South Florida’s condo industry is reaching an almost giddy level of optimism in anticipation of the January session of the Florida legislature, when state leaders are expected to consider — and possibly adopt — language that would permit Las Vegas-style casinos in the economic struggling counties of Miami-Dade and Broward.

Real estate developers, sales agents, and units owners alike are preoccupied with visions of how casinos could provide further stimulus for the improving — but still wobbling — South Florida condo market that crashed in 2007 under the weight of an oversupply of new projects.

Consider that since the second quarter of 2011, when Malaysian-based Genting Group purchased the Miami Herald headquarters and surrounding land for a possible casino, at least 16 new condo towers with more than 3,500 new units have been proposed in Miami-Dade and Broward counties.

The new condo towers are being proposed despite more than 3,700 new units near the coast remaining unsold in Miami-Dade and Broward counties as of Sept. 30.

At the current sales pace, the new condos could be sold out by 2013, which does not factor in bulk buyers who are looking to resell units acquired during the scariest times of the South Florida real estate crash.

It is not to say all of the newly proposed projects — three of which have already begun construction — will be cancelled if the casino legislation fails next month, but it is curious to see how many projects have been announced since the Genting Group announced its plans for a 10-million-square-foot complex in downtown Miami.

Part of the South Florida optimism is rooted in a sudden surge in condo transactions in 2011 by cash buyers from abroad with strong foreign currencies who have been picking up units in bunches.

All the while qualified domestic users with healthy down payments have for the most part failed to acquire their own condo units due, in part, to lender apprehension about providing financing for South Florida condos.

Under the proposed casino legislation, three licenses — two in Miami-Dade and one in Broward — would be available to chosen groups that commit to spend at least $2 billion for new development, which should spur jobs and future tax revenue.

In recent months, representatives from what seems like every major casino operator in the world -—Caesars Entertainment Corp. to Las Vegas Sands Corp., Wynn Resorts Ltd. to MGM Resorts International — have reportedly visited South Florida to explore the prospects of pursuing one of the potential gambling licenses.

The optimism brewing for the prospect of casinos has many in the real estate industry hoping that the possible approval of gambling in Miami-Dade and Broward counties could jumpstart South Florida’s condo market, which has suffered financial pain and hardship since the peak in 2006.

The bullishness, however, may be overly optimistic for most existing South Florida condo projects where association bylaws regulate the period of time that units can be rented out annually.

Much like in the Las Vegas condo market, only those condo units that can be rented out by the day or week are likely to realize any direct boost in leasing activity, which in turn could translate into stronger pricing rather than the emergence of casinos.

For the majority of South Florida condo projects, leasing is limited to three-, six-, or 12-month increments annually. As a result, any boost in pricing would likely occur as part of an overall improvement in the South Florida market.

Condo-hotels, however, are the best positioned to directly benefit from a surge in visitors to South Florida.
Think of condo-hotel units as a partnership of sorts between individual owners and the property’s flag operator.

Some of the best-known South Florida condo-hotels include the newly opened St. Regis Bal Harbour Resort, the W South Beach in Miami Beach, the Q Club Resort & Residences in Fort Lauderdale, and the ICON Brickell Viceroy Hotel in Downtown Miami.

Many owners of condo-hotel units opt to include their properties into the flag operator’s inventory in hopes their units will be rented when visitors make a reservation or walk into a property seeking accommodations. Typically, a flag operator will split the overnight fee with the condo-hotel unit owner.

The condo-hotel owners are responsible for the unit’s property taxes, monthly maintenance fees, daily cleaning fees and the cost of maintaining the interior and furniture of the units based on the guidelines established by the flag operator.

For many investors, the condo-hotel concept allows buyers to purchase a unit that is entrusted to the flag operator to rent out and manage on a quarterly or annual basis. Any proceeds owed to the owners are typically used to cover the unit’s monthly expenses including the maintenance fee and property taxes.

Despite the convenience, many investors consider condo-hotel units to be unpredictable. Tourism trends, natural disasters and changes in flag operators can play a key factor in the project’s success.

Still, condo-hotels have enjoyed a resurgence in popularity in Miami-Dade and Broward counties even prior to the South Florida casino discussion.

In the first 11 months of 2011, buyers have acquired an average of 32 transactions per month at a median price of $292 per square foot in Miami-Dade and Broward counties, according to the Miami Association of Realtors.

In previous years, buyers purchased an average of 17 units per month at a median price of $277 per square foot in 2010 and an average of nine units per month at a median price of $291 per square foot in 2009.

As of Dec. 18, 2011, there are 375 condo-hotel units on the resale market in Miami-Dade and Broward counties at a median price of more than $450 per square foot.

An additional 70 condo-hotel units are under contract waiting to transact. The median asking price for the pending deals is $276 per square foot, according to the data.

As the Florida legislature prepares to decide the fate of full-fledged gambling in South Florida, it is essential for the real estate industry to control its enthusiasm and closer examine what direct impact Las Vegas-style casinos could realistically have on the region’s volatile condominium market.

Read more here: http://www.miamiherald.com/2011/12/25/2559817_p2/casinos-could-be-jackpot-for-condo.html#storylink=cpy

Source: http://www.miamiherald.com/2011/12/25/2559817/casinos-could-be-jackpot-for-condo.html#storylink=cpy

Miami-Dade County public schools has more than 10 acres of coveted real estate near the Miami Herald site where Genting Group hopes to build a casino and resort. But according to the Miami Herald, just because a municipality owns the land, doesn’t mean developers should expect a bargain.

“Be ready to pay the fair market value,” Superintendent Alberto Carvalho said of the real estate, specifying that air rights would be included in the price.

The Herald said several groups are interested in the property, including the Genting Group, but Carvalho said the county is in no rush to sell.

“Do we need to have as much space as we have there? No, I don’t,” Carvalho said. “At the same time, we ought to be careful because this is an asset that once you discard of it, it’s gone forever.”

The Wall Street Journal’s Craig Karmin describes what he called a “very unusual move,” by Morgan Stanley in cutting a deal to return $700 million to investors in one of its real estate funds, in the video above. The Journal outlines the options for the investment fund, which has a total of $4.7 billion to spend and a June deadline to invest in commercial real estate. Karmin said it could spell the end of private equity real estate investment at Morgan Stanley, a “last man standing” in commercial real estate investment among huge banks, as other players have sold off their business or announced they are contemplating doing so in recent months.

The Port of Miami is considering spending several hundred million dollars to upgrade cruise terminals, according to Miami Today, to accommodate the growing number of passengers expected to flood the area in the coming years.

The port drew 4.1 million passengers, making it the busiest one in the world, and officials expect that number to rise to 5.9 million by 2035. The industry generates about $60 million per annum for Miami-Dade county.

In hopes of maintaining its leadership position, officials want to expand the size of terminals because the industry has trended towards larger ships. The latest vessels by Carnival Corp, Royal Caribbean Cruise Lines and Norwegian Cruise Line are as long as 1,300 feet

A German bank is the target of a RICO lawsuit by the owner of the Casa Casuarina, the former Versace mansion, alleging that the bank schemed to commit a series of fraudulent actions. The bank, WestLB, holds the mortgage on the property. “WestLB took signature pages and slapped them on a loan document that was never agreed to by the parties, and pretended like this was a finalized loan document when it wasn’t,” said Adam Steinberg, a lawyer representing Casa Casuarina. “And there was a post-closing agreement that it executed and it says the parties will sit down and agree to a finalized loan document … and they never did.” The property is now the Villa by Barton G.

U.S. Realty Advisors acquired the ground lease interest on Marriott Harbor Beach Resort & Spa for $48.6 million, according to the South Florida Business Journal.

The 16.5-acre oceanfront parcel is located at 3030 Holiday Drive in Fort Lauderdale and contains the 15-story, 650-room hotel. The hotel is controlled by Host Hotels and Resorts, which has more than 93 years remaining on the leased fee interest. The ground lease previously belonged to Northwestern Mutual which tapped Holliday Fenoglio Fowler to market the property.

The hotel has direct beach access, three restaurants, a 22,000-square-foot spa and a 100,000-square-foot function space.

Pending home sales rose strongly nationwide in October, increasing by 9.2 percent year-over-year, according to the October pending home sales report from the National Association of Realtors, released today.

The Pending Home Sales Index, which measures signed real estate contracts for existing single-family homes, condominium and co-op units, rose to 93.3 in October from 84.5 in September. In October 2010, the index was 85.5.

The Pending Home Sales Index in the South surged 8.6 percent to 99.5 in October and was 9.7 percent above October 2010′s index. An index of 100 equals contract activity from 2001.

“Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years,” said Lawrence Yun, chief economist at NAR.

Yun also indicated that record low default rates and a decline in inventory due to less building after the recession hit could be factors driving the optimistic numbers.

Yun was also cautious. “Although contract signings are up, not all contracts lead to closings,” he said. Many potential buyers make mistakes with their credit while applying for mortgages and are not approved. Tighter regulations for mortgages surely contribute. – Guelda Voien

Source: http://therealdeal.com/miami/articles/us-pending-home-sales-rise-sharply-according-to-the-national-association-of-realtors

Home prices in the tri-county area fell 0.7 percent in September compared to August, and 4 percent compared to the same period in 2010, according to the Standard & Poor’s/Case-Shiller Home Price Index, released yesterday. “The plunging collapse of prices seen in 2007-2009 seems to be behind us,” said David Blitzer, chairman of S&P’s index committee, in a statement. “Any chance for a sustained recovery will probably need a stronger economy.”

Source: http://therealdeal.com/miami/articles/south-florida-home-prices-fall-slightly

Las Vegas casino mogul Steve Wynn said he supported a gambling resort at the site of the Miami Beach Convention Center — not as part of a teardown, but an expansion. “I think Miami Beach is the best destination resort in America,” he said. The neighborhood around the convention center has smaller buildings than, for example, downtown Miami or Collins Avenue, but it’s possible a potential gaming resort could go in the area near the Jackie Gleason theater and the New World Center. Wynn is among those interested in bringing gaming to Miami, following the high-profile plans of Malaysian firm Genting. Wynn reportedly checked out the Miami Worldcenter last month.

Source: http://therealdeal.com/miami/articles/steve-wynn-backs-casino-at-miami-beach-convention-center

The sales of single-family homes and condominiums in Miami-Dade County rose by 51 percent in the third quarter, according to a report from the Miami Association of Realtors. It was the 13th consecutive quarter of increasing sales in Miami. The average sales price of single-family homes also rose, jumping 19 percent, and the average sales price of condos jumped by 21 percent. “Strong demand from international buyers is fueling robust sales activity in Miami despite low consumer confidence and high unemployment,” said Jack Levine, chairman of the board of the Miami Association of Realtors. “Local sales are expected to set a record this year that should exceed the height of the boom in 2005.” Total housing inventory in Miami-Dade County fell 38 percent from the same period in 2010, with a 65 percent total drop since August 2008.  — Alexander Britell

Source: http://therealdeal.com/miami/articles/miami-residential-sales-jump-51-percent-in-third-quarter-report