Investment in florida property flies to eight-year high

Photo: Fifth World Art

CBRE sold 172 multifamily units for commercial investors in South Florida between January and June 2014, totalling $515 million - the best result for the first half of a year in eight years. The CBRE Multifamily Group attributes the growth in sales to the state's expanding population, which is fuelling demand for multifamily homes.

The Florida Bureau of Economic and Business Research forecasts a climb of 29 per cent in South Florida's population in the next 26 years, the equivalent of 2.4 million people.

"Investors recognize the strong market fundamentals for apartment buildings which has contributed to the uptick in sale activity," Calum Weaver, First Vice President of CBRE, tells World Property Channel.

"The Miami Beach multifamily market continues to be the most sought after commercial real estate in South Florida," he adds.

Indeed, the Group recently closed its 30th transaction in the area within the past few years, also completing its most expensive sale ever: an 113-unit portfolio of eight properties for $22.15 million.

Florida's residential real estate market is enjoying growth too, with the Florida Realtors' latest report revealing rising median prices, listings and inventory.

Median prices continue to climb, although the pace has slowed somewhat: statewide median price for single-family homes jumped 22 per cent from the second quarter of 2012 to $180,000, with townhome-condos recording a 29 per cent leap across the same period to $142,000.

The median sales price for single-family existing homes rose 5.3 per cent from the same time a year ago, The statewide median price for townhouse-condo properties during the second quarter was up 10.1 per cent over the year-ago figure

"Florida’s housing market continued its steady course during the second quarter of 2014," says 2014 Florida Realtors President Sherri Meadows, CEO and team leader at Keller Williams, who highlights the promising conditions in the local economy.

"As of June, the state’s unemployment rate is 6.2 per cent. More jobs are being created, which is good news for Florida’s economy and a strong housing market."

Closed sales of townhouse-condo units dipped 3.4 per cent compared to 2Q 2013, although this partly reflects the 59.8 per cent decline in short sales for condo-townhouse properties.

Indeed, overall sales jumped 7.3 per cent in the second quarter of 2014 yearon-year,

"The second quarter numbers show that Florida’s real estate market is settling in," explains Florida Realtors Chief Economist Dr. John Tuccillo. "While prices throughout the state tend to be up, sales are mixed with single family sales growing, and condos and townhouses declining. There are a lot of reasons for this, but the major factors are the reduced role of bulk investors, along with the difficulties faced by households with essentially flat incomes and thus limited access to mortgage credit. This market is sustainable, but either or both of these roadblocks must be removed if it’s to take off again."

While bulk investors are playing less of a role in the residential market, though, leaving the way for the market to recovery naturally, the commercial, multiifamily market has never had it better, says CBRE.

"Undoubtedly, the South Florida multifamily market has the sails set high with a strong wind at its back," adds Meadows. "We anticipate fundamentals to continue to remain strong. South Florida is clearly a hot market among buyers — international buyers in particular."

Indeed more than half of CBRE's Florida sales in the last year have been to foreign investors.