Why Foreign Investors are Buying up Miami’s Hottest Real Estate

Foreign investors have played a huge part in the growth of the South FL real estate market. Read on to find out what is fueling this growth in Miami’s hottest real estate, who the major players are, and how money laundering factors in.

Who’s Buying

In 2016 Foreign investors purchased $6.2 billions worth of residential property in South Florida. Investors from Venezuela spent the most of foreign buyers, according to the Miami Association of Realtors.

In addition, investors from Mexico, Peru, and France accounted for sixty-four percent of foreign sales in South Florida last year.

A Safe Haven for Foreign Investment

Miami’s not-so-secret secret is that it’s real estate market is a safe haven for foreign investors and their money. Foreigners often buy expensive homes using offshore companies, trusts and LLCs. However, the secrecy involving offshore companies makes it easy to break the law, as uncovered by the ‘Panama Papers’ leak from law firm Mossack Fonseca.

The leak of the ‘Panama Papers’ shed light on the firm’s creation of shell companies for the rich. Money linked to criminal activity in other countries has helped fund the new condo towers constructed on South Florida’s hot real estate market, making home prices far beyond what a local can afford.

Concerned with money laundering in Miami’s real estate market, the Treasury Department  started tracking Foreign shell companies and homes bought using cash. Cash deals from foreign entities create suspicion because of the following:

  •    The real buyers can hide behind shell companies
  •    Banks aren’t involved in cash transactions, bypassing any checks for money laundering

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Sources:

  1.    https://therealdeal.com/miami/2018/02/08/foreign-investment-in-south-florida-homes-totaled-7-1b-in-17-heres-where-the-money-came-from/
  2.    https://therealdeal.com/miami/2016/01/21/international-buyers-make-up-36-of-all-sofla-real-estate-report/
  3.    https://panamapapers.icij.org/
  4.    http://www.miamiherald.com/news/business/real-estate-news/article168915302.html
  5.    http://www.miaminewtimes.com/news/porsche-design-towers-dezer-development-tied-to-brazilian-money-laundering-

 

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