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Who says South Beach Real Estate is in trouble?

The numbers alone speak for themselves: According to the Florida Association of Realtors, recent Miami-Dade condo sales have fallen to over half their 2006 figure—a drop surpassed nationally only by Las Vegas and Washington, D.C. Meanwhile, sales inventory is up 50 percent, with another 20,000 condos still being built and set to enter the already glutted market by the end of 2008.

“The market is as close to a depression as Miami has seen in 30 years,” South Pointe’sw.jpg Continuum developer Ian Bruce Eichner recently told Bloomberg News. “What’s going to happen to all these units? God only knows. You couldn’t give me a piece of property in Miami for nothing. I like sleeping at night.”

Yet over at the W, they’re sleeping just fine. In fact, challenged to substantiate their bold 70-percent-sold claim, Strafaci does just that—leading me into a back room and a set of file cabinets whose contents eclipse the combined gross national product of several Third World countries. I begin pulling out files at random, but despite my initial skepticism, the proof’s all here: signed sales contracts and receipts of 20-percent deposits from an international who’s who.

A prominent California surgeon is about to become neighbors with a London derivatives trader, a Dutch private-equity-fund manager is bunking next to a Middle Eastern sheik, while the penthouses and poolside bungalows are filled with a clutch of professional athletes. Strafaci recalls so many seven-foot-tall basketball players visiting their old sales offices, with its cramped ceiling, “I prayed every day, Please don’t let one of these guys knock their heads into the track lighting and fall down unconscious. That’s not the kind of publicity I want!”

So what’s the W’s secret? Why are they thriving when so much of Miami is financially melting down? David Edelstein, the W’s developer, has a quick one-word answer.

“Liquidity,” Edelstein explains matter-of-factly, his shorthand for tapping into the demographic most folks would christen “the filthy rich.” The merely wealthy, looking to flip a few condos or purchase a South Beach pied-à-terre, may have headed for the hills. But the truly loaded are as economically flush as ever—and all those seven-figure hedge-fund bonuses have to go somewhere.

“We’re a challenged market, no doubt about it,” Edelstein says by cell phone as his driver whisks him across Manhattan. “But with that in mind, I’m very comfortable that the prices we’re seeing now at the W are going to be seen in the future—and not too far in the future—as a bargain.”

Excuse me, a bargain? The W already has people paying nearly $3,000 a square foot. Even the “cheapest” unit, a 574-square-foot space on the third floor nearest Collins Avenue’s busy traffic, sold for $754,000.

But my protests don’t make Edelstein flinch in the slightest. Moreover, he adds that the $77 million he paid in August 2004 for the W’s surrounding three-and-a-half-acre parcel—where a Holiday Inn stood—was a veritable steal. “It’d be at least $100 million today,” he muses. Though City Hall’s Design Review Board forced a redesign over possible shadows being cast onto the adjoining Roney Plaza condo’s pool, Edelstein says he still feels fortunate: There isn’t another similarly sized oceanfront parcel anywhere else on South Beach free of historic architectural status—a fact that allowed him to raze the Holiday Inn and build from scratch. “You can’t change a doorknob without going through the Design Review Board,” he gripes, and while art deco may have its charms, he says the clientele he’s chasing is after an altogether different style of luxury.

“If you got on a plane and stopped off in Moscow today, jumped over to Berlin, then headed to Dubai or Shanghai, you’d see the amount of wealth accumulated throughout Europe and now Asia,” he says. “At the end of the day, no matter where you fall on the political spectrum, whether you’re a [George W.] Bush lover or a Bush hater, there’s an international recognition that the U.S. is still the safe harbor for capital. And well-located real estate in the U.S. is the best safe harbor of all.” The political center of their own countries may not hold, whether in Caracas or Cairo, ensuring “the world’s wealthiest” will always be scouting for a second (or third) home, one free of strutting caudillos or angry mobs—and preferably with a stunning oceanfront view.

Yet catering to the jet-setting Prada crowd is a far cry from Edelstein’s own real-estate roots, “pounding the pavement” for a commercial brokerage in the Manhattan of the late ’70s, when that city was still reeling from near bankruptcy, civic unrest and a stampede of middle-class office workers heading for the tranquility of the suburbs. Commissions were slim to nonexistent, and Edelstein soon found himself driving a cab to help pay his New York University tuition.

Read Story: Ocean View

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2 Responses

  1. Very Nice Site! Thanks for the air-time.

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    Tim Craven

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