With an influx of Latin American home-buyers, Florida builders find themselves in a seller's market – especially the largest construction firms on the Hispanic Business 500.
"There are days when I look at our skyline and say to myself, 'We're becoming a New York,'" says Agustin Herran, CEO of Miami-based General Real Estate Corp., which specializes in converting apartments to condos. The company debuts at number 21 on this year's Hispanic Business 500.
Florida real estate has benefited from two developments: high oil prices and political instability in Venezuela and Colombia. Oil provides the money, and instability the motive for buying. As a result, an affordable home in a metro area now routinely sells in the $300,000 range and housing tracts are appearing in previously underpopulated counties.
The project Grand Bay in Doral, Florida, illustrates current demand in the home market. Grand Bay involves 2,998 residential units, two schools, a church, a town square, a community center, a park, restaurants, banks, and a grocery store. This instant city will be built by Century HomeBuilders, number 9 on the 500. CEO Sergio Pino says Grand Bay is part of a national trend to build communities with a small-town feel where residents can live, work, shop, and play within walking distance.
Growth in the market means growth for builders. Prestige Builders Partners, number 15 on the Hispanic Business 500, projects its revenues will grow from $350 million in 2004 to $1 billion by the close of this fiscal year or early 2006, according to President Julio Robaina.
Costs of construction have climbed along with home prices, but so far demand has persisted and even increased, says Edie Ousley of the Florida Home Builders Association. Local impact fees now total $2,500 to $20,000 per home, but they "have not kept people from signing their mortgage papers," she says.
Higher interest rates loom as the biggest cloud on the horizon. "Make interest rates a point higher and you'll get rid of 10 to 15 percent of home buyers," predicts Mr. Pino. "But for the time being, rates have held steady and the buyers keep coming."
Builders expect the market to continue strong, judging from their short-term future plans. Prestige Builders recently announced the single largest condo-conversion project in the state, a 969-unit deal called Las Vistas in Doral. General Real Estate expects to complete 3,000 conversions in 2005. The Related Group of Florida, the largest company on this year's Hispanic Business 500, has numerous projects in the pipeline for the next three years (see story, "A Cool $2 Billion"). In 2004 and this year, new home permits in Florida will number about 122,000.
"People keep coming. Even our down cycles are brief and shallow," says Mr. Herran. "The appetite is still here."
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