A strongly criticized new Florida law restricts the real estate buying power of foreigners from seven countries, a startling move for Miami’s global property market.
The legislation Gov. Ron DeSantis signed into law Monday prohibits most citizens of China, Cuba, Iran, North Korea, Russia, Syria and Venezuela from buying real estate close to a military compound or critical infrastructure, including airports, ports and wastewater treatment and electrical power plants. It makes exceptions for foreign nationals from those nations living in Florida with non-tourist visas or those who have secured asylum in the state.
The final watered-down legislation that landed on the governor’s desk, didn’t include a broad ban on Chinese Americans owning any property statewide, narrowed the distance restriction from military and other critical sites and left alone the lucrative federal EB-5 foreign immigrant investor program.
Through the program, foreigners get priority for U.S. visas and green cards in exchange for investments in new real estate developments. Since 2008, this program has contributed an estimated hundreds of millions of dollars to Florida projects, according to nonprofit Invest in the USA, a group that promotes the effort.
Much of South Florida’s housing market is expected to remain resilient since the legislation was modified, according to a real estate lawyer, consultant and broker interviewed for this story. Foreign nationals from the so-called countries of concern renting homes in the region and statewide aren’t affected by the law.
“This legislation in Florida will have minimal effect on the interior [of the state]. Up and down the coast [of Florida] it will have a significant impact,” said attorney Dennis Eisinger, managing partner at Eisinger Law in Hollywood.
What does the law mean for buyers?
Foreigners from the designated seven countries can only purchase a single piece of Florida land or a residence up to two acres, as long as it’s beyond a 10-mile radius of critical infrastructure or military sites. (The original bill said the distance requirement was 25 miles.) They then have to register the property with the state Department of Agriculture and Consumer Services and the state Department of Economic Opportunity.
People from those nations who already own Florida properties can keep them, regardless of location, but have to register them with the state starting in January 2024. Those who fail to register face a fine of $1,000 a day.
Property owners from the stipulated nations who inherit a condominium, townhouse, house or land, within 10 miles of critical infrastructure, military buildings and agricultural land, will have three years to sell.
When does the law go into effect?
Foreign buyers will be restricted as of July 1 under the provisions of the law from purchasing properties near critical infrastructures or military compounds. If any owner or real estate agent sells land or a residence near one of these sites to foreign nationals covered by the measure, they face fines if convicted from $500 to $15,000.
This Florida law is a first-of-its-kind that now other states are considering.
However, Eisinger predicted lawsuits in this state challenging it. Litigation could take months or years to potentially topple the law.
Who are the winners and losers?
“The biggest winners are going to be local residents, as well as those moving down from the Northeast. There will be less competition to acquire property. That’s a plus especially for the local market. A lot of folks have to leave because they can’t afford to live here,” said Jack McCabe, owner of real estate and economic research firm Jack McCabe Expert Services in Deerfield Beach. “The biggest losers will be those with high-dollar properties, as well as developers who have catered to foreign buyers.”
For sellers, the state’s property market gets smaller. The typical move of selling a property to the highest bidder, regardless of where the buyer comes from, becomes complicated. There’s the potential, experts said, that sellers will have to accept less money for their homes.
Also, from the standpoint of real estate developers, they will be prohibited from selling new homes, offices or warehouses to people from these seven countries or allow them to invest in the new construction.
What’s expected to occur in Miami-Dade?
Continuing corporate expansions and wealth migration that accelerated after the pandemic emerged in March 2020 should blunt the worst of the ill-effects of the law. High-earning professionals from the Northeast and West Coast keep coming here, boosting home prices.
During the past two years, many newcomers arrived in the Miami area attracted by the region’s warm climate, lenient COVID-19 restrictions and lean taxes. Global companies followed, opening offices in Miami, including hedge fund operator Citadel, private equity firm Thoma Bravo and French bank BNP Paribas.
Miami-Dade’s foreign buyers have changed over the past few years, said Peggy Olin, CEO of OneWorld Properties. She has sold real estate for years in the county’s urban core, including downtown Miami and Wynwood. She used to see Russians, Venezuelans and Chinese in the marketplace years ago — she even opened three offices in China to draw buyers to Miami — but things have changed. Many of them now look to buy in other U.S. cities.
Most of her international buyers today in Miami, Olin said, come from Mexico and Colombia.
“Maybe we have a couple of people from China, a couple of people from Russia, but it’s not the majority,” she said.
In 2022, almost 67% of South Florida home sales to foreign buyers were in Miami-Dade, according to the Miami Association of Realtors. These nation’s led the way with purchases in the region: Argentina (16%), Colombia (13%), Canada (8%), Peru (8%), Chile (6%), Mexico (6%), Venezuela (6%) and Brazil (6%). Only Venezuela buyers would be affected by the new state law, and the other six countries each accounted for less than 6% of South Florida’s foreign homebuyers last year.
Where in Miami-Dade would buyers be most harmed?
Miami-Dade communities long shaped by some of countries on the restricted list — think Russia and Sunny Isles Beach, Venezuela and Doral, and Hialeah and Cuba — are ones expected to have more properties come on the market and see price declines.
Foreign buyers, real estate consultant McCabe said, are drawn to communities where they have family and friends, hence the expected softening demand for these go-to pockets in Miami.
”You look at Hialeah, Sunny Isles (Beach), Doral where you have a large concentration of foreign buyers, those marketplaces will have more of a dramatic effect,” he said.
What about effects in Broward County?
Real estate experts predicted minimal harm in Broward, where there’s much less demand from foreign buyers than in Miami-Dade to acquire property. Of all the foreign homebuyers last year in South Florida, 27% of them bought in Broward, according to the Miami Realtors.
Still, cities like Fort Lauderdale and Weston likely will be affected due to the construction boom there and the appeal those areas have for high-end buyers — some of which are from foreign nations.