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 piece of land available for development and an unlikely bet on luxury real estate at a time when the housing market appears to be in free fall.
Jorge Perez, known as “the condo king of Miami,” and his Related Group are behind the 10-story, 50-unit project with a $1.2 billion sale price. They paid $122.6 million for the land, at the top end 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 jetty for mega yachts. Sales only started last month.
“Nearly 30% of the units are spoken,” Perez said. “We’ve had contracts in excess of $300 million, and we haven’t really done any marketing. If the market does slow down a bit, we’re in a fortunate position.”
Buyers must make a 50% non-refundable deposit for pre-construction sales.
Perez said the first buyers are from Brazil, New York, Canada, Mexico and Israel. He said he sees much more domestic interest than in the past, as Miami has historically been a haven for foreign investors. That seems to reverberate throughout the city.
The view from South Florida
“Miami is an international-focused market — 80-90% international — but it flipped during the pandemic,” said Danny Hertzberg, a luxury broker with Coldwell Banker and the Jills Zeder Group. “We will maintain this domestic demand for tax reasons, but at some point political instability or a weaker dollar [international] people in.”
Miami has been an outlier in the recent decline in both home sales and prices, with prices still quite high in the city. However, the high-end wasn’t quite as bouncy. According to Miller Samuel, a real estate appraisal firm, current sales of homes priced over $5 million fell 89% year-over-year in December.
“But the one thing to keep in mind in terms of Miami is that the stock is down 60% since pre-pandemic, so what’s different is that the stock is extremely limited,” said Jonathan Miller, CEO of the company. . “That throws out a lot of conventional wisdom about pricing.”
Miller added that the Fisher Island project “might not sell in five minutes, but even in this market it’s not inconceivable.”
Both the house and the location are unique. Fisher Island is an ultra-exclusive 216-acre community, accessible only by ferry or yacht and open only to residents, their guests, and guests of the small luxury hotel there. The last condo sold on the island last year went for $40 million, according to a Related Group representative.
Hertzberg said Perez’s new building “checks a lot of boxes” for wealthier buyers who have a new mindset 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 supermarkets. A private beach,” Herzberg said.
He also noted that immediate access to the golf club is a huge draw for residents. He said there is a five to seven year waiting list to join a golf club in Miami.
“I’m sure they’ll sell out. The question is when is what’s happening in the economy and how aggressive they are on pricing,” Hertzberg said. “If I guessed, they’d be at the top of the list. It just has the right elements for the economy and the world we’re in.”
What the future may bring
Perez, who has developed hundreds of South Florida properties and weathered the massive condo crash during the Great Recession, seemed unconcerned at all about the future of his new project.
“Yes, the market across the country has been down, especially in luxury units, but we find that in enclaves that we have, like Fisher Island, we’re still seeing strong interest from people who can afford the best,” Perez said.
He is, however, concerned about the wider economy and the broader real estate market.
“Of course 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 are pretty much past their peak. We’re going to have a tough, I think, year to a year and a half, two years. And we’re ready to weather that storm if it to happen.”
If Perez gets $90 million for the penthouse, it will become the most expensive apartment to sell in all of South Florida.