MIAMI (Reuters) - Argentine developer Jose Luis Melo watched as Miami’s real estate market reeled from the U.S. housing crash and thousands of the city’s condominiums sat unsold -- and decided it was time to build.
It was late 2010 and Melo, who runs the Melo Group real estate company with his two sons, bought a $1.4 million parcel of land near downtown Miami.
Months later, the Melos lifted the first construction crane in the city’s post-housing bubble era, betting they could find buyers for condos in a new 17-story tower.
“People told us ‘You guys are crazy. The market is awash in units and you are going to build?'” he said, adding that he preferred to sell his own new building. The building’s 98 condominiums sold out in just five months.
The condos were snapped up by cash-rich Latin Americans who have flocked to Miami real estate, helping to spur an unexpected rebound in a market that only three years ago stood as a poster child of America’s housing bust. The buying highlights the role investors have played in some major U.S. cities showing strong signs of a revival after the crash.
Wealthy Latin Americans have long invested in south Florida property, but this time the resurgence in Miami is getting an extra lift from South American developers like Melo.
Increasingly developers from Argentina, Brazil, Mexico and Venezuela are getting into the act to meet demand from Latin Americans looking for a stable place to park their money and to make extra income through rentals.
“I’ve never seen them with the kind of clout they are carrying right now in construction and development,” said Peter Zalewski, principal of real estate consultancy Condo Vultures. “It really is a coming of age period.”
Buoyed by rising property prices and increasing sales, the real estate industry in South Florida is abuzz over more than 80 announced plans for new residential projects, and Latin American developers are involved in nearly one-third of them, according to Zalewski.
The developers are capitalizing on Latin Americans’ long held view of Miami real estate as a safe haven against political and economic volatility at home. The Latin-flavored city, where Spanish is widely spoken, is a popular shopping destination and vacation playground.
Recent currency devaluations in Argentina, Brazil and Venezuela and fears that currencies in those countries may continue to weaken are driving the property buying, brokers say.
In 2012, Venezuelans worried about an inflation-wracked economy, soaring crime and political uncertainty at home, led all foreign buyers in Miami for a third straight year, accounting for 15 percent all sales. They were followed by Argentines and Brazilians.
A sharp increase in real estate prices in Latin America has also made Miami property more attractive. According to the real estate website Zillow, Miami property values are nearly 50 percent off their 2006 peak.
The increased presence of Latin American developers also reflects how their region has benefited from a healthy stretch of economic growth and has given them an unprecedented opportunity to look beyond their own borders to build.
“Before, we were more isolated and looking inward. Now we’ve started to think more globally,” said Eduardo Constantini, head of Consultatio, a major Argentine real estate developer and financial firm.
Like many other developers, Consultatio saw opportunity in Miami’s housing downturn and took advantage of a sharp drop in prices to pick up one of two sites it is now developing.
The group paid $80 million in 2009 for a waterfront site in Key Biscayne, one of Miami’s most exclusive areas, where construction is well underway on a luxury, 154-unit condominium twin-tower with prices that start at more than a $1 million.
Consultatio bought another piece of prime beachfront property last year for $220 million in Miami Beach’s tony Bal Harbour neighborhood in one of south Florida’s biggest Miami land sale deals in 2012.
Other companies, lured by fire-sale prices in Miami’s slump, seized on opportunities in commercial real estate.
Mexican developer Agave Holdings, which is affiliated with tequila producer Jose Cuervo, started looking at Miami during the U.S. downturn after deciding it wanted to diversify its real estate holdings outside of Mexico.
“After the housing crisis, there was a great opportunity to find good prices,” said Jose Antonio Perez, managing director for Agave Holdings.
The company purchased an office building in 2009 that once belonged to the Exxon Mobil Corporation in Miami’s affluent Coral Gables neighborhood. It then invested more than $150 million to renovate the property, called 396 Alhambra, which today is home to offices for HBO Latin America and spirits company Diageo.
But it is the residential market where many Latin American developers have focused their attention as interest from international buyers, particularly South Americans, has helped sales and prices recover.
Overall, U.S. real estate has benefited from an increase in buying from foreign investors, who have focused heavily on the New York and Miami markets.
In a recent report from Christie’s International Real Estate, Miami was listed as eighth among the top 10 luxury real estate markets in the world, with London, New York and the French Riviera in the top three spots.
Several of the new Latin American projects rank among Miami’s most ambitious.
Argentine developer and hotelier Alan Faena is leading a $550 million project in Miami Beach to build what is being billed as the Faena District.
Faena helped transform the Puerto Madero riverfront neighborhood in his native Buenos Aires, converting a series of rundown buildings, including an old mill, into a luxury enclave of fine dining anchored by a five-star hotel, an arts center and apartment buildings.
Backed by Russian-born billionaire investor Len Blavatnik, Faena’s Miami beachfront development involves renovating an iconic Miami Beach hotel, the Saxony, and building a cultural center and theater.
Faena, whose Puerto Madero project was built with a vision of Latin luxury, hopes the Miami project will help establish him as an international property developer.
Miami is “our entryway to the North - it was a natural location for the first phase of the international expansion of Faena,” he said.
With Latin American and non-U.S. buyers now representing a majority of real estate sales in Miami, many developers have unveiled a more cash-focused financing strategy familiar to foreign buyers.
That has given an edge to some Latin American developers over domestic builders.
“It’s Latin American developers building for Latin American investors,” said Zalewski.
It means buyers must pay up as much as 80 percent of the cost of a property before it is completed - something unheard of for most Americans buying a home.
Melo, whose company is now based in Miami, claimed credit for being the first developer to implement the pay model, saying when Miami’s market imploded and financing tightened, he thought back to his days as a developer in Argentina.
“I thought why not sell them the way I used to back home,” he said. “Now everybody is copying me.”
Editing by David Adams and Leslie Gevirtz