developers had turned their attention toward China as a possible replacement for weakening South American markets — though the region has not yet seen the flood of activity that New York has. Cervera’s Peng hopes to change that. He said in a news release that he’ll work to improve Miami’s popularity among Asian buyers, enough so to rival major markets like San Francisco and New York City.
The area where locals may see fastest price relief is the downtown rental market. There are about 3,200 conventional rental units under construction downtown, with at least another 7,000 in the pipeline, according to the DDA study. Most are going up in Brickell and the central business district. The demand from young professionals who want to live near downtown restaurants, shops and bars is growing, developer Carlos Melo said. “These are people who aren’t ready to buy but who have good jobs and want to be close,” Melo said. “We really see so much room in this market because many developers have focused on condos.” In May, the Melo Group plans to open a 500-unit in the Omni area called Melody where two-bedroom apartments rent for about $2,000. The new inventory could help constrain rising rental rates.