The 2018 Brickell Luxury Condo Report
Brickell Luxury Condos for Sale | The 2018 Market Analysis
Softening of General Market has Influenced Luxury Condo Market
Confidence in the general Brickell market has taken a downturn with the oversupply of GENERAL market product, between $600k and $1m (so much new product from buildings like SLS, Bond, Brickell Heights, 1010, Rise and Reach), which has resulted in an unsurprising correction. Although the luxury market in Brickell is actually very small – only 100 units currently available for sale over $2m – the psychological well-being has been poisoned as sellers and buyers widely communicate that we are in troubled water. This has reached the ears of the luxury buyer and the effect has created a widespread softening.
On the upside; statistically speaking the ‘established’ luxury market is far better positioned than the general market (limited supply, low numbers of renters, primary owners) so long term it will fare better. We meet many buyers that would like to invest in Brickell, but they are hesitant to pull the trigger, because the general confidence is gone and there is little movement. With that said, there is not that much true luxury condo product in Brickell and if you can position yourself to buy a unit (particularly a penthouse) in one of the truly and legitimate established luxury buildings like Carbonell, Tequesta 2/3, Asia or Santa Maria with a unobstructed (never to be compromised) view of the water, you will watch as Brickell continues to grow around you in the future – this is a long term play.
What Happened in Brickell that Caused the OverSupply?
The peak in the general Brickell real estate market happened around August 2015. Condos were sold for very high prices per SqFt and pushed as luxury in the pre-construction market (I won’t name names on paper, but a phone call will allow me to tell you who these are!). Many of Brickell’s buyers bought what they were sold as ‘luxury product’. They needed to get the money out of their home countries for economic or socio-political reasons. The necessity to move their funds quickly resulted in a lack of scrutiny. Many of these buyers ended up with a new product that was not only less than luxury, but also populated mostly with tenants and investors, which pulled down the level of perceived quality even more.
In 2016 we experienced a market slow-down while many sellers were riding off the back of the 2015 preconstruction buying frenzy. They as yet had not modified their asking prices. In 2017 many of the new preconstruction condos hit the resell market and we started to see a massive oversupply. In the last two years an average of 1 luxury condo sold per month while today we see close to 100 luxury condos being listed. Under current market conditions it would take almost 8 years to absorb this inventory.
The Next Wave of (Hopefully) True Luxury Brickell Condos
Today we are waiting for the next wave of Brickell luxury condos to be released, which will be Brickell Flatiron, Una Residences and the Aston Martin Residences. They will need to be able to compete in and under the $1,000 per sqft market, in order to not lose buyers to other neighborhoods’ luxury product. In the last few years many buyers looking for true luxury in Brickell, ended up buying in the Grove. This will be the ultimate test to see what kind of NEW ultra-luxury product Brickell really has to offer AND whether we have enough demand to absorb it. If these products are true cutting-edge luxury condos with high-end features and finishes then it might not be affected by the over-supply of the current market. It will open up a new Brickell market, which many luxury buyers have been waiting for and a level of legitimate luxury, which has been for the most part absent from this busy neighborhood.
Socially the Brickell area has certainly changed a lot in the last two years, it now has more high-end ‘luxury’ oriented restaurants, shops and services built to cater to the luxury market. This it was lacking for a long period of time. I think the demand is present for luxury product and the rest of the pieces to the puzzle are in place we just need to see if they will deliver. We have been promised luxury before, but these products were lacking the truly high-end finishes such as deep balconies or high ceilings that product elsewhere provided. If the new condos can compete with products in the Grove and the Beach, I foresee there is a good number of buyers waiting in the wings.