Why Brexit Will Impact Miami CRE?
The economic and political uncertainty created by the United Kingdom’s vote to leave the European Union could have a significant impact in some of the largest property markets in the US, including Miami.
Since the late 1990s, Miami has experienced waves of European inbound investment based on economic cycles in both the US and Europe. This time around, the political upheaval in Western Europe could be a significant influence on the Miami CRE. As the UK economy teeters from the daily political turmoil, investors from the UK and around the world may consider Miami as an alternative market to reliably invest and grow their capital. Pre Brexit, real estate in London was a prime target of foreign investors, particularly Russian oligarchs and Chinese nationals. The Daily Mail had this headline in the past “Ultra-Rich Russians now buy one in five of London’s £10 million-plus-properties but the Chinese are catching up fast.” This trend may shift dramatically to the US and South Florida with the current instability of the pound against world currency. Anxiety over the future of the commercial real estate market in the UK has begun to cause some damage. Investors are already exiting British commercial real estate funds as they have lost confidence over “London’s future as a financial and commercial hub and the worth and stability of its booming real estate market,” according to a recent New York Times article.
At the same time, the UK has strong economic ties to South Florida, one of the most affordable property markets in the US. For example, the region is home to more than 60 British multinational companies with more corporations planning to establish Latin American offices in the Brickell Financial District. The UK is also an important source of visitors for Miami-Dade County, with over 326,000 visitors in 2015. South Florida’s population includes about 26,000 individuals born in the UK.
The total trade between South Florida (the Miami Custom District) and the United Kingdom was almost $1.6 billion in 2015, of which more than $1.1 billion was imports and close to $600 million was exports, according to the Beacon Council, a public private entity in charge of attracting businesses to Miami-Dade. Historically, UK investors have been attracted to residential real estate in Miami, but they may now turn their attention to commercial real estate, as they look to grow and diversity their investments in more stable economies.