Gimme Shelter: Miami or Buenos Aires?

Condo inventory is moving again in Miami, but BA makes a better case for flight to quality.

Crisis meant opportunity for investors in Buenos Aires real estate back in 2002, so—perhaps sensing blood and short sales in the high-rise waters of Miami-Dade—one BA investment advisor wonders if similar opportunities await Buenos Aires buyers in Miami in 2010.

“Median prices in Miami have already fallen 35% from the 2006 peak…and the average recession lasts five years,” writes Marcelo Elbaum of Convexity Asset Management. The abundance of finished units and foreclosures, he reasons, offers investor groups the ability to be picky and even purchase entire buildings from developers, sometimes for as little as $50,000 per unit.

Recent reports from Miami suggest that, of the 23,000 new units built in the Downtown/Brickell/Biscayne Corridor, only 7,300 remain unsold. In addition, high-rise inventory in the under-$300,000 market is down to a six-month supply; much of it snatched up in recent months by foreign investors.

But before pulling the trigger on a condo in the 305, Elbaum brings his readers back to Buenos Aires and recommends a calm, comparative analysis in their own backyard. This pause for additional due diligence reveals a market where the advantages may be greater for the individual investor. Statistics show there is considerable strength in the BA market for properties priced under-$65,000, while sales of 1 and 2-room apartments jumped 53% over last year.

Furthermore, BA real estate advisors will tell you the continued buying motivation in BA is a refugio de valor. And therein lies the main difference with Miami, where the recent buying surge is less emblematic of a flight to quality and perhaps more indicative of a Sunshine State sequel: Return of the Flippers.

For more information about Buenos Aires real estate opportunities, download IncomeBA and the new issue of InvestBA Privada.