No, it's not the oligarchs from Russia, or Warren Buffet. Nor is it any famous (or infamous) billionaires. The guys who are busy buying up Miami have had a love affair with the tropical Latino city for decades now, live a little farther south, and are known for supermodel women, super soccer stars, samba, and the biggest jungle on the planet. The people buying up Miami are scores and hoardes of Brazilians.
According to the Miami Association of Realtors, 9% of Miami residential real estate transactions in 2010 had a Brazilian buyer. Their projections for this year are 20%, more than double.
An estimated 300,000 Brazilians live in Florida, with Miami being their preferred destination either as a second or third home, or to live out their newfound American green card lives.
Last year, Brazilian buyers accounted for more than half of all the properties selling for $500,000 or more in downtown Miami, and nearly 50% of all of the million dollar properties on Miami Beach. Want to meet a rich Brazilian? There's no need to go to Urca or Barra in Rio, or Viilla Nova Conceição in São Paulo. Save the international flight. Just go to Miami.
What's bringing Brazilians to Miami? It's not the old school money laundering and cash hideaway for the rich anymore. It's middle and upper middle class Brazilians who can buy properties in a beloved U.S. for less they can buy property in easy-commute city neighborhoods in São Paulo. Miami is closer to home. The weather is nicer. There are palm trees and sandy beaches.
Brazil incomes are rising, and umemployment is at record lows, uncer 6.1%. Moreover, the strong Brazilian currency trend means that Brazilians can spend less of their own hard earned money, the real, to acquire weak dollar assets like real estate. The purchase is also a testament to Brazil's general belief that the U.S. economy always recovers over time, and that owning fixed assets like real estate makes sense even for them.
Brazilians have the money, and they are spending it in Miami. Near zero interest rates don't hurt either. In Brazil, interest rates are in the double digits.
"They are getting low interest rates of around 4% a year, which is better than they would get in Brazil to buy a house, and many are putting down large down payments, so they can bargain for lower prices with the seller," says Fernando Bergallo, a forex broker at TOV Corretora in São Paulo. Bergallo says a lot of the money buying Miami property is coming from Brazilians who can buy homes in cash.
The Florida housing market was one of the worst hit when the property bubble burst in 2008. It is also one of the worst housing markets on the East Coast, where the majority of Brazilian immigrants reside. The housing correction, coupled with the weak dollar, has led to huge pricing discounts for Brazilians. They are less leveraged and have a strong job market and a strong currency to back them up in Brazil.
According to TOV, an average 1,000 square foot apartment in upscale Miami neighborhoods have a starting price of $250,000, or around $250 per square foot. That comes out to around R$400 per square foot for the Brazilian buyers. But in an equivalent neighborhood in São Paulo, complete with nearby restaurants, night life, and good schools, properties go for around R$1,000 per square foot, or around $600. And you can't hop on a short flight to Disney World for the weekend.
"Miami is simply cheaper for Brazilians, especially when you consider the cost-benefit of a property in an American city that has all the infrastructure you can image, in a secure neighborhood and the properties themselves are often better than the structures they're getting in Brazil," Bergallo says. He facilitates Brazilians acquiring real estate overseas.
Americans might not be buying homes, but Brazilians sure are.
"I think now is a great time for anyone to buy, because whenever you see the world economy picking up those devalued properties are going to probably go up rather than go down," Bergallo says.
