Venezuela – an oil-rich South American country with a population of nearly 29 million that originated the “21st Century Socialism” model under the late former populist president Hugo Chavez in the 1990s — is reportedly as unstable as ever right now.
The dramatic drop in oil prices — a key export for Venezuela — within the last year is reportedly producing destabilizing effects economically, politically and socially for the administration of President Nicolas Maduro who replaced Chavez some two years ago.
To counter the country’s growing problems that range from an estimated 68 percent annual inflation to one of the world’s highest murder rates, Maduro is reportedly “cracking down” on his critics by launching investigations into their actions or throwing them in jail, according to the Miami Herald.
The recent arrest of the Antonio Ledezma — the mayor of Venezuela’s largest city of Caracas — over allegations that he was “conspiring to assassinate [Maduro] with the help of Washington and military dissidents” has triggered a series of new tit-for-tat maneuvers with the United States, according to the report.
As a result of these latest political skirmishes, Venezuela has kicked out a number of U.S. Embassy staffers and instituted a new policy that immediately requires U.S. passport holders to obtain visas before visiting the country.
For its part, President Barack Obama signed an executive order on Monday declaring Venezuela a “national security threat and froze the assets of seven senior [Venezuelan] officials over alleged rights abuses and political repression,” according to the Wall Street Journal.
Political jousting aside, the U.S.-Venezuela relationship has been crucial to the South Florida real estate market going back several decades.
Some longtime real estate watchers both credit and blame one of the first Greater Downtown Miami condo boom-bust periods on Venezuelan investors who bought preconstruction units on Brickell Avenue in the 1980s but ultimately could not complete their transactions due to unforeseen currency issues back home.
Today, nearly two-thirds of all Venezuelan investors looking to buy Florida real estate are specifically focused on Miami-Dade and Broward counties, according to the National Association of Realtors’ Profile of International Home Buyers in Florida 2014 Report, released in September.
When buying in Florida, Venezuelan investors — who use cash nearly 90 percent of the time — tend to purchase condos and townhouses nearly two-thirds of the time, with single-family houses accounting for about 30 percent of the transactions.
Some 39 percent of the Venezuelan buyers are purchasing for “rental/investment purposes” and 26 percent for a use as a vacation home. For 22 percent of the Venezuelan buyers, the intent is to use the Florida real estate for both purposes of an investment and a vacation spot, according to the study.
On the pricing front, 87 percent of the Venezuelan purchases in Florida real estate transact at amounts below $500,000 with a mean price of $270,700.
The price for a Venezuelan real estate deal in Florida is about 10 percent less than the overall mean price of $300,600 for all foreign transactions in the state, according to the study.
The lesser buying power by Venezuelan investors could have more to do with the issues back in South America that erupted in violent protests in 2013, rather than any kind of diminished desire to own Florida properties.
Last year’s study found that Venezuelan investors at that time accounted for 3 percent of all foreign buyers in Florida, which was down from 8 percent a year earlier in 2013, according to the study.
“The steep depreciation of the Venezuelan Bolivar [currency] in 2013 might have accounted for the decline of the Venezuelan buyers, along with political and social factors,” according to the study.
The unanswered question going forward is not whether Venezuelan buyers will purchase properties in Florida in the future but rather if these investor can hold off from having to sell their South Florida units for cash, due to the chaotic situation back home.
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