I would like state my opinion here on an interview article in Mansion Global with Jon Paul Perez, a son of Related’s Jorge Perez. Aside from his love for a deep couch and large TV, there were other things that I was rather surprised to read:
Firstly, Jon’s claim that Sunny Isles and Coconut Grove represent a great resale value with a limited supply of condominium product in these neighborhoods. When you look at our October Condominium Report it shows just the opposite. Double digit drop in median sale price from last year and Sunny Isles having the largest inventory of unsold condos of the surveyed neighborhoods.
Secondly, Jon Paul Perez compares purchasing a preconstruction condominium to buying a car. He claims that once the unit is lived in, it immediately loses 10% of its value. If that were true and since majority of buyers are investors seeking to rent out their units why would anybody in their right mind purchase a preconstruction unit?
You can read the article by clicking here.
We read many articles these days about a market correction but in my opinion it is the resale value of recently completed preconstruction projects which will be affected the most if not only. I should also note that the aforementioned correction would not take place because somebody lived in a unit but because well managed and quality resale condos are selling for 40% less than their brand new counterparts.
Is is also important to note that almost all of the brand new condominium towers undergo a lengthy and typically very costly litigation over construction defects during the first couple of years of opening their doors to new residents.
I don’t mean to imply that all preconstruction projects are a bad investment though. A buyer should do their do diligence prior to purchase and compare not only different preconstruction developments but more importantly compare to the pricing and inventory levels of current resales.