Just four years after condominium development in South Florida completely froze, development is back and heating up quickly. With the median sales price of condominiums in Miami-Dade County up 34% in June compared to the prior year and the amount of available inventory down 29% according to the Miami Association of Realtors, developers are moving quickly to take full advantage. According to a recent article published on condovultures.com, as of June 2012, at least 45 new condominium towers with more than 7,600 units have been proposed along the coast of Miami-Dade, Broward, and Palm Beach counties in the last 14 months, with nine towers already under construction.
Since construction loans are still difficult to obtain and South Americans have been scooping up condominiums at record rates, many developers have borrowed a financing technique frequently used in Brazil. Pursuant to the so-called “Brazil Method”, individual condo purchasers pay for 50-80% of the costs of construction through a series of deposits tied to phases of construction.
Recently, South Florida developers have had tremendous success with the Brazil Method. The Related Group’s MyBrickell project in Miami and Apogee Beach project in Hollywood are both close to 90% reserved and require 20% down upon the signing of a purchase contract, 20% upon the commencement of construction, and two additional 20% deposits at other stages of construction. The Newgard Development Group’s BrickellHouse in Miami is over 85% reserved and requires that purchasers pay 70% of the purchase price at various stages of construction.