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What’s Behind South Florida’s Property Boom?

Miami Will Have A 100-Story Skyscraper of the Waldorf Astoria Chain - El American

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The cold winter along with severe lockdowns have taken their toll on New York investment fund managers and CEOs who are taking refuge en masse in sunny South Florida where not only warm weather, beautiful beaches, and a cool sea await them, but also a state that welcomes new investments with open arms and low taxes.

Investors such as Carl Icahn have decided to move from New York to Miami. Icahn moved to South Florida in 2019 and left his penthouse in the luxurious Museum Tower on 53rd Street in West Manhattan to move to the Indian Creek Villa (known as the Billionaire’s Bunker) on an island in South Miami. Icahn was known in New York for holding dinners at his penthouse with figures such as Michael Dell, Netflix CEO Reed Hastings, or Tim Cook, Apple’s CEO.

With the move of billionaires and figures like Icahn to South Florida, the housing market is experiencing a resurgence not seen since before the 2008 crisis, while cities like New York and San Francisco are losing residents due to their already inflated housing prices and high cost of living.

The city of Miami has begun to witness luxury projects such as the penthouses on Collins Ave, where you can find a penthouse with 8 bedrooms, 8 bathrooms, and a wonderful ocean view for the modest sum of $13,000,000.

South Florida - Properties - El American
Some areas of South Florida have average property prices over $2,000,000.(Efe)

Indeed, in the most luxurious neighborhoods of the city of Miami, the average condo sale reaches $2,000,000 per square foot, reaching over $800, quadrupling the value of the average square foot in Florida.

The high demand, naturally, has also exceeded the costs of lodging, which in places like the luxury island-city Key West, already exceeds $600 a day to rent an apartment through Airbnb, making this city with one of the highest rents in the U.S.

The list of the most expensive homes sold includes a house with its own harbor in Indian Creek that Ivanka Trump bought together with Jared Kushner; not far away Tom Brady and Gisele Bündchen have a $17 million home, which in turn is located a few blocks from the home of singer Julio Iglesias.

South Florida’s real estate boom is not only driven by the migration of a few millionaires. The influx of new residents is also driven by those looking to take advantage of remote job opportunities or seek a state that has allowed businesses to stay open and have a favorable tax structure. This has led to near-record real estate prices and absorption in Miami and Palm Beach.

In fact, Florida saw the second-highest population growth of any state in 2020, after Texas, with the migration of more than 240,000 new residents.

The real estate boom has also been driven by increased demand for office space from corporate groups looking to relocate their offices to Florida. (Efe)

Another factor that has driven up real estate prices is the high demand for office space due to the migration of entire law firms and executive offices to Florida. For years, large Wall Street investment funds have been subtly moving some of their offices to South Florida.

Cold New York has lost hundreds of executives who have preferred to locate in warm Miami, where they have not only the same time zone but also more business-friendly legislation and a better climate. Citadel investment fund, Goldman Sachs, and Elliot Management are among the companies that migrated.

Microsoft itself announced it is in negotiations to lease 30,000 square feet of space in OKO Group’s 830 Brickell building, a 56-story office tower adjacent to downtown that is currently under construction.

With the migration of hundreds of thousands of new people to Florida, the state is looking to adapt its infrastructure to meet the needs of a larger population, such as the construction of a new tunnel system to streamline traffic and reduce pollution by Boring CO. (Space X and Tesla founder Elon Musk’s subway tunneling company), as announced by state Governor Ron DeSantis.

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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