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Miami Real Estate Markets Are Currently at or Approaching Peak

Posted by Jereco O. Paloma on Jan 14, 2016 11:43 AM EST
Florida Poised To Become Third Most-Populous State In U.S. more big
MIAMI, FL - JANUARY 03: Cranes are seen against the skyline as condo's are built on January 3, 2014 in Miami, Florida. The population in the state of Florida will surpass New York state soon to become the nation's third-most populous state. (Photo : Joe Raedle/Getty Images)

The majority of Miami's real estate markets are either currently at or approaching their peaks, according to a nationally renowned economist. 

Economist Hugh Kelly of New York University (NYU), in a report published in The Real Deal, said some real estate markets in Miami are currently at their peak, while some are still capable of growth and expansion. Kelly said real estate investors in Miami should now be on the defensive mode, as most of its real estate markets have undergone explosive growth.

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Kelly, however, said the office segment market in Miami is still able to grow, while apartment and hotel segments are nearing their peak. Industrial and retail segments in Miami, are also nearing their peak, Kelly said.

Instead of reacting to the cycle while hoping that it would turn on their favor, Hugh suggested that industry players should act now and starting standing on a defensive mode, which has a higher chance of turning things around.  

"It's time to start thinking about how to preserve those gains and how to monetize those gains. Is it a sell strategy or a hold strategy? Is it a chance, if you are going to acquire, to make sure you buy based on existing cash flow rather than on future appreciation?" Kelly was quoted as saying by The Real Deal.

He said other trends tend to work in favor of Miami, describing it as a "24-hour city". He added that these cities, such as Miami, tend to benefit from long-haul property investments. Miami though, along with other gateway cities, is not exempted from the ill effects of market volatility and other factors that tend to drag the market such high interest rates, additional regulations, high capital rates, among others.

Meanwhile, a report from the Miami Herald showed that the Federal Government has vowed to crack down secret deals in Miami real estate. The report noted that the initiative specifically would target cash purchases of luxury properties by shell companies, probably hiding the identity of the true owner.

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