MIAMI — Facing a teetering economy at home, wealthy Brazilians have been pouring money into what they increasingly see as the safest place to invest: South Florida real estate.
So are Argentines, Colombians, Mexicans, Venezuelans, French and Turks — almost anyone with money to shelter, a direct flight to Miami and a shaky economy to flee.
Their cash has helped drive the latest twist in Miami’s evolving transformation — from a 19th century rail stop to a tourist-and-retiree hub to a haven for Cuban refugees to now a harbor for global investors. No American skyline has undergone a more drastic face-lift from foreign cash in the past decade: Luxury condo towers and swanky retailers crowd a downtown once marred by empty lots.
And almost no developer expects the demand to stop.
Yet Miami residents as a whole have scarcely benefited from the glitz. By catering to wealthy foreigners able to jet around the world, the area boasts a showcase of highly visible investments but not the broad income gains that would serve the bulk of its residents.
Wages have actually dropped for Miami workers in the past year. Area unemployment tops the national average. Miami contains the largest share of renters in the country who devote over 30 percent of their pay to housing — the level the government deems burdensome. Census Bureau data show that high rents burden 66 percent of Miami tenants, compared with 52 percent nationwide.
Workers have few affordable housing options in neighborhoods sandwiched between luxe coastal development and the marshy Everglades.
“We’re not seeing the benefits of that income being disposed of in the local economy,” said Ned Murray, associate director of Florida International University’s Metropolitan Center. “That impacts local businesses, and we’re losing opportunities to create year-round housing for our workers. They’re moving out.”
With its glamorous locale and easy access, Miami real estate offers an asset that’s appreciating at a time when other investments have shrunk or turned frighteningly volatile. It’s a testament to investor concern about stocks, bonds, commodities and economic growth that a stretch of land prone to natural disasters and the ravages of climate change can be coveted for its real estate potential — less than a decade after the bursting of a U.S. housing bubble.
“All of the insecurity around the rest of the world only reminds people how important it is to have assets in the United States,” said Alicia Cervera Lamadrid, a developer who is leading sales efforts for the planned 57-story Elysee, with condo units starting at $1.65 million and personal wine storage available for residents.
No fewer than 126 residential towers are planned for construction in South Florida. One sign of the scale of wealth from abroad is that the majority of foreign purchases are being funded with cash, not debt.
Last year, foreigners spent $6.1 billion on Miami-area real estate — 36 percent of all such investment, according to the Miami Association of Realtors. Nationally, foreigners account for just 8 percent of sales. Brazilians are the predominant searchers for Miami homes online, trailed by Venezuelans and Argentines, according to the association.
The influx has been sudden enough that the federal government has announced plans to monitor home purchases exceeding $3 million in Miami and New York City. Starting in March, the government will temporarily require title companies to identify buyers of property. Authorities have grown concerned that money launderers may be using anonymous holding companies to stash money in high-end real estate.
Purchases by Brazilians paused briefly last year, when the nation’s currency, the real, tumbled against the dollar. But as Brazil’s economy has worsened, developers say sales have picked up again even though the weaker currency means Miami homes cost them nearly 50 percent more in dollars than in late 2014.
The average luxury condo price in Miami Beach has surged 35 percent from a year ago to $3.7 million, according to the real estate brokerage Douglas Elliman.
Anthony Graziano, executive director at Integra Realty Resources, who has analyzed the Miami market, expects sales to remain strong for properties worth more than $1 million, outpacing those in the $400,000-to-$800,000 range. Graziano describes a wave of wealthy buyers who seem intent on investing in properties that can protect their money from volatile markets.
“There really is no other place to put your money,” he said. “Stocks are getting hammered. Bonds are getting high. What is your equity play if you’re an ultra-high-net-worth investor? Buy one-of-a-kind luxury real estate.”
Downtown Miami is “beginning to shift, but the question is, to whose benefit?” said Arden Shank, executive director of Neighborhood Housing Services of South Florida. “It doesn’t benefit the people who have been there for a long time.”
The metro area’s unemployment rate is 5.5 percent, compared with 5 percent nationally. Average hourly earnings have dipped 0.4 percent to $22.57 from a year ago. By contrast, the national average wage has risen more than 2 percent in that time.
The influx of wealthy real estate investors does mean some benefits for the area, notably a miniboom in the city’s creative community. Murray’s research shows a growth of 21,568 jobs in the design, film, media, performing arts and museum sectors from 2010 to 2012.
Government figures show that the number of Miami-area jobs in the leisure and hospitality sector has jumped 28 percent since the recession began in late 2007. Even so, seven of the top 12 occupations in Miami-Dade’s tourism-driven economy produce less than half the median family income, Murray said. For many families, 65 cents of every dollar earned gets spent on housing and transportation costs — a crushing burden.
“Once you exceed the 50 percent threshold, you begin to lose working families and working households,” Murray said.