Miami Heat
Over the past five years, the Miami condominium market had been experiencing, in some cases, up to 25-to-30-percent annual appreciation rates. "That was a rate that simply could not be sustained," says Craig Studnicky, president of the Aventura-based International Sales Group. "As irrational as 2004 and 2005 were on the upside, the early part of this year was equally irrational," he says. "The market was at a Mexican standoff. Buyers weren't buying and sellers weren't lowering their prices." Despite this, "long-term demand for property in Miami/Dade has remained robust," Studnicky says.


"Probably the biggest story in Miami," says Ron Shuffield, president of Esslinger-Wooten-Maxwell Inc., in Coral Gables, "is the return of the American buyer over these last four to five years. The number one driver of our business is population growth and no one disputes the fact that Florida will continue to grow in record numbers. With 82 million U.S. baby boomers entering into their peak earning and inheriting years, many hundreds purchase here every week. A Friday afternoon check of any of our U.S. airports along the eastern seaboard will find planeloads of northeasterners heading to south Florida every weekend in search of their 'condominium in the sun.' "

Currently, one of every nine condominiums on the market for sale in Miami/Dade County is priced at more than $1 million. So it's inevitable that prices over time will continue upward as construction costs increase and the availability of land decreases; as the land supply remains fixed, the solid demand will push up condominium prices. Despite the slowdown, our experts named two "hot properties."

The Peninsula, in Aventura (one of Miami/Dade's newest upscale communities, incorporated in 1995), is "one of the area's most stunning properties," Studnicky says. "It's a spectacular waterfront condominium," with 2,800-square-foot units selling for between $1.2 million and $1.3 million. The Metropolitan Miami project on Brickell Avenue also is drawing attention, notes Shuffield. Over the next five years, MDM Development Group will transform a 6-acre parcel of parking lots into a diverse mix of residential and commercial activity. A curved, L-shaped 40-story tower will feature unobstructed views of Biscayne Bay and the city of Miami. Metropolitan Miami also will feature retail venues and restaurants, an entertainment complex, pedestrian-friendly open piazzas, and loggias, all surrounded by Miami's signature water views. "It's an exciting time to be here," Shuffield concludes.

The New Hamptons
Much as in the celebrated Cinderella fairy tale, Vero Beach's modest pumpkin is changing into a carriage fit for royalty. Long accused of being the low man on the Florida East Coast luxury condominium real estate totem pole-behind Fort Lauderdale, Boca Raton, and Palm Beach-Vero Beach has become a first-class address.

The catalyst of change has been a healthy dose of entrepreneurial activity by a growing number of highly talented, deep-pocketed, and farsighted investors. "We've also been discovered by South Florida," says Clark French, the owner of Clark French and Co. in Vero Beach. "In many ways, we are the new Hamptons. A number of high-profile business people and celebrities are buying homes up here and will spend two to three weekends a month in Vero. Our buyers appreciate the understated, slower pace of life. And yet our amenities are first rate."

French points to the Vero Beach Hotel and Club (Phase I is scheduled to open soon), an 83-unit luxury condominium on the beach and the only condominium-hotel in the Vero Beach area at this time. Prices start at $775,000. Like most prime Florida real estate, luxury property in Vero Beach has just gone through a stratospheric up-cycle. "Three years ago, an $8.9 million estate increased to $20 million in 12 months. That kind of rate increase couldn't continue. We experienced a little bit of a slowdown at the end of 2005, but we're still a good investment," French admits. "Some properties were over-priced. But our first quarter in 2006 was our best quarter ever. And compared to Miami and Palm Beach, our luxury condominiums are undervalued. I expect the rest of 2006 to be a good year."

 

Hidden Treasure
At the western end of Florida's panhandle, Pensacola Beach, with its emerald-green water and sugar-white sand, "has long been a hidden treasure. Visitors from Atlanta and the Midwest knew about us, would vacation here, fall in love with the area, and then buy second homes. It was a fairly small market. That changed a few years ago, when Pensacola Beach was 'discovered' by investors looking to 'flip' properties for a quick profit. Suddenly, there was a tremendous boom in the luxury market with condominiums appreciating at unusually high rates," says Carissa Carisse, PA, a real estate associate for Coldwell Banker JME Realty in Pensacola. "After the last few hurricane seasons, however, the market has slowed, inventory is up, and those investors have flooded the market. We've changed back to a second-home and vacation-home market. It's a more balanced market. Excellent for buyers."

For that reason, Carisse expects 2006 to be a "good year for home sales volume, even with a moderate downtrend."

"What affects property values most in this area is hurricanes," Carisse says. "The good news is that the condominiums, built to code, will weather the storm. In fact, it's the safest way to live on the water. Luxury condominiums like Portofino in Pensacola Beach and Luxury Towers in Gulfport, Mississippi stood up to Hurricanes Ivan and Katrina, while single-family homes were heavily damaged or washed away."