Leonardo DiCaprio working with Delos to build eco resort on private island

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Leonardo DiCaprio has announced that he’s opening an eco resort on his private island in Belize. The actor picked up the 104-acre Belizean island, Blackadore Caye, in 2005 for just $1.75 million.
The planned luxury resort will feature villas on a platform over the water, artificial reefs with “fish shelters” and a nursery growing marine grass to feed manatees, according to Curbed. It is expected to open in 2018.

“The main focus is to do something that will change the world,” DiCaprio told the New York Times. “I couldn’t have gone to Belize and built on an island and done something like this if it weren’t for the idea that it could be groundbreaking in the environmental movement.”

DiCaprio is working with NYC developer Delos to build 68 resort villas and 48 private houses to sell. DiCaprio owns a unit in the Delos Living building at 66 East 11th Street.

The units will cost between $5 million and $15 million. Jason McLennan, author of “The Philosophy of Sustainable Design,” has been tapped to design the project. [Curbed] – Christopher Cameron

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Say Belize, please, for bargains on Caribbean luxury

By The Real Deal

Belize is an under-the-radar bargain in the market for Caribbean real estate, according to a new report by an affiliate of Christie’s International Real Estate. Christie’s affiliate Sancas Realty suggests in its report that Belize has the potential to become a leading destination for wealthy buyers of luxury villas and beachfront homes.

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The report detailed several lures of luxury homes in Belize. For starters, the fixed exchange rate of the Belizean dollar against the U.S. dollar is two-to-one. Gil Castillo, president of Sancas Realty, said in the report, “American buyers can be assured that their investment in Belize real estate will continue to appreciate on pace with the U.S. dollar.” Luxury homes in Belize have an average price under $1 million. Starting prices for luxury homes in markets worldwide average $2 million, according to Christie’s, which relies on local standards to define properties as luxury homes.

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Infrastructure upgrades and low property taxes in Belize also have supported the development of luxury homes there. Major air carriers have added flights to Belize from hub cities including Panama City, Panama, as well as Los Angeles and Houston.

Sancas Realty also reported that foreign nationals already account for 95 percent or more of the luxury-home purchases in Belize in beachfront locations.

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Dolphin Capital Investors has launched sales for luxury villas in the Dominican Republic

By Katherine Kallergis, The Real Deal

Miami Beach-based Pierre Charalambides of Dolphin Capital Investors has launched sales for luxury villas in the Dominican Republic – and is looking to lure New York and local buyers. Charalambides, co-founder and managing partner of London-based Dolphin Capital is leading development of the 200-acre Amanera resort and villas, part of a long-term 2,400-acre project in Playa Grande. The resort, which opened at the end of November, features access to a 180-acre golf course, club house, spa and health club, restaurant and outdoor activities. The Amanera resort and villas are part of the first phase. “If the first phase does not go exactly as planned, and you have a lot of land around it, you have a lot of room for error,” Charalambides told The Real Deal.

 

Aman Villas

The villas, priced from $4 million to $8 million, range from 2,400 square feet to 8,600 square feet.

 

Buyers will have the option of joining the hotel rental program. “We know owners [of a nearby resort] that make $600,000 to $1 million on rental villas a year,” Charalambides said. He’s sold five of 35 villas and expects to sell out within the next three years, and said the units offer a value as compared to South Florida and the Northeast. “We think the opening coincides with a great time in the market. Prices in Miami and New York are very high,” he said. Dolphin Capital, with regional offices in the South-of-Fifth neighborhood of Miami Beach, and listed on the London stock exchange, has a $150 million investment in the project. That includes about $50 million in debt. The deposit structure is 40 percent to purchase the lot and receive a title, then the remaining 60 percent in three installments. From start to finish, each villa takes about 18 to 24 months to deliver. So far, the biggest demand is from the finance industry in New York, he said. But the firm is also targeting high net-worth individuals from West Palm Beach and Miami. According to a Knight Frank wealth report released earlier this year, Miami has become a hot spot for the wealthy, and will remain among the world’s top 10 cities for the super rich through at least 2025. Underlying that is the demand for luxury properties. “Obviously, there’s less reason to leave Miami to go to Dominican Republic. [But] the more Miami prices are rising now and the more the city is becoming more and more [congested], it becomes more of an escape,” he said.

Is Miami real estate at or nearing its peak ?

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By Erik Bojnansky, The Real Deal 

Most of Miami’s real estate sectors are at or near their peak, according to a national economist who spoke at CREW-Miami’s Economic Outlook luncheon held at the Four Seasons Hotel Miami on Tuesday.

Hugh Kelly, a clinical professor at New York University’s Schack Institute of Real Estate and a member of the Counselors of Real Estate, said that while most real estate sectors across the country are poised for expansion, there are local markets that have already seen explosive growth, such as Miami, and “it’s time to play defense.”

Current data suggests that there’s still room for the office market to grow in Miami, he said. But the data also claims that the hotel and apartment sectors in Miami are at their peak, Kelly said. Miami’s industrial and retail sectors, meanwhile, are coming close to the peak.

“It’s time to start thinking about how to preserve those gains and how to monetize those gains. Is it a sell strategy or a hold strategy? Is it a chance, if you are going to acquire, to make sure you buy based on existing cash flow rather than on future appreciation?” Kelly said. “Those are ways to think defensively about where you stand in the cycle and make the cycle run in your favor rather than react to the cycle as it turns.”

Most trends, on the other hand, appear to favor Miami in the long haul, Kelly added. For one thing, Miami is what Kelly calls a “24-hour city”— places that tend to be very beneficial for long-term real estate investors. The financial markets are also going through a period of volatility, which will likely increase the flow of cash toward real estate as a “safe haven.”

“In a lot of ways that is why gateway cities do so well in terms of foreign capital,” Kelly said.

However, rising interest rates, capital rates, and increases in regulations have contributed to the overall deceleration of international capital flows, Kelly added. This will cause some “marginal deals” to fall apart nationally, he said. Incidentally, Kelly doesn’t blame the rise of capital rates on the Federal Reserve finally increasing interest rates. “It’s because the pool of capital is very deep but not limitless,” Kelly said.

Overall, a knowledgeable investor who “stays awake” and knows when to play offensively or defensively will do fine in the national real estate market, Kelly said. He also doesn’t foresee a major correction in most hot real estate markets, except for places that are really saturated and overpriced like Manhattan.

“If you are building 5,000 apartment units that need to have buyers at $10 million and up, even in New York the market is a little thinner,” Kelly said.

But is Miami overbuilt and overpriced? And will it be hit by the devaluation of foreign currency against the U.S. dollar? After all, it was foreign currency that helped fuel Miami’s rebound that followed the great recession. When asked that question by Britt Rosen of Appraisal Services, Inc., Kelly, whose speech mainly focused on national trends, admitted he wasn’t sure. “You don’t come into a city pretending to know more than the people who live there,” Kelly said. He then quoted from his old high school history teacher, a marine captain: “Remember what an expert is: a loud mouth far from home.”

Rosen believes that Miami is heading for a price correction. With foreign currencies continuing to drop, it’s only a matter of time before some South American investors sell their units for below market price, he reasoned. Plus, there’s a lot of new residential units being built. “I think we’re going into an oversupply market residentially,” he said.

But Cristina Arana Lumpkin, an attorney with Bilzin Sumberg and president of CREW-Miami, is more optimistic.

“There are two ways of looking at it. You could look at the devaluation of Latin American currencies as being negative, but you can also look at people living in those countries where their currency is being devalued and they still need a safe haven,” Lumpkin said.

“And Miami has operated as a safe haven for Latin America for a long time now and will probably continue to do so in the near future,” she said. “In difficult times… safe havens are more about the preservation of capital than the return of capital.”

 

Which Comes First, the Park or the People?

 

 

 

Do you live within a half mile (0.8 km) of a park? Can you walk from your home to a park in ten minutes or less?

If you live in Boston, San Francisco, New York City, or Washington, D.C., the answer is almost certainly yes: nearly every resident in those cities has quick and easy access to some kind of public park space.

If you live in a more spread-out place, like Fort Worth, Texas; Columbus, Ohio; or Las Vegas, there is only about a 50/50 chance you can easily walk to your closest park. And things are more challenging in the sprawling giants like Oklahoma City, Memphis, and Indianapolis. In Houston, for example, more than 1.2 million people cannot get to any park, even a tot lot or a small urban square, without walking more than a half mile.

These facts, determined through mapping by the Trust for Public Land (TPL), demonstrate the need for many more parks for the increasingly urbanized U.S. population. Cities are rising to the challenge in creative ways, building deck parks over highways, converting asphalt schoolyards to after-school community parks, installing community gardens at abandoned properties, turning unused rail lines into linear parks, and more.

All these efforts help provide green space within a ten-minute walk for the millions of urban and suburban Americans who are too far from parks to derive the health, environmental, and rejuvenating benefits they offer. While a number of big-city mayors and even a governor have endorsed the goal of providing parks or other open spaces within a ten-minute walk of residents, adding enough parks to serve all 249 million people living in U.S. cities, suburbs, and urbanized areas—83 percent of the population—will be a challenge.

There is another, concurrent approach to providing Americans with a nearby park: bringing more dwellings to the periphery of existing parks to increase density on their edges. This is what TPL researcher Kyle Barnhart calls, “not only ‘parks for people,’ but also ‘people for the parks.’”

Small areas of pavement are transformed into usable urban open space, commonly known as parklets, in San Francisco’s Pavement to Parks Program. Small areas of pavement are transformed into usable urban open space, commonly known as parklets, in San Francisco’s Pavement to Parks Program.

The concept is parallel to the approach taken with transit. It is well established that the expense of building and operating transit lines can and should be earned back through the promotion of transit-oriented development—dense pockets of housing, commercial space, and retail development within 2,000 feet (610 m) of subway stations and major trolley and bus stops. Arlington, Virginia, for example, has won numerous awards—and achieved notable economic success—by closely tying compact residential and commercial redevelopment to six of its Metro stations.

The same logic can hold for park-oriented development. While studies by Smart Growth America and others show that transit is the strongest generator of demand for urban consolidation and density, parks can be high on that list, too. This has been shown in compact redevelopment in such places as Philadelphia (around Hawthorne Park), St. Paul, Minnesota (around Wacouta Commons), and Denver (along Commons and Confluence parks).

Surveys regularly find that people strongly desire greenery nearby, and they like providing a place for their children (and their dogs) to play. Even people who have no kids or animals and rarely go to a park significantly benefit from simply having a green view from a house or an apartment, as has been shown in research by Ming Kuo at the University of Illinois and others.

“The great thing about parks is that you can jump into them from just about anywhere,” says Elizabeth Shreeve, a planner and a principal with SWA, a landscape architecture, planning, and design firm in Sausalito, California. “And it’s particularly true for trails—long, thin parks that can have a few miles of edge and touch so many more communities.”

Americans are not unified on the topic of density and parks, and that lack of consensus may be partly due to the many different mental pictures people have of both parks and cities.

Iconic photos from New York City and Chicago show massive walls of apartments facing Central Park and Lincoln Park, respectively. Philadelphia’s Rittenhouse Square, San Francisco’s Portsmouth Square, and Portland’s new Jamison Square teem with activity nearly around the clock because of the large number of people living nearby. But that is not the rule. An ongoing study by the Rand Corporation is finding that some city parks around the nation are surprisingly lightly used, and part of the reason is that so few people live near them.

One dramatic case is Portland’s 5,032-acre (2,036 ha) Forest Park, one of the largest city parks in the country, which has only 4,344 residents within a half mile (0.8 km) of its long boundary. It receives only about 500,000 visits per year, which sounds like a lot, but that works out to less than two persons per park acre every week.

In contrast, New York City’s Riverside Park, much smaller at 330 acres (134 ha), serves more than 259,000 people within easy walking distance and receives about 3.5 million visits a year. Riverside Park and the adjacent Riverside Drive were specifically planned and designed in the 19th century as an amenity attraction for the development of scores of mansions, and later handsome apartment buildings, along the drive, and it worked.

In a few places, tall buildings could threaten the very parks they celebrate. In Manhattan, a recent spate of ultra-tall luxury condominium towers is casting shadows that reach into Central Park at certain hours during winter months. (These buildings do very little for urban density because their super-wealthy owners generally reside elsewhere most of the time.)

Parks in densely developed midtown areas of major cities might well require special zoning protection to avoid being cast in shade much of the year. San Francisco already has fought back with a stringent sunlight protection law that requires developers to replace every square foot of parkland that is newly shaded even one hour of the year.

One trend affecting densification around city parks involves the conversion of former manufacturing and office buildings to residential use. From Portland, Maine, to Portland, Oregon, and from Washington, D.C., to Seattle, Washington, business and industrial centers have been turned into or added to residential communities. As new residents move into the once-nearly abandoned historic downtown Los Angeles, how might that change demand for park amenities like playgrounds in Pershing Square or increase use of newly built Grand Park or Spring Street Park?

Finding the Revenue

Park-oriented development plays into two of today’s realities: urbanites want high-quality parks nearby, and mayors need revenue to maintain the quality of those facilities. That revenue can only come from taxpayers, philanthropic donors, or people paying fees.

“In cities, density not only matters, it’s crucial,” says Mahlon “Sandy” Apgar IV, a real estate counselor and author. “Parks are one of the key features that can bring it about.”

Apgar himself is living his aphorism. Beginning as an intern with legendary developer James Rouse, he has lived in London; Washington, D.C.; and Baltimore’s suburbs. But after becoming empty nesters, Apgar and his wife, Anne, moved to Baltimore’s Federal Hill neighborhood, which is anchored by the famed Inner Harbor and a historic park. There they cofounded a park revitalization organization called South Harbor Renaissance.

Apgar is focusing his attention on finding a sustainable funding model to pay for better upkeep and management of that historic open space, Federal Hill Park. He thinks solutions could include market-based pricing for revenue-generating activities in the park, a value-based local tax benefit for merchants who contribute in-kind support to the park, and a services-based assessment (such as those charged by private neighborhood associations) to pay for maintenance by the Waterfront Partnership, Baltimore’s celebrated open-space management group.

“As Baltimore grapples with solutions to issues of employment, housing, and education, parks must be part of the mix as well to make it a healthful and beautiful city that unites and uplifts people,” Apgar notes.

“Of course, conversations about density can be a flashpoint for a community,” he adds. “People intuitively perceive the drawbacks more than the benefits. Most people don’t link their neighborhood’s density with the capacity and resources to improve their parks. So, that’s what policy makers and officials themselves need to understand and then communicate to constituents.”

Opposition to greater building height or increased development density surrounding parks is often due to NIMBYism, he says. “And in older cities, it may be symptomatic of other issues confronting residents, such as antiquated infrastructure and inefficient public services despite high taxes.”

In the absence of lengthy conversations and public education, “battle lines are drawn between old-timers and newcomers who bring fresh ideas and energy to enliven community parks,” Apgar says.

Jamison Square, the first park added to the Pearl District in Portland, Oregon, is a model pocket park that, through a variety of inclusive features including a fountain, a boardwalk, and an outdoor gallery, enables a high level of use by the surrounding communities. (PWL Landscape Architecture)
Jamison Square, the first park added to the Pearl District in Portland, Oregon, is a model pocket park that, through a variety of inclusive features including a fountain, a boardwalk, and an outdoor gallery, enables a high level of use by the surrounding communities. (PWL Landscape Architecture)

“Historically, inflexible zoning did not allow much room for experimentation. Now that’s changing,” he says. “The millennials’ drive to the city and enthusiasm for shared space promotes higher-density urban design. Planned new communities have shown the way by integrating open space with denser mixed-use development and introducing flexibility to open-space zoning. And these innovations, thankfully, are moving from backroom deal making to more open neighborhood forums.”

Baltimore has a triad of parks that illustrate the opportunities and challenges of the “people for the parks” concept.

Federal Hill is an eight-acre (3.3 ha) park in a crowded historic neighborhood. A few miles away, 135-acre (55 ha) Patterson Park, supported by a group called Friends of Patterson Park, is becoming steadily safer, more beautiful, and more active, adding significant value and appeal to its neighborhood; it seems likely that the housing market there would support replacement of some of the small surrounding rowhouses with apartment buildings.

But the story is different on the west side, where 700-acre (283 ha) Druid Hill Park was at one time the city’s premier pleasure ground, surrounded by large apartment buildings and a dense fabric of fashionable brownstones. Because of severe neighborhood decline, the periphery today is a sad mixture of old buildings, vacant land, and a few new gated developments.

Zoning and Political Will

There is no one-zoning-fits-all solution to these myriad situations, nor a single best way of developing around parks. In some places, the housing demand simply does not exist; in others, there would be strong resistance from current residents to denser development. Apgar takes that concept further: he believes that large parks should not even be thought of as single entities. “One of Patterson Park’s strengths is that it is large and diverse enough to have a mix of surrounding communities with different types of housing, different uses, and different markets,” he says.

In all cases, local politicians and business leaders would have to understand that park-oriented development is economically beneficial to the city and environmentally beneficial to the surrounding region, just as is the case with transit-oriented development.

Clearly, with a few notable exceptions in places like New York City, many neighborhoods surrounding parks are far from being fully developed. In fact, with many urban communities in a state of almost continuous redevelopment flux, there is often room for gradual densification. A rough calculation shows that if the density around parks in all urban areas were slowly increased so that the half-mile-walk “catchment population” doubled from an average of about 1,850 people to 3,700, the number of new parks needed to provide the ten-minute walk to all city dwellers would be cut in half.

This approach would not be easy. One person particularly aware of the importance of parks, but also of the challenge of density, is Jeremy Sharpe, vice president for community development for the Rancho Sahuarita master-planned community in Tucson, Arizona.

“The closer residents can be to a park, the better,” Sharpe says. “A safe, well-maintained park is an amenity. We regularly survey our residents, and parks and trails continue to be the main reason people live in our community.”

Federal Hill in Baltimore’s Inner Harbor offers eight acres (3 ha) of park space in what otherwise is a crowded historic neighborhood.
Federal Hill in Baltimore’s Inner Harbor offers eight acres (3 ha) of park space in what otherwise is a crowded historic neighborhood.

But density is a challenge, he says. “In principle, in gateway cities the park-oriented development idea makes sense. But in non-gateway cities like Tucson, the market doesn’t demand that level of density,” he says. “Yes, there is an increased interest in urbanity, especially by millennials. But according to two 2015 ULI studies, while 37 percent of millennials want to live in cities rather than suburbs or a small town (America in 2015), only 13 percent actually now live in or near downtowns (Gen Y and Housing). Most millennials want urban amenities in a suburban environment.

“Also, sometimes changes in the development process are difficult,” Sharpe continues. “New ideas are often challenged, not because of the concept necessarily, but because there aren’t existing principles to work under in the local market. Public planners have limits on what they’re able to approve due to politics and zoning constraints. In our master-planned community, we’ve had to demonstrate some amenities and principles that were new and unfamiliar in our region.”

Shreeve turns that thought around. “How about giving developers density bonuses for making improvements to existing parks?” she says. “Traditionally, in many places developers give land or money for new parks. But what if they also had the alternative of making our current parks better and allowing more people to live around them?”

Would this densification strategy cost more, or less, than simply buying more land? No one knows yet, but there is one major difference between the two approaches: buying the land requires public (and occasionally, private) money, whereas changing the urban form can be done largely through private financing. Small changes in zoning rules, incentives, or both can allow private developers to enter the market and assume the risk in return for likely profit.

Cities today are again ascendant, but they can also be difficult places to live without green space and other places providing respite. Creating new parks and working to fit more people around the edges of existing parks is a double-barreled way to get the most benefit to the largest number of people at a cost the nation can afford.

Peter Harnik is director of the Center for City Park Excellence at the Trust for Public Land; he is author of Urban Green: Innovative Parks for Resurgent Cities (Island Press, 2010).

Transforming Cities through Art and Culture

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By Leslie Braunstein, ULI Magazine

Art and expressions of culture can no longer be considered pricey or optional additions to major real estate projects. “Culture is the new currency,” stated Shaheen Sadeghi, president and CEO, LAB Holding, at a 2015 ULI Fall Meeting opening general session. “It’s the way you think and interact with your community.” Jessica Goldman Srebnick, CEO of Miami-based Goldman Properties, added, “Art is a game-changer.”

Srebnick’s late father, Tony Goldman, “saw things that other people don’t see,” she explained. “We always integrate art into our projects. Why surround yourself with sterility when you can surround yourself with something fascinating? As developers, we have the largest canvases in the world.”

For the last four decades, Goldman Properties has used community-based public art as a springboard for neighborhood revitalization, transforming some of the East Coast’s most downtrodden urban areas into iconic destinations that have skyrocketed in value. After rebuilding much of Greene Street in New York City’s SoHo district, Goldman moved into Miami Beach in 1986, quickly acquiring 18 deteriorating art deco buildings along Ocean Drive. Now, of course, this South Beach strip is a world-class cultural, recreational, and tourist magnet.

More recently, the company has taken on another challenge: acquiring about 20 run-down single-story commercial buildings in the dying industrial Miami neighborhood called Wynwood. It was there, said Srebnick, that her father would implement many of the lessons learned throughout his career. Before redeveloping and leasing a single structure, the company invited a group of the world’s leading graffiti artists to paint the backs of their newly acquired buildings. These modern works of art—open to the public and illuminated at night—became the Wynwood Walls, “the world’s largest outdoor street museum,” attracting up to 15,000 people per day.

One of the lessons learned by Goldman is the evolution of a new live/work/play neighborhood. It starts with the “play” element, often in the form of restaurants. Greene Street Café in New York, Trust in Philadelphia, and Wish and Lucky in Miami Beach all proved that “people will come to a great restaurant even if it’s in a crappy neighborhood.” So Goldman proceeded to lease space to a new restaurant, Wynwood Kitchen and Bar.

The next step, Srebnick went on, is work. “Dad said we should never give in to fear, so we have always been the first to jump into the pool,” she explained. “Curation is important; we wanted differentiated and creative office users.” To obtain an anchor tenant in Wynwood, Goldman leased a building for a dollar a year to the Museum of Contemporary Art. Later, they had an artist paint bold black-and-white stripes on an empty building, then leased it to technology sector tenants, realizing a rent increase from $6 per square foot ($65 per sq m) to $35 per square foot ($377 per sq m). A plain garage was given a stunning, futuristic facade. “We believe that Wynwood will become one of the world’s most important neighborhoods for the marriage of public art and architecture,” Srebnick concluded.

Sadeghi engaged the audience of ULI members with music, images, and a variety of provocative questions. “Why do we fear riding in an elevator with another person? What would happen if you let that other person into your life? What if there was a pawnshop where you could sell your bad memories and leave them behind? As developers, we are in the memory-making business; our projects can change people’s lives.”

The California-based speaker went back in history to point out that after World War II, the world had to buy goods from the United States because other major powers were destroyed. Foreign and domestic demand, combined with new technology, spurred the era of mass production, the era of consumption, and the rise of the middle class. TV dinners and canned meat gave rise to fast food and then the drive-through. Everything had to be done faster and cheaper. Americans represent 4.5 percent of the world’s population, Sadeghi pointed out, but consume 25 percent of the world’s goods.

But now Americans are fed up and a major shift is occurring, he continued. Mass culture in the United States is giving way to a plethora of niche subcultures. “It’s about personalization, customization, and localization, not homogenization. We want content in our lives; we want layers of experiences; we want authenticity that cannot be bought.”

So what does this have to do with real estate development? The answer is: everything. “We are stuck in Development 1.0,” Sadeghi noted. “But insanity is doing the same thing over and over again [and expecting different results]. People in the community are now active participants—even coauthors—in our projects.”

 

 

Miami’s condo market continues to be global magnet

Miami’s condo market continues to be a strong magnet for international investment, but many brokers say the line between residents and investors may now be fuzzier than ever. “From what I see and what I’m hearing from developers,” he says, “about a third are buying for their own use as a permanent residence, a third for a second home and a third as an investment to rent out.

“Over the past two years rental inventory had been extremely low, so this is a very sought-after alternative.” That three-way split applies to the Greater Miami market as a whole, Mr. Kawas says; specific areas vary widely. Investors are much more prevalent in downtown, Brickell and Miami Beach, he says, “but if you go to Doral or Coral Gables or Coconut Grove there’s a much higher percentage of end-users – probably more like 60% end-users and 20% for each of the other categories.” Investors, Mr. Kawas says, can be further broken down into several different types.

“Some,” he says, “are buying in the lower to midrange price point – under $1 million – and are looking for a return of 5% to 7% or 8%. Then there are high-end buyers who are looking for more upside and capital preservation; they are happy with a lower return.” A third trend that is gaining momentum, Mr. Kawas says, is “a marriage between second homes and investment. For example, 60% of units at 6080 Collins Ave., which launched in August, are reserved, most of them by investors. “There’s a very high demand for properties with very liberal rental policies that will allow them to use it for a couple of months as a vacation home and then rent it out the rest of the year.”

Edgardo Defortuna, president of Fortune International Realty, says the trend for foreign investors to live in their units part of the year is particularly strong in Miami Beach, where he estimates about 65% of condos are owned by buyers from other countries. “They will spend two or three months here,” he says, “or the family will move here while the man of the house moves back and forth. This is happening much more, especially with investors from countries such as Venezuela and Brazil.”

As much as 85% of buyers of new product in the central business district and along the Biscayne corridor are investors, Mr. Defortuna says, and will likely put their units on the rental market. “Doral, which is heavily populated by Venezuelans, is an exception,” he says. “Most plan to stay here if they can figure out a way to become permanent residents.” ISG principal Craig Studnicky calculates that countywide the ratio of absentee to permanent condo owners is about 40/60. “It was higher 10 years ago,” he says, “but many now have their green cards and live here permanently or are early retirees from the New York area.”

While Brickell buyers are almost exclusively from South or Central America, Mr. Studnicky says, “moving north to Aventura and Sunny Isles there’s a bigger mix of people from the Northeast.”

Miami sees two annual influxes of snowbirds, he says – “those from the Northeast, who are here now, and South Americans who come here to escape their winter in June, July and August. So none of these buildings is ever fully occupied.” EWM’s David Siddons cautions against too much generalization. While he says his impression is that the downtown-Brickell market where he is active is about 80% either snowbirds or investors renting their units out, “that said, a number of buildings such as The Palace, Santa Maria or buildings on Brickell Key are not anywhere near that. They are family-friendly buildings that attract primary residents.” Like many other brokers, Mr. Siddons says, he is seeing more clients in the past three years who initially planned to live in their unit for only a couple of months a year but “end up using it a lot more than they ever anticipated.”

To learn more about residential opportunities contact AG&T. 

Thor equities buys an entire block in wynwood for 41.5 Million

Thor Equities just paid $41.5 million for more than an entire block in Wynwood, a missing piece that gives it one square block and marks the largest deal ever in the red-hot Miami neighborhood, The Real Deal has learned.

New York-based Thor Equities, led by Joseph Sitt, bought 2800 Northwest Second Avenue, a 100,000-square-foot site running from Northwest 29th Street to Northwest 28th Street at Wynwood’s northern entrance. The corner site includes five existing buildings totaling 45,000 square feet, and also features 300 feet of frontage on Northwest Second Avenue and a 16,500-square-foot parking lot, a Thor spokesperson told TRD.

The property has development rights in excess of 600,000 square feet, and the plan for the site includes a mix of retail, residential, hotel and/or office uses, the spokesperson said.

The seller is Lehman Family Partnership Ltd., headed by Dennis J. Lehman, as trustee, according to public records. The entity had paid $200,000 for the parcels in 1995. The properties have been the 68-year home of Lehman Pipe & Plumbing Supply.

Bruce Koniver, principal of Koniver Stern Group brokered the deal, representing the seller. The firm was the only broker involved in the transaction. Koniver said he has known Lehman since 7th grade, and began marketing the property a few months ago.

“There was a hit list of potential buyers we reached out to, and fortunately enough Thor was on that list,” Koniver told TRD.

Thor’s latest purchase gives it the entire square block between Northwest Second Avenue and Northwest Third Avenue and between Northwest 28th Street and Northwest 29th Street. Its latest Wynwood purchase is adjacent to 2801 Northwest Third Avenue, a 105,000-square-foot, seven-parcel site that the real estate investment and development firm purchased from David Edelstein for $26.9 million in May.

The huge real estate investment firm, which has been expanding its holdings in Wynwood, also owns 2722 Northwest Second Avenue in Wynwood, as well as additional properties in the Design District and on Collins Avenue and Lincoln Road in Miami Beach.

Wynwood, known for its artsy vibe, is a neighborhood transforming with new retail stores and restaurants. Among new retailers are Warby Parker, Illesteva and Marine Layer. New restaurants include Wynwood Diner and the Lunchbox. The area is also home to art galleries and one of the largest open-air street art installations in the world including Wynwood Walls, creative offices and showrooms.

The city of Miami’s Planning, Zoning and Appeals Board recently approved a slate of changes to zoning and land use designations that would allow denser residential developments on roughly 205 acres in Wynwood. The recommendations must still be finalized by the city commission.

“The already burgeoning Wynwood Art District is primed for a mixed-use, residential rezoning that will spur further development, and accelerate its ongoing transformation from an underutilized industrial area into a true live-work-play community,” Sitt, CEO of Thor Equities, said in a statement.

Caribbean Resorts Lure Private Equity as Banks Retreat

 

 

Bloomberg business by Ezra Fieser 

Dec. 2014

Private equity companies from Bain Capital Partners LLC to billionaire Sam Zell’s Equity International were boosting investments in Caribbean resorts as the region’s traditional lenders scaled back operations.

While Canadian banks including Bank of Nova Scotia and Royal Bank of Canada shuttered some businesses in the islands, U.S.-based private equity firms have spent $329 million on hotel developments this year, the most in a decade, according to Real Capital Analytics Inc., a New York-based commercial real estate research company.

“Private equity makes for an interesting hero in this situation,” said Robi Das, managing director in the Miami office for Newmark Grubb Knight Frank, a commercial real estate company. “The traditional lenders have been hesitant to participate in the Caribbean. I wouldn’t say they’re out of the market, but the new debt that’s coming in is private equity.”

Struggling with some of the heaviest debt burdens in the world, Caribbean governments are seeking to take advantage of rebounding tourism as the U.S. economy recovers. In May, Zell led the approximately $500 million purchase of Decameron Hotels & Resorts, which operates in countries including Jamaica and Colombia. Now, Cuba provides a new opportunity as U.S. tourists prepare to take advantage of an easing in travel restrictions.

“The Cuba story is huge, no question,” Das said.

While investors wait and see what financial safeguards will be put in place, U.S. hotel chains including Marriott International Inc. and Hilton Worldwide Holdings Inc. said they are interested in the Cuban market or monitoring developments there.

Closing Branches

As part of a larger international pullback, Toronto-based Scotiabank on Nov. 4 said it would close 35 branches in the Caribbean and take C$109 million ($94 million) in losses related to three Caribbean hotel development loans.

Those cuts followed Royal Bank’s sale of its Jamaica operations and Canadian Imperial Bank of Commerce’s May announcement of C$123 million in losses and a C$420 million goodwill impairment charge on CIBC FirstCaribbean International Bank. Royal Bank said on Nov. 21 that it would shutter its wealth management business in the Caribbean.

Scotiabank, which is weighing a sale of its Puerto Rican banking unit, will continue to implement “operational efficiency initiatives,” spokesman Marcelo Gomez-Wiuckstern said in a Dec. 11 e-mail. CIBC had no comment, spokesman Kevin Dove said via e-mail.

Luxury Development

Cuba’s opening to more U.S. tourists may change that trend. Five decades after closing operations in the communist country, Royal Bank’s Chief Executive Officer David McKay said Canada’s second-largest lender by assets is evaluating a return to the island.

“We see a very attractive, long-term marketplace in Cuba,” McKay, said in an interview last week in Toronto.

Traditionally the dominant lenders in the region, banks were stung by a drop in tourism and falling revenue for hotels in the wake of the global financial crisis. Tourist arrivals fell by 3.6 percent in 2009 to 22.1 million, the fewest since 2005, according to the Caribbean Tourism Organization. Revenue-per-available room for Caribbean hotels, a key measure of the sector’s health, fell 7 percent in 2008 and about 16.6 percent the following year, according to Smith Travel Research.
Macao Beach

The downturn ensnared projects such as Roco Ki, envisioned as a luxury development with four golf courses, a Westin hotel and $3 million estates built on a 2,500-acre (1,011-hectare) bluff above Macao Beach on the Dominican Republic’s east coast. The development said it received $85 million in loans from Scotiabank and the European Investment Bank. Construction stopped in 2008, leaving shells of buildings on a bluff overlooking the sea.
Calls to the lead developer, Macao Beach Resort Inc., went unanswered. Press officials at Westin owner Starwood Hotel & Resorts Worldwide Inc. did not respond to calls and e-mails by Bloomberg News seeking comment.

“The traditional lenders have been very, very slow, to return to the market, particularly for new construction,” said Parris E. Jordan, managing director at HVS Caribbean, a hotel consultancy that evaluates projects.

While the regional economy has rebounded, growth remains uneven. The economies of the Spanish-speaking Caribbean are forecast to expand by 4.1 percent next year, compared with 2.2 percent in the English-speaking countries, according to the United Nations. Vulnerable to hurricanes and earthquakes, Caribbean nations have an average debt-to-GDP ratio of nearly 80 percent, according to the UN.

25 Million
More than 25 million visitors are expected to visit the Caribbean this year, according to the region’s tourism organization. Jamaica Tourism Minister Wykeham McNeill said Nov. 29 that more than $300 million in hotel investment is helping boost an economy that is expected to grow by 1 percent or less this year. Fitch Ratings on Nov. 21 raised the Dominican Republic’s credit rating, citing the strength of the tourism market in the Caribbean’s largest economy.
Private equity firms are entering the market largely through joint ventures with hotel operators, including Marriott and Hyatt Hotels Corp.

“Our goal is to have 150 hotels open by the end of 2017 and the Caribbean plays a large part in that development story,” said Craig S. Smith, Marriott’s president for Latin America and the Caribbean.

For investors, working with the established hoteliers is “a shorter trip to the cash register than building new,” said William Sipple, managing director at Denver-based HVS Capital Corp, which consults on Caribbean hotel purchases.

Billionaire Sale

At least three such joint ventures bid on Occidental Hotels & Resorts’ portfolio of hotels, being sold by Amancio Ortega, the billionaire owner of the Zara clothing-chain, and Banco Bilbao Vizcaya Argentaria SA, Spain’s second-largest bank.
Caribbean Property Group LLC, a New York-based private equity company, and Spanish hotel operator Grupo Barcelo plan to resume discussions in the coming weeks with Occidental for a deal that could be valued at $625 million, said a person with knowledge of the talks who asked not to be identified because the talks are private.

“The attraction is that this type of capital can help position you to grow,” said Javier Coll, chief strategy officer of Apple Leisure Group, a travel company that manages 37 resorts, including seven in the Dominican Republic and two in Jamaica’s Montego Bay. Apple Leisure last year sold an undisclosed equity stake in its operations to Bain Capital.
Virgin Islands
The company’s hotel management subsidiary AMResorts has since opened all-inclusive resorts in the Mexican Riviera and new markets, including the U.S. Virgin Islands.
“The demand from visitors is there,” Coll said.
Caribbean all-inclusive resorts have evolved from their yesteryear image of cramped rooms, crowded pools and long buffet lines, said Ryan Cotton, a Bain Capital principal who led the investment in Apple.

“More and more passengers are going to come to four- and five-star American-centric” resorts, Cotton said in a Dec. 15 telephone interview. “So it’s a perfect time for transacting. We’re pretty compelled by that.”

Growth in the Caribbean has also brought investment from China, which is offering cheap loans, construction services and equity investments in hotel developments.
In the Bahamas, Chinese firms provided a $2.6 billion construction loan, $150 million in equity and about 4,000 workers to develop the 1,000-acre Baha Mar resort, the largest single development in the history of the Caribbean. That project, delayed by six months, is expected to open early next year.
Daniel Liu, senior vice president at China Construction America, Inc., which is building Baha Mar, said the company expects to expand throughout the region. The company, a wholly owned subsidiary of China State Construction Engineering Corp., is targeting projects of $100 million or more, he said at a conference in Punta Cana, Dominican Republic last month.

“We are really pushing ourselves in the Caribbean,” Liu said. “We’re going to be a driving force, I’m very sure about that, in the Caribbean market.”