Unique Homes Blog

Luxury buyers from around the world are migrating to Florida and the Caribbean.

With its high-rise towers lining the oceanfront and gated estates dipped in art deco glamour, greater Miami tends to dominate the discussion on Florida real estate in both good times and bad. But the Florida luxury market is as diverse as the Sunshine State itself, and current conditions vary widely. And in the pristine islands scattered across the Caribbean, not far off the Florida coast, even more exotic opportunities await buyers.

Coldwell Banker Residential Real Estate’s Jill Hertzberg — she and Jill Eber comprise “The Jills” team that maintains a celebrity-studded client list — suggests that the rumors of Miami’s demise have been greatly exaggerated. Even once-empty condo towers, images synonymous with a market crash, have begun filling up thanks to deep discounting. “The market last year was tough, but in the last few months, it has started to percolate and the best properties are starting to go,” reports Hertzberg, who is confident 2011 will reflect continued progress despite some remaining price resistance. Her confidence is largely based on Miami’s sound fundamentals: a cosmopolitan, world-class waterfront city with strong international appeal. “There will always be people who desire great destinations,” she insists.

“We’ve seen the market pick up tremendously, with people once again wanting to spend money,” offers Hertzberg’s partner, Jill Eber, who has seen increased enthusiasm since December. The Jills currently boast the highest-priced listing ever posted in Miami, a 30,000-square-foot contemporary estate on Biscayne Bay. “I’ve seen incredible properties up and down the coast, but I’ve never seen one like this,” declares Eber, who suggests it is more of a resort than a house. Despite the $60 million price tag, she reports very serious interest in this property.

Specializing in the Miami-area communities of Coral Gables, Coconut Grove and South Miami is Josie Wang of Avatar Real Estate Services, who maintains, “The luxury market is moving again, not just because of local buyers seeking to upgrade, but through lots of international buyers as well.” Prices, however, are still fragile in her opinion, and although activity has increased and values have begun to stabilize, she does not foresee bona fide price appreciation in the near future. “Because inventories are still high, pricing has to be aggressive,” she insists. This top producer suggests this is a particularly good time to invest in these sunny, affluent locales.

Less than an hour north of Miami is Boca Raton, where resort-like condominium complexes hug a white-sand beach and sprawling estates line emerald fairways inside gated communities. The market here has been slow to recover and Scott Agran of Lang Realty reports some current prices are below replacement value. Nonetheless, he remains guardedly optimistic about 2011. “I think we’ll do modestly better than 2010…volume should be up slightly, but there’s still downward pressure on pricing,” he reports. Agran believes a robust recovery is contingent on a significant resumption of job growth and increase in confidence. But when that happens, he believes reticent buyers who have been putting off their purchases for several years will come flooding back into the market.

Unlike most distressed markets, however, the area does not suffer from an oversupply of housing. “Boca Raton is virtually built-out, with an inventory of available housing in the 6-to-8-percent range, below historical norms,” explains Agran. Because condominiums were not overbuilt to the extent they were in the Miami area, he reports their sales do not appear to be lagging behind single-family homes. Exceptional oceanfront units begin at approximately $2 million, while beachfront single-family homes command at least $3.5 million. At press time, there were 52 Boca Raton properties priced higher than $5 million; 10 of those in excess of $10 million.

Carmen D’Angelo, Jr., whose Premier Estate Properties primarily specializes in the Gold Coast communities of Boca Raton, Hillsboro Beach, Delray Beach and Highland Beach, is bullish about 2011. He suggests that a rising stock market and burgeoning activity in Beverly Hills and New York in 2010 are leading indicators for a more robust South Florida luxury market. “Buyers are back in the market to enjoy the Florida lifestyle,” he reports, noting that clients are always looking for distinctive architecture and fabulous locations. “Anything on the waterfront is in demand, and if it’s not on the water, people prefer more substantial acreage,” observes D’Angelo.

Debra Duvall of Water Pointe Realty Group is a key player on Florida’s Treasure Coast, approximately 100 miles north of Miami. Restrictions on density here prevented the overbuilding experienced in other parts of the state, thereby mitigating the damage. “Many people are still in trouble, but this cycle has recouped more quickly than some I’ve seen in the past,” she says, noting that the scarcity of premier waterfront and golf-course properties contributes to price support. Upbeat about current trends, the long-time Treasure Coast resident sees this as an ideal time for baby boomers to invest, whether they are approaching retirement or planning for the future. Duvall cites increased sales in 2010 and is confident the trend will continue in 2011. “Prices have stabilized but there are still a lot of good buying opportunities for people,” she says, suggesting some neighborhoods may even see modest price appreciation. Luxury homes of 4,000 square feet begin at $1 million in gated golf communities, while large oceanfront houses command more than $3 million.

Once the exclusive retreat for winter-weary New Yorkers, Florida now attracts a far more diverse customer base. D’Angelo reports that Canadians comprise the bulk of international buyers in his company’s Gold Coast territory. Hertzberg notes that while Miami Beach used to be a distant Big Apple suburb, only about one-third of her luxury buyers currently hail from the Northeast U.S. Another one-third are Europeans fleeing their own frigid winters, and the remaining one-third are South Americans, partially fueled by Brazil’s powerhouse economy. Wang confirms the influx of foreign clients, citing Russian condo buyers and the sudden appearance of Asians in the Miami market. Even in the Treasure Coast, Duvall reports buyers from around the globe, many connected with biotech firms relocating to an area whose second nickname is the “Research Coast.”

Drawing a thoroughly international clientele is the luxury market in the sun-kissed islands of St. Martin and St. Barthélemy (“St. Barths”), comprising one of the most coveted corners of the Caribbean. The 37-square-mile island of St. Martin has a split personality — its northern half (St. Martin) is under the French flag while its southern portion (St. Maarten) is Dutch. The differences extend well beyond language and culture. Peyton Cromwell of RE/MAX Island Properties explains that Dutch St. Maarten offers a fast-paced cosmopolitan vibe with nightclubs and casinos. “It’s a true 24-hour island, which is unusual in the Caribbean,” he says, adding that its French neighbor is more relaxing. Island Real Estate Team’s Arun Jagtiani reports that St. Maarten is incredibly diverse, claiming 90 different nationalities are represented there.

Caribbean luxury real estate markets have been profoundly affected by the global recession, but St. Maarten has been spared a severe downturn. “We’ve seen better days, but property values have only dropped about 5 percent,” notes Jagtiani, who has lost some buyers to Florida, where deeper discounts are available. In recent months, however, he has observed that buyers, accepting the fact that St. Maarten prices will not be dropping much further, are beginning to act. Meanwhile, sellers are beginning to be more receptive, particularly to cash offers. “With both sides now working from a slightly different mindset, I think it creates the perfect formula for activity to dramatically increase,” says Jagtiani. In St. Maarten, an oceanfront condo can be obtained for $800,000, but a luxury house on the beach requires an investment of $2 million to $3 million. A simulative effect on the Dutch side of the island is the government’s favorable tax policies, with no annual property tax and no capital gains tax.

More laid-back French St. Martin is priced competitively vis-à-vis competing Caribbean destinations such as Antigua or Barbados. And even with $5 million beachfront villas, it is a steal compared to ritzy St. Barths. “It’s a diamond with many facets,” insists Pierres Caraibes’ Lesley Reed, who explains, “With its beaches, restaurants, shopping, hiking and riding, it has something for everybody.” She reports 60 to 70 percent of buyers are Americans, with the remainder from Europe, almost all of them seeking vacation villas. The Americans, accustomed to a buyer’s market in the States, try to extract deep discounts in St. Martin, which has the effect of flattening the market. Reed acknowledges that taxes are higher than on the Dutch side of the island, but quips, “If you don’t pay anything, you don’t get anything,” touting the French side’s superior infrastructure.

The French territory of St. Barths is the kind of place where Hollywood stars rub bronzed shoulders with Russian petro-billionaires and Brazilian supermodels. RE/MAX Island Properties’ David VanderNoot explains that the national origin of the island’s buyers is rapidly changing. “Up until five years ago, 80 percent of St. Barths buyers were from the U.S., but now clients from South America, Mexico, Russia and Eastern Europe have reduced that to about 50 percent,” he says. VanderNoot reports that St. Barth’s values are currently 15 to 25 percent below their heights, making this a smart time to invest in what will always be considered paradise by the rich and famous. Despite the market adjustments, a beachfront home in St. Barths can still command more than $15 million, and Russian billionaire Roman Abramovich reportedly paid close to $90 million for a magnificent 70-acre beachfront estate on the island in 2009.

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