The foreclosed homes sale recently closed by Goldman Sachs Group in downtown Kendall, just outside Miami, showed how deep condo prices have fallen in the area over the past year.
Goldman sold a total of 158 foreclosed condo units in its Kendall project called Downtown Dadeland for only $113,000 each, equivalent to just 33 percent of the cost of construction and the land. The units are part of a seven-building residential and commercial complex in Kendall, which is about six miles from downtown Miami.
According to Peter Zalewski, founder of Bal Harbour-based property brokerage Condo Vultures LLC which reported the condo sale on its website, Goldman took a big price cut from the sale.
The fortunate buyer was a partnership created by Nova Scotia-based Southwest Properties Limited and Armco Capital, which made a cash payment of only $17.9 million for the condo units. The payment is equivalent to around $109 per square foot, substantially below the estimated building costs of around $300 per square foot, based on computations made by Jim Spatz, chief executive of Southwest Properties, and by Condo Vultures owner Zalewski.
The deeply discounted foreclosed homes sale is nonetheless not a rarity in the Miami area, where average condo prices have fallen by 37 percent over the past year to only $137,900 in the July-September quarter.
Based on a report released by the Florida Association of Realtors, sales of condo units have increased by 43 percent to almost 1,800 units during the quarter because of the sharply discounted prices. In September, the median prices for new and pre-owned houses and condo units dropped to $159,000, marking a 30-percent drop from the median in September last year.
The Downtown Dadeland, which had its groundbreaking in 2003, was sold at a low price despite its being next to the popular Dadeland Mall, which is operated by Simon Property and which is anchored by the biggest Macy’s store in South Florida.
The condo units range from studio units to three-bedroom units measuring 1,100 square feet on average. According to Spatz of Southwest Properties, the partnership will rent out the condo units for about 3 to 5 years until condo prices in Miami improve.
Goldman Sachs disposed of only the condo portion of the Dadeland development in the foreclosed homes sale. It still owns the commercial portion of the complex. According to Zalewski, the complex was built at a cost of $224 million and Goldman Sachs acquired it through foreclosure.