Strong dollar, rising prices kills condo craze in the US; sales take a hit

MIAMI: The sales office for condominiums at Miami's Brickell City Centre attracted more than 100 visitors daily last year, with prospective buyers crowding in and snapping selfies beside a scale model of the $1-billion project. Now, the flow of people has trickled to about a quarter of what it once was.
“Buyers are asking really good questions" instead of rushing into deals, said Stephen Owens, president of the US unit of Hong Kong-based Swire Properties, the developer of the nineacre (3.6-hectare) condo, hotel, office and shopping complex. “Two years ago, it was, Where can I sign?"

Downtown Miami's luxury-condo boom fuelled by buyers from Latin America and Europe willing to pay half the purchase price up front is becoming a casualty of the year-long climb in the US dollar.

Diminished purchasing power and rising prices are holding back the overseas investors that make up the bulk of sales at new towers, cooling a frenzied market. In response, developers are delaying projects, lowering down-payment requirements and turning their focus to Americans.

“We've seen a very strong shift in the last year in the dollar it has literally pushed whole countries out of the marketplace," said Kevin Maloney , founder and principal of Property Markets Group, which is developing Echo Brickell, a 57-story luxury tower that will have a shark tank in the lobby .

“We look around as real estate guys and say , Jeez, who is our buyer?" he said. “Now you are going to allocate more of your dollars to domestic US."

ONE TOWER

Developers have broken ground on more than 7,600 new condo units since 2011, when construction resumed after the last crash, according to a report scheduled for release next week by the Miami Downtown Development Authority. After starting 16 major downtown towers in 2014, builders began work this year on just one.

Sales of new condos slowed and prices flattened in the first quarter, the report showed. More than 3,000 condo units planned for construction are at risk of delay , said Anthony Graziano, senior managing director at Integra Realty Resources, which prepared the report.