Latin America Influencing Miami’s Economic Outlook
The International Monetary Fund recently predicted that growth in Latin America will be negative in 2016. This will be the second straight year of losses in the region. With many industries in Miami intertwined with Latin American business and economics, the negative effects are being felt locally.
Tourism, retail, trade, and banking are seeing decreases in activity due to the foreign economic plights. Visitors from South American countries are decreasing, and those that do still visit, are spending less. Banks report decreased deposits from their Latin American customers since they need the money to fuel businesses in their home countries.
The strong dollar is also making it more difficult for foreigners to afford the luxury condo market. The decline in activity is resulting in builders considering shelving condos that are not off the ground, or holding openings until 2017 or 2018.
But not all areas of real estate are experiencing negative affects. Experts are not predicting a slowdown in single-family home activity. According to the Miami Association of Realtors, foreigners spent nearly $6 billion on residential real estate last year. While the majority of this foreign spending came from South American countries who have currencies that are struggling against the dollar, tight inventory situations are expected to continue to drive single-family home prices up.
Commercial real estate is also thriving, with many large deals already executed in 2016. Global companies are used to these economic cycles in Latin America, and still prioritize being based in Miami. This year, CRE sales are projected to surpass $560B. “We believe the Miami economy will prevail, even with the troubles in Latin American economics. And especially in Commercial Real Estate,” says, Keith Darby, President of RISE Realty.