Lending squeeze: financing condo construction still a challenge in South Florida
Lending market still difficult as condo presales slow and lenders put the screws on developers
October 27, 2016 10:30AMBy Mike Seemuth
The work site for Auberge Beach Residences & Spa on the beach in Fort Lauderdale. Inset: Ben Gerber, the vice president of fi nance at The Related Group.
From the fall issue: South Florida condominium sales have been at high tide for years, but the low tide may be just on the horizon — if not ashore — amid mounting evidence of overbuilding and declining demand. Real estate experts say that if preconstruction condo sales keep falling, a slowdown in construction financing will follow.
Wells Fargo Bank Senior Vice President Patrick Ramge, who oversees commercial real estate lending throughout Florida, has lowered the expectations for his bank’s condo construction lending in 2017 in the state. “It’s not going to be as big as previous years have been for Wells Fargo,” Ramge said. “Presales in South Florida have definitely slowed down.”
Until recently, sales were propped up by demand from foreign buyers, but their interest in the Florida condo market has ebbed as currency exchange rates have turned against them. Real estate analyst Jack McCabe, based in Deerfield Beach, said that over the last few years the foreign condo buyers had “created a bottom and started pushing prices back up, but it wasn’t going to last forever.” [more]
Source: The Real Deal