A strongly criticized new Florida law restricts the real estate buying power of foreigners from seven countries, a startling move for Miami’s global property market.
The legislation Gov. Ron DeSantis signed into law Monday prohibits most citizens of China, Cuba, Russia, Venezuela, North Korea, Iran and Syria from buying real estate within 10 miles of a military compound or critical infrastructure, including airports, ports and wastewater treatment and electrical power plants. It makes exceptions for foreign nationals from those nations living in Florida with non-tourist visas or those who have secured asylum in the state.
The final watered-down legislation that landed on the governor’s desk, didn’t include a broad ban on Chinese Americans owning any property statewide and left alone the critical EB-5 immigrant investor program. Through the program, foreign investors contribute money to large real estate developments in Florida and other states to apply for green cards.
Pockets of Miami-Dade County that are already home to many people from these seven nations, especially Sunny Isles Beach often referred to as Little Moscow, Doral and Hialeah, will face blowback from the law, experts said.
Overall, South Florida’s housing market is expected to remain resilient and largely unscathed, according to a real estate lawyer, consultant and broker interviewed for this story. Foreign nationals from the so-called countries of concern renting homes in the region and statewide aren’t affected by the law.
“This legislation in Florida will have minimal effect on the interior. Up and down the coast, it will have a significant impact,” said attorney Dennis Eisinger, managing partner at Eisinger Law in Hollywood. “It is more expansive than just selling to one of these people in those countries. It’s going to have a chilling effect on people from those countries. There’s a lot of vagueness to this law, and how it was put together.”
The law is unlikely to stand the test of time, Eisinger said, predicting lawsuits challenging it. However, anticipated litigation could take months or years to potentially topple the law.
What are the law’s key mandates?
After July 1, foreigners from the designated seven countries can only purchase a single piece of Florida land or a residence up to two acres after July, as long as its beyond the 10-mile radius of critical infrastructure or military site. They then have to register the property with the state Department of Agriculture and Consumer Services and the state Department of Economic Opportunity.
People from those nations who already own Florida properties can keep them, regardless of location but have to register them with the state starting in January 2024. Those who fail to register face a fine of $1,000 a day.
Property owners from the stipulated nations who inherit a condominium, townhouse, house or land after July 1, within 10 miles of critical infrastructure, military buildings and agricultural land will have three years to sell.
When does the law go into effect?
Foreign buyers will be restricted as of July 1 under the provisions of the law from purchasing properties near critical infrastructures or military compounds. If any owner or real estate agent sells land or a residence near one of these sites to foreign nationals covered by the measure, they face penalties and fines. Again, foreigners who buy in Florida before July can keep their land or residences, no matter the location.
Who are the winners and losers?
The law will affect everyone in the Florida real estate market, said Jack McCabe, owner of real estate and economic research firm Jack McCabe Expert Services in Deerfield Beach. Developers will be prohibited from selling to any prospective buyers from these seven countries and raising capital from them for new construction. The free and open state property market just shrunk for sellers who often seek after the highest bid, regardless of the buyer’s origin.
“The biggest winners are going to be local residents, as well as those moving down from the Northeast. There will be less competition to acquire property. That’s a plus especially for the local market. A lot of folks have to leave because they can’t afford to live here,” McCabe said of Miami-Dade. “The biggest losers will be those with high-dollar properties, as well as developers who have catered to foreign buyers.”
Miami-Dade communities long shaped by these countries — think Sunny Isles Beach and Russia, Doral and Venezuela, and Hialeah and Cuba — are ones expected to have more properties come on the market and see price dips.
What’s expected to occur in Miami-Dade?
Continuing corporate expansions and wealth migration that accelerated after the pandemic emerged in March 2020 should blunt much of the ill-effects of the law. High-earning professionals from the Northeast and West Coast keep coming here, boosting home prices.
During the past two years, many newcomers arrived in the Miami area attracted by the region’s warm climate, lenient COVID-19 restrictions and lean taxes. Global companies followed, opening offices in Miami, including hedge fund operator Citadel, private equity firm Thoma Bravo and French bank BNP Paribas.
”You look at Hialeah, Sunny Isles (Beach), Doral where you have a large concentration of foreign buyers, those marketplaces will have more of a dramatic effect,” McCabe said.
Miami-Dade’s foreign buyers have changed over the past few years, said Peggy Olin, CEO of OneWorld Properties. She has sold real estate for years in the county’s urban core, including downtown Miami and Wynwood. She used to see Russians, Venezuelans and Chinese in the marketplace years ago — she even opened three offices in China to draw buyers to Miami — but things have changed. Many of them now look to buy in other U.S. cities.
Most of her international buyers today in Miami, Olin said, come from Mexico and Colombia.
“Maybe we have a couple of people from China, a couple of people from Russia, but it’s not the majority,” she said.
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