MIAMI – With the U.K. voting to leave the European Union, what does Brexit mean for South Florida? According to real estate experts, it could mean a big boom in the Miami real estate market.
"London was amongst the world's most lucrative real estate markets, however, last week's U.K. vote is already causing property prices to plunge, which means that Florida real estate will likely move up the list of busiest global investment destinations," Daniel Kodsi, CEO of Paramount Miami Worldcenter, said.
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Kodsi, a developer of 24 Florida communities, predicts Florida's real estate market will likely experience an increase in foreign buyers seeking a stable and safe market to invest in.
"Miami has the most stable real estate market in the country," Kodsi said.
Miami Worldcenter is the city's new retail, residential, entertainment and transportation complex. It's also Florida's largest building project, expected to be complete by the end of 2018. The project has attracted investor-buyers from 35 different countries, Kodsi said.
"People who previously invested in London, U.K. real estate, which was once one of the most stable and profitable in the world, are now concerned about its instability and they are looking for a better real estate investment," Kodsi said. "They are buying downtown Miami real estate because it is a safe and valuable investment."
Christopher Zoller, who is the chairman of the board of the MIAMI Association of Relators agrees with Kodsi, saying that Miami is a "growing world-class city that attracts both domestic and foreign buyers."
"Regardless of what happens in the world, international and domestic buyers are always interested in Miami for its multicultural affinity, strategic location, excellent weather, exciting lifestyle and friendly global business environment," Zoller said. "Additionally, Miami is a great bargain compared to other world-class cities, including New York, Paris, Hong Kong and London."
The Florida Realtors Association reported that Florida real estate values traditionally increase from four to 10 percent annually, and in recent years, values have climbed into the teens in Miami, but leveled off in 2016.
"Florida real estate is one of the most valuable properties in the world, yet is less expensive per square foot than Paris, New York and other global cities, but its valuations are consistently greater," Kodsi said. "Brexit adds a new dimension to the global real estate investment landscape, which will take time to fully understand but may, with near immediacy, trigger a surge in additional foreign investment in Florida."
Gerard Yetming, executive vice president at Colliers International, also believes investors will seek global real estate elsewhere, including New York and Miami, if the U.K. does in fact leave the EU.
"I think real estate investors will explore other gateway cities," Yetming said. "London is not as pure as it was."
Yetming also said Miami is an attractive option for foreign investors because of its impressive recovery after the housing crisis.
"After the last downturn, Miami wasn't expected to come back so quickly. It received international attention," Yetming said. "It has become a real destination for investment internationally."
As for what is happening overseas, partner at Arnstein & Lehr LLP in Miami Louis Archambault believes Brexit and the subsequent fallen value of the British pound might encourage investors to stay put.
"European investors may decide to sell their investment properties in South Florida to reinvest in their countries if property values drop as a result of the political crisis," Archambault, who has been working with European investors for more than a decade, said. "If your currency is weak, it actually encourages investors to invest in their own country and people to buy its products."
"The worst thing that can happen to a local market is when nothing is changing hands," he added.
So what will happen to South Florida?
With a possible influx of Europeans looking at South Florida for long term investments, stable markets, and an ideal location, Kodsi believes immigration will increase, bringing wealthy, educated investors.
Kodsi expects those investors not only to buy real estate in Miami, but also to open businesses, creating jobs and enhancing tourism. He predicts a population growth of about 20,000 people to downtown Miami over the next few years.
Yetming is optimistic, but said only time will tell.
"Obviously, there will not be a lot of answers for several months," Yetming said.
Article written by: Sara Girard, Call Christina Team Member.
Follow Girard on Twitter @SaraYGirard