The talk of the town, here in South Florida, is all about the political and economic in Venezuela. Does it really have an impact on Venezuelan investment in the condo market?
As a reminder, Venezuela is an oil-rich Latin-American country, said to be unstable as ever these days. It originated the 21st Century Socialism under Chavez and is now undergoing dramatic decreases in oil prices – their key asset. Hence some social, political and economic downfalls such as an average 68% annual inflation and an incredibly high murder rates. On top, critics towards the government are often sent to jail.
Moreover, the U.S.-Venezuela relationship has been essential to the South Florida real estate market over the past decades. Greater Downtown Miami condo boom has long been credited to Venezualan investors, as they were responsible for buying Brickell preconstruction units back in the 1980s. They also took the blame for the bust when they could not finalize their transactions because of currency issues in Venezuela.
Nowadays, about 2/3 of all Venezuelan buyers looking to purchase Florida real estate have focused on Miami-Dade since 2014. When investing in Florida, Venezuelans — who use cash almost 90% of the time — tend to acquire a majority of condos and townhouses. Single-family houses account for 30% of the transactions. 39% of the Venezuelan buyers do it for rental or investment purposes and only 26% use their purchases as vacation homes. 22% of them intend to use the Florida real estate for both purposes. Regarding pricing, 87% of the Venezuelan purchases in Florida real estate happen below $500,000 at an average of $270,700. It is 10% less than the overall mean price for all foreign transactions in Florida.
The fact that Venezuelan’s buying power is lower than other foreigners could be linked to the issues happening in South America, leading to violent protests as seen in 2013. It is not necessarily synonym with a diminished desire to own Florida properties. In 2014, Venezuelan investors accounted for 3% of all foreign buyers in Florida, a lot of whom purchase in the Brickell area which was down from 8% in 2013. Social and political factors, altogether with the steep depreciation of the Venezuelan Bolivar currency clearly accounted for the drop in the amount of Venezuelan buyers converging towards Miami.
Now, can they hold off from having to sell their South Florida units for cash?
Comments(0)