Launching a new luxury condo tower at a time when the market is glutted with unsold inventory might seem like risky business.
According to the most recent home sales report by the Miami Association of Realtors, sales of luxury condos in January surged 58.1 percent year over year. Cash buyers -- critical for projects such as Una, which has no traditional bank financing in place -- comprised 42.4 percent of all sales transactions in January. That is nearly double the national average of 22 percent.
The year-to-year bump in sales has made a dent in the overstocked luxury condo market, but supply still far exceeds demand. According to the 2018 EWM Realty International Annual Market report due to be released this week, the current inventory of available luxury condos ($1 million and above) in Miami-Dade in January was at 40.8 months. That's down from 61.7 months over the same period last year, but still way above the three-to-six-month sweet spot that reflects a healthy real estate market.
The higher the price, the larger the inventory, too: In the $3 million-plus price range, the current inventory of luxury condos is at 73.7 months, according to EWM. The report uses data from the Southeast Florida Regional Multiple Listing Service.
But the developers of Una argue that their tower is so unique, it can't be lumped in with the existing luxury condo towers struggling to close sales. By using private equity instead of relying on traditional bank financing and presales, these developers can launch their new project while other developers are taking a wait-and-see attitude.
"If you have confidence in a market -- and we have a lot of confidence in Miami -- you have to back it with your own equity," said Jonathan Goldstein, CEO of Cain International, a London-based funding and investment firm. "You're going against the grain a little bit. You've got to have the confidence of your convictions. It's during the times when other (developers) can't access the marketplace when you can hopefully do the best. But we would not be averse to third-party financing if it becomes available at the right time."
Doronin and Goldstein believe the Una's unique location combined with timing -- no other luxury tower is currently slated to break ground south of Brickell -- will allow the project to stand out from the pack and buck market forces.
"This is a very established neighborhood, very private and quiet," Doronin said. "There has been no new construction here for the last 10 years. We were lucky to manage to purchase this site. And for the near-future, no one else is going to build here. We won't have any competitors in South Brickell."
Doronin also points out that international buyers pay special attention to high-profile projects, such as OKO's $350 million Missoni Baia tower in Edgewater and the Aston Martin Residences project from the Argentine supermarket magnate German Coto under construction at the mouth of the Miami River.
While Latin Americans still make up the overwhelming majority of foreign real estate buyers in Miami, Mansion Global reports that interest from territories such as Israel, Russia and Europe continues to grow. Miami is already ranked as one of the top six international home-buying markets for the super-wealthy (defined as having assets of $30 million or more), coming in third after London and New York and ahead of Monaco, Los Angeles and San Francisco.