The 2018 South of Fifth Luxury Condo Report
The 2018 Market Analysis for South of Fifth Luxury Condos for Sale
A Bullish Outlook After Some Years of Corrections
South of Fifth has seen an extreme price surge in recent years. Prices increased considerably until they reached their peak in the summer of 2015. After 2015, we started seeing price corrections in South of Fifth. The most striking in this market however was the arrival of brand new, expensive properties such as One Ocean and Marea. These buildings were sold at record prices, yet they do not offer unobstructed water views and are therefore harder to sell once the market softens. This is what happened with many of these newcomers. The product didn’t offer ocean views and people seem less impressed with the endproduct than anticipated.
Condos such as Icon saw a decline in price as they simply cannot compete with luxury buildings elsewhere on the Beach, while they were asking for top dollar. While some condo neighborhoods suffered a price correction in price caused by oversupply, the SOFI market suffered decline caused by over confidence. Many sellers were inexperienced second home owners, who were not plugged into the market movements and lacked the sophisticated knowledge of locals. They were also in some cases led by inexperienced agents who allowed the ego to rule. This resulted in what I like to call “Selling by Association”. Because your condo is neighboring a $2,000 per SF condo, it does not mean you can ask for that price. An analogy is parking your old car next to a new Ferrari and deciding to sell it at the same price, because your parked aside to each other.
When it comes to condos, it’s not JUST about location. In the condo market the land value does not come into play as much as in the single-family home market. Meaning that if you are surrounded by two ultraluxury condos, your condo’s value does not rise at the same rate. This strategy however was followed by many sellers, leaving their units on the market for a prolonged period of time.
Finally, South of Fifth also experienced a fair amount of local migration. Residents discovered alternative, and often better, options either further up the beach into areas such as Surfside where new condos like Fendi were attracting attention or into primary markets such as Coconut Grove where you get more value for your dollar and where we saw the introduction of new condos such as Park Grove.
As we work through 2018 we have seen 33 sales over $3m, this represents just over a 50% increase from last year’s 17 sales for the same period of time. The sales are ranging from $3m to the most expensive sale to date this year; a penthouse unit at 321 Ocean for $26m, which also topped out the highest $ per sqft achieved in the condo market at $3819 per sqft!
The most popular condo is Continuum that has delivered 13 sales of the 33. Thats over 1/3rd of the sales coming from just one condo. Last year there were only 6 sales for the same period, so an increase of around 100% in absorption. We know Continuum well. So much so that we have dedicated a website just to this one condo: www.Continuumexpert.com. Apogee condo makes up 5 sales within the top 10 most expensive, which makes it clearly the most popular ultra luxury condo for SOFI. The cheapest deal at $7.5m and the most expensive came in at $14.5m.
We are currently seeing an inventory of around 30 months, which is much better than the Miami Beach average. After some years of price corrections, South of Fifth is definitively experiencing a stronger 2018 with 50% more transactions than the year before (We see an increased amount of traction, increased sales prices per SF and falling inventory).In short, we are bullish on this unique niche market. We think the market has absorbed the inventory it was left with after the market experienced its peak and buyers’ confidence is back