A contractor pulls equipment in front of a new high rise condominium and office buildings under construction in the Brickell neighborhood of Miami, Florida, U.S., on Friday, Sept. 30, 2016. Developers are building entire neighborhoods as foreign demand sets the pace. Meanwhile, EB-5 visa projects moving out of Miami as region develops further along the coast, up to West Palm and even in the 'burbs.
Walter DeFortuna, CEO of Fortune International Reality, is showing me the new Reach apartment building from the outside deck of the sister property called Rise, two high-end residential towers built by Swire Properties of Hong Kong. These twin towers are the kind of place that comes equipped with full spa and weight lifting facilities and Caribbean blue infinity pools. Yes, like the ads, there are bikini clad women, at least two on this sunny hot day in Miami, sitting poolside with their toes in the water.
Before we met in the lobby, I watched a woman dressed in white, looking very indigenous to Mexico, chasing after a Shirley Temple-of-a-girl with a floral printed summer dress and matching bow. She was calling after the child in Spanish. This reminded me of the nannies in Brazil in their white uniforms. Sure enough, a woman in skinny jeans and bangle bracelets walks in with two boxes of toys tucked under each arm. A muscular black Mercedes Benz is at the door, all chromed out and reflecting the south Florida sun. She says something in Spanish to the receptionist.
DeFortuna points to the glass tower, completed last year. He is explaining some design, how it captures the wind. That's not my beat, so I zone out. It is obvious to me that the new Brickell City Centre (BCC), also a Swire development, is an entire new neighborhood. It's got what is to be expected adjacent to such pretty real estate: fancy stores and fancy pastry shops and many restaurants and food courts modeled on Eataly in New York, and -- oh yes -- a VIP Cinemex movie theater all the way from Mexico. The Miami EAST hotel is here, a discreet Miami-style W. It even has a secret bar (ooops!).
Miami is done (though never entirely) building residential or mixed-use towers for money laundering foreigners. Developers are building entire towns for them instead, and everyone else in between. They will call it "lifestyle properties", but it is even more than that. In Swire's case in particular, their Brickell City Centre and its surroundings is a work and entertainment complex that hires hundreds if not thousands of locals.
Who lives here, I ask DeFortuna about Reach and Rise. What percentage of the people who bought here are American citizens?
"This is about 80 percent foreign owned, I'd say," he tells me in a slight Argentinian accent.
How many of them live here year round?
"About half of them," he says. "So most of these units sit empty year round. But that's changing. There is constant traffic in and out of here now. We are not selling ghost properties to foreigners."
Not too long ago, Miami was just a place to park money and leave. You came here on weekends from Sao Paulo or Caracas. Today, more of them are moving here to stay. Some are just using these homes as their own private hotels, not much different from what the rich Latinos have been doing since the 1980s. Except nowadays they have much more to do in town. Miami is booming and building in order to better serve them, and by doing so, it is becoming a whole new city.
Let's face it: Miami owes its life to foreigners. In simplest of terms, the Cubans came here in the 1950s and 1960s. Fleeing Castro, many were already private sector entrepreneurs or became entrepreneurial overtime. The Cuban community can be credited with laying the foundation for Miami becoming the capital of Latin America. In the 1980s and into the early 1990s, you had drug money from Mexico and Colombia being funneled into high-rise condos. And recently, you have the success of the EB-5 visa program, the investor visa that matches developers with rich foreigners looking for a green card. That immigration program was utilized heavily post 2008-09 crisis as local credit dried up.
Miami's skyline, whether it's BCC or the Miami World Center, is being built by foreigners. It is being redesigned and rebranded to attract anyone to whom Miami Vice and the Miami Sound Machine conjure up youthful memories. For foreigners who also share a romanticized view of the city's perceived cruise-ship lifestyle -- a city full of mambo kings and techno salsa queens grinding the night away to the too-cool commercial flare of Pitbull -- Miami is starting to deliver. Throw in Art Basel and a new move to make it a tropical fashion hub (Sorry, Sao Paulo) and you've got Miami, Florida defined.
Peggy Fucci, CEO of OneWorld Properties, holds brochures written in Chinese for the Paramount Miami Worldcenter. International brokers are constantly on the hunt for foreign buyers. They drive domestic demand for Miami housing.
There are roughly 30 new towers going up here. Swire is ready to build their biggest one yet, an 80 story mixed-use development. A brown, bare swath of land is already carved out for it in Brickell. Compared to New York, Miami real estate is a steal. Reach and Rise apartments go for between $600 and $1,500 per square foot. Some northerners are coming south as the city develops anew, adding to the demand.
"That Miami owes its life to foreigners is largely accurate," says Kieran Bowers, president of Swire Properties USA. He moved to Miami from Hong Kong in August 2016. We are seated at a bar at Quinto La Huella. Now and then, you can feel the blaze from a large fire pit where men are cooking meet, Uruguayan style. "Foreign demand certainly drives the residential market here. But the commercial side is still domestic," he says.
Not far from where we sit is a tall glass Wells Fargo office building on Brickell Avenue. America's second largest bank by market cap is known as a transfer hub for Latin Americans shipping money out of the U.S. They signed a $32 million lease to expand their presence in downtown Miami last year. Ten years ago, its Wachovia banking division got them in trouble for laundering Mexican drug money into the United States. I wonder where some of it went...?
Miami's development is spilling out into smaller cities further north. A new train service will connect the city to West Palm Beach and later to Orlando in what some have called a Grand Central Station-sized project in the heart of Miami. The build-up has gotten so crazy over the last 10 years, that land is now hard to come by. So developers and foreign investors are looking elsewhere, to the suburbs like Miramar and Dora, and to larger ocean cities like Fort Lauderdale. One would not think of these towns as being a haven for foreign real estate investors, but it's attracting EB-5 money too .
Rodrigo Azpurua, a Venezuelan born developer and CEO of Riviera Point Development Group is as good example as any. You don't have to be building a Trump tower to bring in foreign money to Miami or South Florida. You don't have to be building A-list style properties, either. He's brought in over $53 million to south Florida real estate since 2012 and 164 EB-5 investors, now happy holders of American green cards.
"I read a lot of market reports about what's going on in the real estate cycle in Miami and Miami behaves differently than any other city in the United States and that is because of the foreigners here," Azpurua tells me over drinks at Miami East, wiping sweat off his forehead. "Miami is influenced by South America and now by Europe and China." Azpurua is building a Radisson Red property at the Miami International Airport, and roughly 40% of the money came from South Americans.
EB-5 visas require holders to invest at least $500,000 in a development project that creates 10 jobs per investment. "Look, in the 1980s it was cool to be a rock star and in the 2000s in Miami, it's cool to be a developer," he jokes. "When I started out it was just me and my wife," he says, his wife Dania is sitting across from him and chatting with a friend. That was about eight years ago now. "We're 20 people today, but in 2013 we were four and for sure we jumped because of foreign investors through EB-5. If the government raises the limit to $800,000 for EB-5, it won't stop this." Rumor has it that an increase in the minimum investment is one of the plans to revamp special immigration visas in Washington. "Developers will have to come up with a better deal," he says. "My investors range from net worth of $7 million to $1.5 billion. Three hundred thousand dollar differences won't stop them from investing here if the deal is right and the fundamentals are there."
The music gets louder. It's Brazilian, but I don't know the song, something loungey with a techno-beat and a Brazilian woman singing over it. Antonio Banderas walks in. He's in a T-shirt. The actor best known for his role as Zorro is in town for Miami Fashion Week. It's a new thing in town, and is part of the city's attempt to put Miami on the map as a place for fashion designers to show their stuff. Surely, the fashion conscious Latin Americans are here year round to support it. The night before, Jorge Ramos, a journalist with Univision, was suited up and tie-less at a secret bar with some Fashion Week people; his signature look of one-part shyness, one-part bored on his face. Does that man ever smile?
Sticking with the mixology here, this new Miami looks less and less like the rest of the United States each year. Get off the plane, it's almost all Spanish. Unlike the southwest and California, this isn't like Puebla and Jalisco. The people here are different. They are one-part Caribbean Spanish, one-part Latin American Spanish, and a dash of Brazilian. (Though, oddly enough, my driver was Bulgarian and his girlfriend was Russian. Sunny Isles is loaded with them.)
Argentina-born FORBES billionaire Jorge Perez donated some $35 million to the city's modern art museum a few years back. They relocated to Museum Park off Biscayne Boulevard and named it after him. He's a true Miami local now, having lived in the U.S. for decades.
On the museum grounds, across the Biscayne Bay on Dodge Island, a Carnival Cruise ship is docked and ready for action. But this fun ship represents an older Miami: a place you came to only to escape. Now Miami is a place you escape to -- to hide money, yes. And if Swire is right, maybe to live. Most of those who come to live here will have English as a second language.
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