South American investors are continuing their love affair with Miami.
Economic insecurity is just one reason why investments in the U.S. are considered the best way to keep money safe. And, foreign investors have that in spades.
Add to that the physical safety factor, and no state income tax. Those thing help Miami beats other large metros where the well-off expats usually land.
Many of them, too, are plunking down cash for those purchases. So much so, that the U.S. government has begun to put in place higher hurdles for cash buyers in places where they have a significant market presence.
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The list of countries where buyers come from is lengthy. Argentinians, Brazilians, Colombians, Mexicans, Venezuelans and even French and Turks love to hop a direct flight to Miami and part with a pile of cash.
The Miami of today is radically transformed due to this largesse. Once a retiree-fueled haven, now Miami exudes a completely different vibe.
As reported by the Associated Press, last year, foreigners spent $6.1 billion on Miami-area real estate, or 36 percent of all such investment, according to the Miami Association of Realtors. In the U.S. as a whole, foreigners account for 8 percent of sales. Brazilians are the predominant searchers for Miami homes online, trailed by Venezuelans and Argentinians, according to the association.
Even with a drop in sales last year due to a flagging exchange rate, Brazilians still think the pros outweigh the cons in investing on American soil. Or, in this case, sand.
Foreign investment’s impact on the Miami economy
At last count, 126 residential towers are planned for South Florida. And, those are not targeted at lower income brackets.
But has that massive tilt toward massive bank accounts served to lift all boats?
As anyone who has lived in a tourist town, an influx of out-of-towners who want to capture the local cool factor has an uneven benefit on local economies, and the people who depend on local jobs.
One example is the impact of gentrification.
In Miami the influx of expats with cash to spend has been followed by an explosion of luxury shops. Those storefronts have brought a uptown vibe to areas where there was once blight. That means that rents for established neighborhood business, and locals perhaps seeking a second location, shoot out of reach.
Wages dropped for Miami workers in the 2015. It’s unemployment beats the national average. Miami contains the largest share of renters in the country who devote over 30 percent of their pay to housing. It’s worse than that– high rents burden two-thirds of people in Miami who rent their living quarters.
According to government figures, the number of Miami-area jobs in the leisure and hospitality sector has jumped 28 percent since the recession began in late 2007. But those jobs are not well-paying. The top 12 occupations in Miami-Dade’s tourism-driven economy produce less than half the median family income.
“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, in a statement. “That impacts local businesses, and we’re losing opportunities to create year-round housing for our workers. They’re moving out.”
South Florida, an area which is already prone to natural disaster, is also bearing an environmental blow of another kind – the impact of climate change. Those change, and hurricane recovery, strain public infrastructure both natural and man-made, adding to potential costs and liabilities of the area.
So even with the dollar strong as compared to foreign currencies, purchases of U.S. properties remain an attractive investment for South American customers, especially those who called Brazil home.
