Colombians Look to Miami Real Estate to Protect Wealth After Election

• Colombians are searching for Miami properties this year more than any other country’s residents.
• COVID-19 caused a shift in preference from commercial to residential real estate as an investment.
• Foreign buyers are undeterred by Miami’s hot housing prices and consider it a stable investment.

The Cipriani Residences building is no more than a hole in the ground in Miami’s Brickell neighborhood, but that hasn’t stopped buyers from dropping millions of dollars on the condos-to-be.

One buyer plopped down over $10 million on six condos — one for each of his three children and three to rent, Fernando Naranjo, the buyer’s representative and the broker-owner of The Orange Group, said.

Naranjo’s client, who he declined to name for privacy reasons, “bought this for asset preservation,” he said. The buyer is Colombian, and the deal comes at a time when the country’s economics face an uncertain future following the election of the leftist president Gustavo Petro in June.

Colombians have signed more than 20% of the purchase agreements in the 397-unit building, according to the building’s sales director, Ana Gomez.

Miami has established itself as a center of investment in residential real estate for citizens of South American countries seeking to preserve their capital as their countries weather changes in political power — and that’s especially true of people in Colombia and Argentina.

Miami’s housing prices are red hot, but that hasn’t stopped some wealthy buyers in these countries from parking their money in an asset they see as more stable than the stock market or more reliable than their local economies.

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Miami has long drawn Colombian buyers interested the multicultural community the South Florida city offers, but the National Association of Realtors Miami has seen an uptick in searches for properties on its website from the country, with slightly over 12% of all international searches — the most of any foreign nation — coming from the South American country this year. Argentina follows, with slightly over half as much search volume.

They see Miami real estate as a safe investment

Why the turn to US real estate now?

Mohit Karnani, a Ph.D. candidate of economics and statistics at the Massachusetts Institute of Technology who researches economic development, said even just the expectation of inflation in South American economies — such as through increased government spending on social services — was enough to cause a currency devaluation.

“The Colombian peso has depreciated by about 20% in the past three or four months,” said Karnani, adding that a similar thing was happening in Peru and Chile, which both also had recent elections. “People want to look for safety when these things happen.”

Real estate in the Miami-Fort Lauderdale area was about 38% overvalued as of July, a Florida Atlantic University study found, but that can allow landlords to collect higher rents, especially as financial firms and remote workers with deep pockets flock to the area.

Many foreign buyers who invest in real estate plan to rent their properties out. They see opportunity in residential real estate, as opposed to commercial real estate, like offices and retail spaces. Those types of properties have lost some of their shine amid the pandemic as remote work stifles the return to office and online ordering strains on in-person shopping.

Miami condos are a way to preserve the value of their money

Gomez said wealthy Colombians and Argentinians had been active buyers of the preconstruction residences, with many purchasing in the $1 million to $3 million range.

The building is expected to be ready for residents in late 2025. In the meantime, preconstruction buyers, who have signed nonbinding purchase agreements and would lose their 20% deposit if they decided to not follow through with the buy, don’t have to pay property taxes or maintenance fees.

Courtesy of Ana Gomez.

“When you buy preconstruction, you have three or four years to organize and adapt to the new situation that is happening in the country,” Naranjo said, adding that it gave these buyers time to free up funds to pay for the residences from other assets in their home countries.

Most Colombians are cash buyers, Gomez said, meaning that they don’t use financing to purchase units.

“They search for a way of refuging their money,” Karnani, who is from Chile, said. “You can also see new instruments in their local markets. You’ll see, for example, banks offering accounts in dollars or people advertising real estate projects not in the country.”

And that’s exactly what the Cipriani team plans to do, with trips to Buenos Aires, Argentina, and Bogotá, Colombia, to connect with agents and prospective buyers now that Colombia’s election is over.

“People were waiting to see who the next president was going to be, but now they’re very afraid,” Gomez said of Cipriani’s Colombian buyers. “They want to, of course, be protected. There’s nothing more solid to them than real estate.”