First Major Loan Approval For Construction Of Miami Luxury Tower Since The Crash

By Author: Andres Leiser
Total Articles: 34
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The first major real estate construction loan for a luxury condo project in Miami has been agreed to by a group of lenders since the housing. This marks a milestone in real estate financing for luxury condos. Loans to build condo towers were commonplace during the housing boom, but the bust left Florida with an large inventory of luxury real estate condos and financing for new development disappeared. The loan is the first debt deal of over $100 million for a new condo development since the housing boom went bust. The loan itself shows that banks are being very cautious about condos. The lender required the builder to have $320 million in pre-sales, and stipulated 50% down payments from buyers as a condition of the loan.

The Mansions luxury real estate deal comes at a time that banks around the country are showing a greater interest for real estate investment. Commercial real estate loans grew by about $14 billion to $1.51 trillion in the fourth quarter. This is the largest increase in years. "There's been improvement over the last couple years, but really, it's just within the last quarter that the overall sector has ...
... been turning," said Matthew Anderson, managing director at loan research service Trepp LLC. The return of bank lending in South Florida in part reflects the condo market's reemergence from the damage done during the housing bust. Sales and prices have recovered over the last two years, with help from foreign buyers. Many of the foreign buyers use cash to purchase the units.

Sales in the South Florida market, which include Miami-Dade, Broward and Palm Beach counties, dropped to 29,058 transactions in 2007, but improved to 52,679 in 2012. The median price per square foot for condos in Miami fell to $107 in 2010. It reached $139 by the end of 2012. This is still way below the $400 a square foot hit during the peak years, when more than 22,000 new units were added to the market in Miami. Developers have noticed the recent improvement in the Miami luxury real estate market. There are approximately 2,000 units under construction currently in Miami. Developers don't want to be left behind as the new South Florida construction boom is just beginning. Every luxury real estate developer wants to get started earlier rather than later in hopes of delivering their units earlier than the competition.

Most luxury condo developers have had to rely on a combination of their own personal money, investments from equity funds and large buyer deposits, some as much as 80% of the purchase price, to finance construction of their projects. Banks are becoming more confident as the Mansions deal suggests. Lenders see dollar signs and can't restrain themselves forever.

High-priced luxury condos have been a especially lucrative as of late. In 2012, 48 Miami area condos were sold for more than $5 million. This is up from 31 in 2007. Also in 2012, reports of a record sale price for a condo in the Miami area had everyone buzzing, after a penthouse in the Continuum, a South Beach tower, sold for $25 million.
AUTHOR'S BIO

Andres Leiser is a local contributor for Constec Realty's Miami luxury real estate website. Andres Leiser has been involved in Miami real estate for over a decade. For more information visit : -www.constecrealty.com