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Miami's Related Group Requires Up To 100% Deposits For New Condos
Miami's Related Group Requires Up To 100% Deposits For New Condos
Published on 6/28/2013 3:40:00 PM

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In the same month that his development company paid $32 million for a condo site located a block south of the proposed Brickell CityCentre mixed-use complex in Greater Downtown Miami, highrise developer Jorge Perez of the Related Group revealed his Miami-based firm is requiring up to 100 percent buyer deposits for presale units in its proposed condo towers, according to a new report from

Perez told CNBC's Squawk Box that the Related Group - which reportedly "probably lost about $3 billion in different projects" during the last real estate boom-and-bust cycle - is limiting its risk in this newest South Florida condo boom by collecting deposits that are significantly higher than the standard 20 percent amount required during the last building boom that began in 2003. 

"The difference now is that we're much more cautious in how we take deposits," Perez told CNBC. "For all of our condominiums, people that want to buy from us have to pay between 50 percent and 100 percent during the construction period of their purchase so financing really has been done by the purchaser. We are not taking the risk that we took in the previous boom." 

Overall in South Florida, developers are proposing at least 140 new towers with more than 18,560 units in the tricounty coastal region of Miami-Dade, Broward, and Palm Beach some as of June 28, 2013, according to the Preconstruction Condo Projects Database™ compiled by the licensed Florida brokerage CVR Realty™.

Perez added another notable step being taken to limit the Related Group's risk this time around is the implementation of a presale condo strategy that specifies the process that is to be followed if buyers once again refuse to purchase their units at the contracted price upon completion of construction. 

"If there was something to happen, we do not have to give back that money to the purchaser," Perez told CNBC. "All we have is an obligation to resell their unit for them at market. We have greatly reduced the level of risk."

As the developer risk has been limited so has the pool of prospective buyers - with a heavy concentration on foreign investors. 

"Right now, the demand is extremely strong...from both Latin America and Europe," Perez said, "And starting again from the Northeastern United States as the economy in the U.S. rebounds."

In anticipation of the stronger demand, a Related Group-controlled entity paid $32 million - an average of  $533 per square foot - for a nearly 1.4-acre-vacant site located at 850 S. Miami Ave. between the Shops At Mary Brickell Village and the proposed Brickell CityCentre complex in Greater Downtown Miami, according to the Miami Daily Business Review

The development site - originally proposed to be the Premiere Towers complex during the last condo boom - was purchased at the heart of the real estate crash for $9 million, or $150 per square foot, in December 2008, according to the press report. 

The Premiere Towers site has a 2013 assessed land value of $12 million, or $200 per square foot, according to the Miami-Dade County Property Appraiser.

The Related Group has not yet determined what it plans to do with the Premiere Towers site, according to the press report.  

Overall, the Related Group is already proposing at least 13 South Florida condo towers - including six projects with nearly 1,400 units that are already under construction - with more than 2,300 units in projects, including the proposed One Ocean and Marea in the South Beach market; the SLS Hotel & Residences and an unnamed project on the former Element condo site in Greater Downtown Miami; and the ICON Palm Beach north of Downtown West Palm Beach, according to the Preconstruction Condo Projects Database™.

Additionally, the Related Group is currently constructing the 1100 Millecento ResidencesICON Bay, and MyBrickell projects in Greater Downtown Miami; the Baltus House in the Morningside area of Miami; and the Apogee Beach and Beachwalk towers in the Hollywood / Hallandale Beach market in Southeast Broward County, according to

Some six years after the South Florida real estate crash began in 2007, one new condo tower has already been completed in the tricounty region and 24 other highrises - Aventura's Bellini At Williams Island; Greater Downtown Miami's 1100 Millecento ResidencesBrickell Citycentre (two towers), BrickellHouseHabitat IIICON Bay, and MyBrickell projects; Hallandale Beach's Beachwalk; Hollywood's Apogee Beach and Costa Hollywood (two towers); Key Biscayne's Oceana (two towers); Miami's Baltus House in the Morningside area and Grove At Grand Bay (two towers) in the Coconut Grove are ; Miami Beach's Faena House Saxony and Residences At Miami Beach Edition; Palm Beach County's 4001 North Ocean project; and Sunny Isles Beach's Chateau BeachMansions At AcqualinaPorsche Design Tower, and Regalia - are under construction as the post-crash development era gains momentum, according to a report.

The push for new condo construction comes as the boom-era unit inventory is dwindling in South Florida.

Fueled by investors primarily from overseas, about 2,130 new condo units remain unsold from a supply of nearly 49,000 units created since 2003 in South Florida’s seven largest coastal markets of Greater Downtown MiamiSouth BeachSunny Isles BeachHollywood / Hallandale BeachDowntown Fort Lauderdale and the BeachBoca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island as of March 31, 2013, according to a new report.

The total number of unsold new condos does not include any of the more than 8,000 units that were purchased in bulk transactions by investment groups that plan to one day resell the units at a premium, according to the Condo Vultures® Bulk Deals Database™

A number of the newly proposed condo units are not expected to be completed until 2014 when the unsold developer inventory from South Florida's last real estate boom and bust is projected to be sold.

It is important to note there are various stages to a residential real estate transaction in South Florida.

A transaction begins when a property is made available for sale and ends when a title is conveyed from one party to another party as a result of the recording of a deed with the local government. 

As part of the process, a property typically goes under contract and into a due diligence phase by which a deal can be canceled.  

The new condo sales report is based on completed transactions where a deed is recorded and taxes paid as a result of the sale.   

Condo Vultures® LLC is a real estate consultancy and marketing company based in the 225 Midtown Building at 225 NE 34th St., Suite 209B, Downtown Miami, Florida, 33137. Condo Vultures® LLC can be reached at 800-750-0517.

Don't forget to sign up for our weekly Market Intelligence Report™ for detailed condo reports to stay informed on the latest market trends and to find out about our various Condo Vultures® Seminars. Looking for a property at a deep discount? Take a peek at the Vultures Database™ or view our Video Library. Looking for bulk projects direct from developers or lenders? Visit the Condo Vultures® Bulk Deals Database™. Our new books, the Official Condo Buyers Guide to Miami™Official Condo Buyers Guide To South Beach™Official Condo Buyers Guide to Sunny Isles Beach™Official Condo Buyers Guide to Downtown Fort Lauderdale and the Beach™Official Condo Buyers Guide to Hollywood / Hallandale Beach™Official Condo Buyers Guide to Downtown West Palm Beach™, and Official Condo Buyers Guide to Boca Raton / Deerfield Beach™, are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database™.

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