Just off the coast of Miami Beach, on the ultra-exclusive Fisher Island, there is one crane on one construction site. It is the last lot available for development and an unlikely bet on luxury real estate at a time when the housing market appears to be in freefall.
Jorge Perez, also known as the “condo king of Miami,” and his related group are behind the 10-story, 50-unit project that has a retail price of $1.2 billion. They paid $122.6 million for the land, at the top of the market.
Units start at $15 million. The project includes a $90 million, 15,000-square-foot penthouse and a $55 million ground-floor villa with a half-acre backyard. The building will also have its own slip for megayachts. Sales just started last month.
“Almost 30% of the units are spoken for,” Perez said. “Contracts have gone out for over $300 million, and we haven’t really done any marketing. Still, should the market slow down a bit, we’re in a lucky position.”
Buyers must put down a non-refundable 50% deposit for sale before construction.
Perez said the first buyers are coming from Brazil, New York, Canada, Mexico and Israel. He said he is seeing far more domestic interest than in the past, as Miami has traditionally been a haven for foreign investors. It seems to reverberate throughout the city.
The view from South Florida
“Miami is an internationally focused market — 80-90% international — but that turned around during the pandemic,” said Danny Hertzberg, a luxury real estate broker with Coldwell Banker and Jills Zeder Group. “We will continue to have this domestic demand for fiscal reasons, but at some point political instability or a weaker dollar will pull [international] people in.”
Miami has been an outlier in the recent decline in both home sales and prices, with prices still quite strong in the city. However, the high end has not been as resilient. Pending sales of homes priced above $5 million were down 89% in December year over year, according to Miller Samuel, a real estate appraisal firm.
“But the one thing to keep in mind about Miami is that inventory is down 60% since pre-pandemic, so what’s different is that inventory is extremely limited,” noted Jonathan Miller, CEO of the firm. “It throws out a lot of conventional wisdom about pricing.”
Miller added that the Fisher Island project “may not sell in five minutes, but it’s not out of the question even in this market.”
The property and location are both unique. Fisher Island is a 216-acre, ultra-exclusive community, accessible only by ferry or yacht and open only to residents, their guests and guests of the small luxury hotel there. The last apartment sold on the island last year went for $40 million, according to a representative of the Related Group.
Hertzberg said Perez’s new building “checks a lot of boxes” for wealthier buyers who have a new mentality since the start of the pandemic.
“They want amenities, privacy and security. That’s an important factor there. They want convenience. There’s a private school there. Their own restaurants, their own grocery stores. A private beach,” Herzberg said.
He also noted that immediate access to the golf club for residents is a big draw. He said there is a five- to seven-year waiting list in Miami to join a golf club.
“I’m sure they will sell out. The question of when is what happens in the economy and how aggressive they are on pricing,” Hertzberg said. “If I was betting, they’d be at the top of the list. It has exactly the right elements for the economy and the world we’re in.”
What the future may bring
Perez, who has developed hundreds of properties in South Florida and weathered the massive apartment crash of the Great Recession, didn’t seem at all worried about the future of his new project.
“Yes, the market across the country has slowed down, especially for luxury units, but we’re finding that in the enclaves that we have, like Fisher Island, we’re still seeing a great level of interest from those people who can afford the best,” Perez said .
However, he worries about the broader economy and the broader real estate market.
“Obviously it bothers me. It bothers me every day. I wake up every day thinking you know what’s going to happen in the economy,” Perez said. “We think interest rates and inflation have peaked. We’re going to have a tough, in my opinion, a year to a year and a half, two years. And we’re ready to weather that storm if that happens. happen.”
If Perez gets $90 million for the penthouse, it will be the most expensive condo to sell in all of South Florida.