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

Hotel prices in Miami Beach are often as much as twice as high as similar properties in Las Vegas, according to an analysis by Strategic Advisory Group. The study was done on behalf of the city of Miami Beach. It comes in light of a recent vote against a potential casino resort in the city, and amid growing concerns over the impact of the addition of thousands of potential hotel rooms in downtown Miami. “If you put 5,000 hotel rooms in downtown they will suck out everything surrounding them,” said Stuart Blumberg, the former head of the Greater Miami and the Beaches Hotel Association. “It will take 19 years for the current hotels to break even. They’re going to destroy the market inventory.”

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.”

After a long lull, South Florida foreclosure filings are beginning to pick up, despite another decrease last month.

The improvement is not readily apparent in the numbers, but upon closer examination, the rate of decline slowed considerably last month, according to data from RealtyTrac.

While the number of properties with foreclosure filings in South Florida fell 27 percent last month compared to November 2010, the November 2011 figure is a drastic reduction from a nearly 60 percent average drop each month since the summer, and 41 percent in October.

“I would say that’s a significant shift,” said RealtyTrac spokesperson Daren Blomquist. “We had a 14 percent nationwide year-over-year decrease in activity, and that was the lowest year-over-year decrease we’ve seen this year.”

Statewide, Florida saw a 7 percent increase in initial default notices compared to November 2010, the first time in 20 months that the state had an increase in that number.

“That is another sign to me that the lenders are ramping up and processing some of those delayed foreclosures,” Blomquist said.

The foreclosure slowdown came in large part due to the freeze imposed by banks following the robo-signing and fraudulent document scandal of a year ago. 

There were a total of 9,157 properties with some form of foreclosure filing in South Florida last month, led by 4,044 properties in Miami-Dade County.

Broward County had 3,196 properties with foreclosure filings, and there were a total of 1,917 in Palm Beach.

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

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

A 10-bedroom home at 3 Indian Creek Drive in Miami Beach has been listed for $60 million, according to Miami Today. The home, which was designed by architect Rene Gonzalez, has 30,000 square feet and a 100-foot pool. The home is located on Indian Creek Island, which has its own private police force and golf club.

To view the property please call 786-276-2451

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

Real estate brokers assembled in Miami yesterday said they expected the market’s international sales to be even stronger in 2012, following a period of purchasing, particularly from Latin America, that Related CEO Jorge Perez said “saved” Miami’s residential sector. “You have a unique opportunity for the next few years,” said Moe Velssi, the president-elect of the National Association of Realtors at the International Real Estate Conference in Coral Gables. “This will be a record-breaking year for the number of sales in the Miami market,” said Teresa King Kinney, the CEO of the Miami Association of Realtors. “There’s no other market in the United States can boast these kinds of numbers.” – Miami Herald

Source: http://therealdeal.com/miami/articles/miami-s-foreign-sales-could-be-better-in-2012

A modified Florida law making it easier to dissolve condominium associations has led to a number of condos being converted back into rental apartments, especially in the state’s suburban areas, according to the Sun Sentinel. “Most people see this as a way out because it should not have been a condo in the first place,” said Jennifer Drake, an attorney for Becker & Poliakoff in Fort Lauderdale. At least 36 condos in Broward and Palm Beach counties have been changed back into apartments in the last three years. But the movement is finding opposition. “I don’t want to live in a rental community; that’s why I bought a condo,” said William Bush, a board president in Weston. “I think people would be dead-set against it.” [Sun Sentinel]