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INVESTORS GUIDE Brickell and Miami Downtown Real Estate THE DAVID SIDDONS GROUP www.luxlifemiamiblog.com 2013

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Page 1: Investors guide2013final (1)

INVESTORS GUIDEBrickell and Miami Downtown Real Estate

THE DAVID SIDDONS GROUPwww.luxlifemiamiblog.com

2013

Page 2: Investors guide2013final (1)

2 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

An Investors Guide

his market report looks back at 2012

exploring the growth of the Brickell and

Downtown Miami real estate market.

From boom to bust to boom, the purpose

of this report is to provide the reader with a

better understanding of market prices, values

and purchase opportunities.

I would like to thank the DDA, EWM, and the

Florida Real Estate Association for providing

me with much of the information that went

into this report.

What is covered? 1. What happened in Brickell and Downtown in 2012

2. What’s new in Brickell and Downtown Miami

3. What to Consider when investing in Miami Condos

4. Infrastructural and social developments in Brickell and Downtown

5. Brickell and Downtown Condos in detail

6. Appendix and references

T

Asia corner unit. Asia is currently trading at $855 per sqft.

Page 3: Investors guide2013final (1)

3 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

What happened in Brickell/Miami downtown in 2012?

Of key Importance, property prices increased in

Brickell and Downtown dramatically. 1 bed units

increased on average: 27.9%, 2 bedrooms: 24.5%,

3 bedrooms: 27.3% and 4 bedroom units 17.6%.

Visit: www.luxlifemiamiblog.com/condomarket or go to the

appendix for the complete table of data

The rental market increased significantly as the popula-

tion grew but the inventory of available units for the most

popular 1 and 2 bed units decreased on average 14%.

which in turn pushed rental prices up.

Visit: www.luxlifemiamiblog.com/rentalmarket or go to the

appendix for the complete table of data

The speed at which properties sold also increased. As

demand increased over 2012 so properties sold on

average 35 days faster than sales of the year before. We

expect this trend to continue through 2013.

Visit: www.luxlifemiamiblog.com/condomarket or go to the

appendix for the complete table of data

As we saw the rate of buying increase we saw

inventory drop drastically. Inventory is quite possibly

the most telling factor in a market’s future success.

If inventory falls below a critical point then prices can only

further increase. In Brickell inventory currently sits below a

level that maintains market balance and prices can only

increase through 2013.

$600

$500

$400

$300

$200

$100

$01 Bedroom

units2 Bedroom

units3 Bedroom

units4 Bedroom

units

241

312262

332

247

323

517

594

PRICES PER SQUARE FOOT2011 2012

Information derived from Florida MLS data.

Prices increased by

17-27%

Rental Market prices increased

up to

8.3%Time on the Market

decreased by

22.5%

Decrease in inventory for

2 bed units by

31%

A superb 3 bed unit at Epic. This building is currently trading at an average of $778 per sqft.

Page 4: Investors guide2013final (1)

4 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

1. Midtown and Design DistrictPrices went from just $232 to $315 per sq.ft. in less than 1 year.

There is significant commercial development going on in the area.

2. DowntownPrices rose on average from $297 to $365 per sq.ft.

Brickell is divided into 3 areas: Brickell Key, Financial District, and Old Brickell

3. Brickell KeyThere are no more condos to be built on the island. Over 2012,

there was a 15% price increase per sq.ft.

4. Financial DistrictOver 2012 prices per sq.ft jumped from $338 to $395, up 18%.

New condos being developed are: MyBrickell, 1100 Millecento,

Brickell House and the SLS Hotel and Residences in Brickell.

5. Old BrickellStarting with sq.ft. prices in $200 range, these older condominiums

can offer excellent entry-level value.

N M

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Bric

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Blv

d.

NE

2 A

ve.N

W 7

Ave

.

Midtown & Design District

Brickell Key

Old Brickell

Financial District

DowntownMiami

SW 8 St.

NE 15 St.

Rickenbacker Causeway

NW 5 St.

NW 29 St.

SW 3 Ave.

S Miami A

ve.

MacArthur Causeway

Julia Tuttle Causeway

Price change per sq.ft. over 201235%

30%

25%

20%

15%

10%

5%

0%

Old

Bri

ckel

l

Fin

anci

al D

istr

ict

Bri

ckel

l Key

Mid

tow

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d D

esig

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istr

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Do

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Information derived from Florida MLS data.

Miami, “The New Global City” as called by the Wall street Journal, is home to:

• 60 International Banks

• 29 Consulates

• 26 Foreign Trade Offices

• 9 International Trade Organizations

• 8 International Chambers of Commerce

Page 5: Investors guide2013final (1)

5 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

2002

Condos For Sale on 12/31 Condos Sold Annually

5,000

0

10,000

15,000

20,000

25,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Inventory and SalesMiami-Dade County 2002 - 2012

UN

ITS

$500

$450

$400

$350

$300

$250

$200

$150

$100

$50

$0

Q4 2005 Q4 2008 Q4 2012

Historic Condo Sales Prices/Sq.Ft

$334 $344

$434

$213

$257$303

$338$375

$462

Bri

ckel

l

Bri

ckel

l

Bri

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l

Mid

tow

n

Mid

tow

n

Mid

tow

n

Do

wnt

ow

n M

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i

Do

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ow

n M

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i

Do

wnt

ow

n M

iam

i1 Historic Brickell

2 Financial District

3 Brickell Key

4 Downtown

5 Midtown & Design District

RETURN ON INVESTMENT

Moderate

Moderate/volatile

Moderate

Volatile

Volatile

TIMELINE

Short, Medium & Long Term

Short, Medium & Long Term

Short, Medium & Long Term

Long Term

Long Term

RISK

Low

Low

Low

Medium

Medium

Condos For Sale 12/31Condo Sold AnnuallyMonths of Supply on 12/31

20026475

122046.4

20036260

128725.8

20045259

138974.5

20059643

152607.6

20061987511932

20

200723517759237.2

200822637673140.4

2009161691068118.2

2010151171416112.8

2011865117533

5.9

2012717517361

5

The importance of InventoryMarket prices stabilize when inventory hold between

6 – 9 months of supply. Current inventory supplies are now

just below 5 months. Such a current short fall of inventory

can only result in an increase to residential property prices.

“Is this just another Real Estate Bubble?”, “With prices increasing so rapidly, are we not destined to another Market Collapse?”

BURNING QUESTION 1:

Answer: Real estate is a cyclical business and like any other industry or market, it goes through periods of contractions and expansions. As a Realtor I cannot tell you what will hap-pen in 5 years but I can give you some market facts that will give you more insight into the real estate cycle. Like any other market the real estate market is never in equilibrium and will fluctuate between excess inventory and shortfalls in inventory due to changes in demand and supply of real estate.

Demand for real estate in Miami in the last 2 years literally exploded. Originally it was buyers looking to take obvious advantage of units selling below construction cost. In the last year demand for real estate has continued as Miami Condos are still seen to provide excellent value to buyers from the America’s market: Brazil, Argentina, Mexico looking to invest in US property as well as many from mainland Europe and the rest of the US.

Brickell and Downtown has not only attracted investors but big businesses as it becomes the ‘business hub’ for Latin America. As the population has boomed so rental rates have increased dramatically further fueling the demand for property that provides a much healthier return than other investment mechanisms.

Interestingly as the mortgage market tightened its lending parameters, so a large majority of buyers have been all or mostly cash. New projects have required 40-50% down as opposed to the previous market conditions of 2004 - 2007 where buyers were heavily relying on large mortgages to make purchases. Combined with stronger infrastructural, social and business developments in Brickell and Downtown this has resulted in a much more robust property market.

Data taken from EWM Trendgraphics. Originally derived from the Florida tax rolls and MLS data combined.

Page 6: Investors guide2013final (1)

What’s new in Brickell/ Miami Downtown?

6 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

Miami World Center A nine block mix-used devel-

opment which will offer various

innovative, urban-style residences

including lofts, apartments and

condominiums.

Brickell House374 units and a robotic parking garage. Units

will range from 400 sq.ft studios to 1775 sq.ft

penthouses. Set for completion in the first

quarter of 2015.

Resorts World MiamiThe Genting Group $3 billion

project which includes two resi-

dential towers with 1000 units.

The plans to include a casino in

the mega project have now been

put on hold.

Brickell CiticentreA $1.05-billion urban shopping

and mixed-use development with

two 42-story condo towers with

a total of 800 units. Estimates

ranging from 900- 2500 sq.ft and

priced between $450,000 and

$850,000.

One Bayfront PlazaThe 80 story plaza will offer 700 luxury

residences which are expected to be

completed in 2018.

N M

iam

i Ave

.N

Mia

mi A

ve.

Bric

kell

Ave

.B

isca

yne

Blv

d.

NE

2 A

ve.N

W 7

Ave

.

Midtown & Design District

Brickell Key

Old Brickell

Financial District

DowntownMiami

SW 8 St.

NE 15 St.

Rickenbacker Causeway

NW 5 St.

NW 29 St.

SW 3 Ave.

S Miami A

ve.

MacArthur Causeway

Julia Tuttle Causeway

1

2

3 4

5

67

89

10Appendix and references

Icon BayA 40 story, 300 unit development

with 1,2,3 bedrooms ranging

from 928 to 1530 sq.ft interior.

My BrickellSet for completion November 2013, My Brickell

is a 27 story boutique building with 192 units.

1000 MuseumThe skyline changing new residential tower of

World famous and prize winning architect Zaha

Hadid. Prices are estimated at $900/sq.ft.

Condos will cover half or the entire floor

starting at 4 million,

Penthouses at $30 million.

SLS hotelA Philippe Starck designed

Hotel and Residential build-

ing with 1,2 and 3 bedroom

units. Prices start in the

low $400s per sq.ft. and

will range from 600 sq.ft to

1600 sq.ft units.

1100 Millecento ResidencesA 42 story and 382 unit condo inspired by

designs of legendary Italian Automobile

designer Pininfarina. Currently under con-

struction. Set for completion in the third

quarter of 2014.

1

2

3

4

5

6

7

8

9

10

95% sold

Under plan

Under plan

Under plan

Under plan

90% sold

95% sold

Selling now

Under construction

95% sold

Page 7: Investors guide2013final (1)

7 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

There is a huge variety of Condos in Brickell

and Downtown and the best deals are often

found not by generalizing a choice of one

Condo over another, but in the specifics of

a single unit. My role is to assist clients in

looking for specific unit opportunities and to

search for anomalies in the market that give

light to potentially excellent deals or risky

investments. Understanding key factors

and spotting these anomalies is essential in

choosing a wise investment.

1. Price per sq.ftPrice per sq.ft. is of course of key importance.

Buyers should be aware of the average price

per sq.ft. not just in their neighborhood but in

specific buildings. The chart on page 10 and

11 shows the average price per sqft for all

buildings in Downtown and Brickell.

Icon Brickell saw substancial increase in value from 2011-2012. This is inpart due to its enormous popularity with renters, and prices were still considered cheap in 2011 in comparison to other similar Condos.

Bristol Towers is a good example of a building in excellent financial health. Unit 3302 is currently for sale for $1,749,000.

2. Financial stabilityBased on income levels and reserves held

within a Condominium. This will affect

changes in future maintenance costs and

if reserves held are too low this can result

in building assessments. Please call me for

the 2012 financial summary reports for any

specific Condo in Brickell or Downtown that

you may be interested in.

3. Maintenance Costs

Please refer to page 10 and 11 to see the

current maintenance fees for any of the

Brickell and Downtown Condos. Maintenance

is calculated on a per sq.ft. basis.

Carbonell Condo 2706 , 4/4.5, currently for sale for $1.8 million, has one of the lowest maintenance fees in Brickell. This is due to its strong and establlished financial situation.

4. Location and Views

Miami has always been about water views.

As the city develops so these prices hold a

premium but also weather economic change

much better than city view units.

5. Amenities, Facilities and Services

Spa’s, state of art gyms, large lap pools,

concierge, restaurants are all highly

attractive to owners and renters alike and

make such buildings a top choice. However,

high levels of amenities can also mean higher

maintenance fees as the running costs of the

building are usually higher. Unique and Bou-

tique style features such as private elevators

can also help Condos appreciate well. In the

same way ‘overly generic’ units and Condos

can be far more vulnerable to market change

as there are hundreds of choices to potential

buyers in the future.

What to consider when investing in Miami condos.

All units at Paramount bay enjoys direct bay views where owners can enjoy the city lights of Miami beach and water views. Unit 1409 of Paramount is currently for sale for $699,000.

Icon Brickell has the largest pool in North America! Epic is home to Zuma and 2 other award winning restaurants. Both have higher than average maintenance fees, but in return offer an exceptional level of services and facilities.

Page 8: Investors guide2013final (1)

8 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

6. Surrounding DevelopmentsValues for units for sale in Midtown and

Downtown (such as Paramount Bay and

Icon Bay) have done very well on account

of the upsurge in new commercial and retail

developments within the Design district –

New supermarkets, designer stores, and over

a dozen top level new restaurants.

The new SLS in Brickell will follow the same format as the new SLS in South Beach and is currently selling pre construction with an average price of $500 per sq.ft. This price is expected to rise to $600 once the project is physically completed.

Bay House - Midtown / Edgewater Hot on the heels of the sold out Icon Bay project in Downtown is Bay House. This newest project from the Melo Group will consist of 38 floors and 164 exclusive residences. Read the full report on this new project on my Blog site. http://www.luxlifemiamiblog.com.

1000 Museum on Biscayne will be designed by Zaha Ahid, considered the worlds most famous Architect. Heralded to have units selling from $4 million upwards, and set to redefine the luxury Condo market in Downtown. Information on this project and all other new developments can be found on my Blog site: http://www.luxlifemiamiblog.com. Search Categories: Brickell and Downtown New Condos.

New Designer shops in the design district has helped boost sales in Midtown2 and the new Icon Bay Condo as seen here.

7. New developmentsBuying a pre-construction unit is certainly

more of an unknown quantity than buying

an established Condo but can offer excellent

value as they can sell around 20% or more

below the price of the finished value.

Page 9: Investors guide2013final (1)

Infrastructural and Social Developments within Brickell and Downtown that will affect future sales and rentals.

9 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%1 Bedroom

units2 Bedroom

units3 Bedroom

units4 Bedroom

units

4.4%

8.3%

2.0%1.4%

Rental Increase per sq.ft. over 2012

Information derived from South Florida MLS data.

One of the most significant reasons why we

have seen such an increase in population

within Downtown and Brickell (population

grew from 71,800 to 78,000 between 2011-

2012) is that these neighborhoods have

become a much better place to live:

Better transportation:The metro mover has extended from Brickell

directly to the airport. The Brickell Trolley, a

free trolley service around the neighborhood,

started last year and has been incredibly

popular.

Commercial development:Significant amounts of Commercial buy up

have occurred in Brickell and Downtown with

18 million sq.ft. of class A and B office space

and 2.5 million sq.ft. of retail space. The Port

of Miami is chartering more than $2 billion

dollars in infrastructural development.

Over 2012 Commercial property in

midtown and downtown has in some cases

increased in value by over 30% as so many

businesses move into the ‘business hub of

Latin America’.

Infrastructure:A new cinema and a new Wholefoods in

Downtown. The building of the new Art

Museum and History Musem (the biggest

in the whole of the US) also in Downtown.

New supermarkets in the Midtown area. 30

new restaurants in Downtown, Midtown and

Brickell have all opened in the last 12 months.

The new Brickell City Center with a host of

new retail stores as well the new designer

stores in midtown will continue to make this a

highly desirable neighborhood and add value

to the surrounding Condos.Mary Brickell Village - seen as the center of Brickell will soon be joined by Brickell City Center which will further expand the number of restaurant, shops and services to a neighborhood which is currently growing in population by a staggering 10% per year.

Information derived from DDA Miami.

Page 10: Investors guide2013final (1)

10 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

Brickell and Downtown Condos in DetailHere you will find key information for ALL Condos in Brickell and

Downtown. We reveal changes in price per sq.ft. in the 12 months

from the end of 2011 to the end of 2012. This information has

been sourced directly from the South Florida MLS. We also reveal

current maintenance fee rates which is extremely important and

the health Grade of the buildings as provided by Condoreports.com.

BURNING QUESTION 2:

Answer: Those investors who were willing to take

a greater risk and invest in a pre-construction

project over the last year have yielded significant

financial returns on their investments, far in excess of

returns they would have otherwise yielded on

buying into an already established Condo.

Investors must be aware of a Developers track

record, financial stability, their payment structure

and the unique selling points of that project that will

enable it to stand out from the crowd. My Blogsite:

www.luxlifemiamiblog.com details ALL the new

Condo construction projects in the whole of Miami

Dade with prices, floorplans as well as how that

project compares to other existing Condos. The

golden rule I use is: ‘If it existed today how would

it compare in price to the competition?’ If an equal

quality unit sells at $600 per sq.ft. today and you

can buy pre construction at $450 per sq.ft. for the

same product or better you will see a significant

appreciation.

“Should I buy pre-construction?”

Carbonell

Page 11: Investors guide2013final (1)

11 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

Source: MLS data, www.condoreport.com for Healthgrades.The building health grade ranks from 0-100 and measures price trends and condo association stability. Generally speaking, buildings with higher index readings are more stable than buildings with lower readings

Brickell and Downtown Condominium Information on www.luxlifemiami.com

Details of all the buildings can be found on

my website: www.luxlifemiami.com under the

tab “Featured Condos”. I feature all of the

major Miami condominiums and present the

reader with pictures, videos, floorplans and

information on amenities.

1450 Brickell, an all-office skyscraper on Brickell Avenue

Page 12: Investors guide2013final (1)

12 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Analysis of 1,2,3,4 bedroom units in Brickell and Downtown Miami.

We analyzed the Brickell and Downtown area

by comparing the 4th quarter of 2011 sales

information with the 4th quarter of 2012 sales

information. We made a general analysis for

the greater Brickell/Downtown Area and a

more specific analysis focusing specifically

on Downtown Miami, Wynwood/Art District,

Brickell Financial District, Brickell Key and

Historic Brickell.

In order to be more accurate for budget and

investment purposes we analyzed 1,2,3 and

4 bedroom units separately.

Market Analysis Brickell/Downtown Miami

When comparing the 4th quarter of 2011

with the 4th quarter of 2012 it can be seen

that the amount of closed sales for 2 and 3

bedroom units increased with a significant

percentage. The (more scarce) 4 bedroom

units had the same amount of sold units in

Q4 2011 compared to Q4 2012 and

1 bedroom units sold 8.1% less than during

last quarter in 2011. This doesn’t

automatically mean there is less demand for

these units. Sales prices went up by 17.6%

to 27.9% (27% for 1 bedroom units) and

the average price per sq.ft, increased with a

minimum of 14.9% for 4 bedroom units and

with a maximum of 31% for 3 bedroom units.

Not only did properties increase in value they

were also less days on the market (15.1%-

26.9%) before being sold.

As can be seen from the availability of units,

the months of inventory in the last quarter of

2012 for 1, 2 and 3 bedroom units went down

by 31.3%, 4.9% and 12.7% respectively.

Applying the supply and demand theory on

these units, we can conclude that demand

for these units is still high as the inventory is

down and prices are increasing.

Only for 4 bedroom units the months of

inventory did increase by 30% to 13 months.

A 6-9 month inventory is considered normal.

Given that the inventory is higher than 6-9

months we are still finding ourselves in a buyers

market. The 1 and 2 bedroom unit market

is close to becoming a sellers market (low

months of inventory and decreasing levels

of available units) whereas 3 and 4 bedroom

units are still in a buyers market with higher

levels of inventory and more units for sale.

Information derived from Florida MLS and EWM Trendgraphics

Page 13: Investors guide2013final (1)

13 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Rental Market Analysis of 1,2,3,4 bedroom units in Brickell and Downtown Miami.

From the table above it can be seen that the

price per sq.ft. increased for all types of rental

units in the Brickell and Downtown Market

over 2012.

In general it can be said that all units did

better than the year before regarding an

increased price of sq.ft. The months of

inventory decreased drastically for almost all

type of units to a level below 3 months.

Investors who would like to rent their invest-

ment properties out this analysis will only

become truly interesting when we include the

rental prices into the equator.

It can be concluded that the Brickell/Down-

town Miami Market is growing significantly

with inventory levels decreasing for almost

all types of units to a level below 3 months

and resulting in price increases over short

periods of time. From the table above it can be

seen that the price per sq.ft increased for all

types of rental units in the Brickell and Down-

town Market over 2012. The buying demand

for units in Brickell/Downtown Miami will be

stimulated by the increasing number of

new residents coming to Miami, the new

economical and demographical boost that

will be given to the city by projects such as

Resorts World and Brickell CitiCentre and the

economical and political instabilities in Europe

and South America help fuel the opinion that

the purchase of the Miami condo units often

make for a safe and profitable investment.

Page 14: Investors guide2013final (1)

14 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Market Analysis of 1,2,3,4 bedroom units

Brickell Key Condos Financial Distric Condos

Page 15: Investors guide2013final (1)

15 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Market Analysis of 1,2,3,4 bedroom units

Downtown Condos Wynwood/Design Districts

Page 16: Investors guide2013final (1)

16 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Market Analysis of 1,2,3,4 bedroom units

Old Brickell Condos