Tired of Tame, Miami Sellers Get Their Mojito Back
Wall Street Journal
Lavish condo-launch parties—featuring such buzz generators as live leopards and caviar bars—used to be the hottest ticket in town before the real-estate bust turned out the lights in 2006.
Now, an influx of foreign cash is revitalizing the housing market and bringing back the fetes, though they have toned down the big cats and scantily clad Champagne servers.
"We have all sobered a bit," said David Edelstein, owner of the W South Beach hotel and condos, who threw a party for brokers in July. "A lot of the flashiness has been dialed back."
This being Miami, that isn't saying much.
At an April launch party for 1100 Millecento Residences in Miami's Brickell neighborhood, some 600 guests crowded onto a gravel lot where a 42-story tower will soon rise. Guests sipped wine and nibbled empanadas as images of condo interiors flashed on a screen and a DJ spun electronic dance music.
Then a roar of engines pierced the din, and a column of Maseratis and Ferraris streamed in—a nod to Italian car-design firm Pininfarina SpA, which is designing the building's common areas. Models in black, skintight outfits got out and posed beside the cars, as onlookers snapped photos.
"Miami is back!" Jorge Perez, the developer behind the project, yelled to the crowd.
Early figures suggest Mr. Perez may be right. In the Miami area, home prices increased 11.3% in August, compared with a year earlier, according to CoreLogic Inc., a Santa Ana, Calif., data firm. A July report by the Miami Downtown Development Authority found the volume of residential sales in the downtown area increased 24% in the first half of the year, compared with the same period in 2011.
After more than four years of inactivity, nine new condo projects in Miami-Dade County broke ground in the past year, and at least two more are scheduled to begin construction by year end, said Peter Zalewski, principal at real-estate consultancy Condo Vultures LLC.
Most of the buyers these days are wealthy Brazilians, Argentines and other foreign clients looking for second homes or investment properties to rent out, he said. Their tendency to pay in cash makes them attractive to developers.
Because banks are still reluctant to provide construction loans, developers are relying on buyers to finance condo projects, requiring that they put down as much as 80% before closing, Mr. Zalewski said. The vast majority of projects in the area are now using that model, he added.
With so much of the buyers' money on the table, developers are wary of going overboard on the festivities.
"The last message you want to send is that whatever money you have, you're spending on a huge party," said Tadd Schwartz, a marketing consultant who has represented developers.
A February launch party he organized for the BrickellHouse condo project was bare-boned: a smattering of food trucks and a bar serving run-of-the-mill spirits.
That is a far cry from the bashes of the boom era. "The money was flowing, the profitability was in the hundreds of millions," Mr. Perez said. "Spending a half-million on a party was nothing."
Many people who attended those events snapped up properties on the spot. The only problem: Too many were speculators intent on flipping the units before they were even completed, Mr. Perez said. When the market swooned, they bailed out.
Today's buyers are more serious, and their appetite appears strong, real-estate executives say. At 1100 Millecento, 90% of the units are under contract, according to Related Group, the developer.
While the mood may be more subdued, there are occasional flashes of the former opulence, such as the bash for 1100 Millecento.
At a March launch party for the Mansions at Acqualina—a luxury tower going up in Sunny Isles Beach, north of Miami—developers Jules and Eddie Trump (no relation to Donald) erected a huge tent on the beach lighted by chandeliers. Attendees feasted on filet mignon and risotto, while a DJ played Brazilian music and dancers in beige body suits performed on a stage. Capping off the evening was a performance by Il Volo, a trio of Italian pop-opera tenors.
A December party planned for a new South Beach project called One Ocean promises to be high end. It is set to take place during the Art Basel contemporary-art fair and is aimed at the major collectors flying into town, says developer Related Group.
If the Miami market continues to perk up, count on the revelry ratcheting up as well. "At the end of the day," Mr. Zalewski said, "Miami is a party place."