Florida's new wave: what's in store for investors?

Florida's new wave: what's in store for investors?

Florida's allure as a prime US property investment hotspot is multifaceted. Its warm climate, world-renowned beaches, and rich cultural offerings draw tourists year-round. For investors, it's crucial to recognise that it's not just Florida's residential real estate that's of interest but also its commercial sector. Lately, investments in various hospitality ventures, such as boutique hotels, have gained traction, given the state's ever-increasing tourist demand. In 2022, a record 137.6 million visitors flocked to the state's attractions. So, what are the trends of property in Florida that investors should be aware of?


Trend: investing in condo and boutique hotels

Florida is a prime destination for investing in boutique hotels. The state's business-friendly policies, absence of income tax, and thriving tourism industry ensure a consistent flow of guests.

While short-term residential rentals offer a return of 4–5%, anticipated returns from boutique hotel investments can range from 6–10%. This is attributed to the provision of hotel services and often more strategic locations catering to all types of tourists, from holidaymakers to business travellers.

The minimum investment for boutique hotels ranges from $100,000 to $200,000. This would typically cover the purchase of a hotel room in an established complex with a steady stream of clientele. The cost of an entire hotel depends on the number of rooms, starting from $2 million and upwards.

The advantages of investing in a condominium or boutique hotel include:

  • Ease of ownership. Investing in a condo hotel means you have a dedicated property management team on-site.
  • Potential rental income. Through the hotel's rental programme, your apartment can generate income when you're not using it. These consistent rental revenues can help offset ownership costs like mortgage payments, property taxes, and maintenance fees.
  • Amenities and services. Condo and boutique hotels often offer a range of luxury amenities and services, such as swimming pools, gyms, spas, concierge services, and restaurants. Not only do these enhance your personal living experience but they also make your property more attractive to potential renters.

Trends for 2024: top investment destinations in Florida

When considering investments in hotels or houses in Florida, location is paramount. This state boasts a diverse range of popular cities and regions, each with its unique appeal and investment potential. Here are some of the state's prime spots for potentially lucrative real estate:

  • Miami. A tourist magnet, Miami is renowned for its vibrant culture, nightlife, and stunning beaches. Year-round, it hosts events like the international Art Basel fair, Miami Art Week, and exhibitions at the Pérez Art Museum Miami. Miami Beach offers a mix of luxury and entertainment, making it perfect for condo-hotels.
  • Orlando. Home to numerous theme parks, Orlando attracts families from around the world. Visitors flock to attractions like "The Wizarding World of Harry Potter," Universal Studios Florida, and Disney’s Animal Kingdom. Boutique hotels here can benefit from year-round tourist traffic, with a mix of business travellers, convention attendees, and vacationing families providing a broad tenant base.
  • Fort Lauderdale. Often dubbed the "Venice of America" due to its intricate canal system, Fort Lauderdale offers a more refined atmosphere compared to neighbouring Miami. The city's docks, beaches, and cultural landmarks, including several historical museums and contemporary art galleries, appeal to both leisure and business travellers.
  • Tampa Bay. With its growing business activity and a plethora of cultural and entertainment events, Tampa Bay is a promising location for condo-hotels. Attractions include an aquarium, several museums, family theme parks, and scenic waterfront views, adding a unique charm to the area.
  • Key West. For those seeking a resort-like setting, Key West offers a tropical paradise. Its laid-back vibe, variety of water sports, and vibrant cultural scene make it a popular holiday spot. Known for its nightlife, the area boasts numerous bars, clubs, and restaurants.
  • Naples. Located on the Gulf of Mexico, Naples is famous for its upscale shops, gourmet restaurants, and emerald golf courses. With around ten golf clubs, including the Tiburón Golf Club and TPC Treviso Bay, condo-hotels here cater to a discerning clientele, attracting affluent retirees and well-off travellers.
  • Palm Beach. A haven for wealthy tourists and the elite, Palm Beach offers spa resorts, restaurants, tranquil promenades, and pristine beaches, creating a relaxed atmosphere. Condo-hotels here present an opportunity to invest in truly exclusive real estate.
  • Clearwater Beach. Consistently ranked among the best beaches in the US, its family-friendly coast and proximity to Tampa make it a promising spot for serviced apartments in Florida.
  • Sarasota. With a vibrant cultural scene, numerous museums, galleries, and city theatres, Sarasota is a mecca for art enthusiasts. It boasts classical art museums, a car museum, an opera house, botanical gardens, a jungle park, and much more.
  • Destin. Located along the Emerald Coast, Destin is celebrated for its breathtaking beaches and vivid green waters. A popular spot for families and couples seeking a relaxing resort holiday, it's a promising location for condo-hotel investments.

Trend: Florida's gentrification

One noteworthy trend currently unfolding in Florida is gentrification. It refers to the renovation of deteriorating urban neighbourhoods through improvements and the subsequent influx of wealthier residents. This process typically results in an increase in the average income level of the district's population.

Gentrification here is closely tied to climate change and the potential flooding risks faced by affluent coastal areas. According to a 2022 report by Climate Central, beachfront properties in the US, valued at $34 billion, could vanish within the next 30 years due to rising sea levels. Consequently, wealthy individuals are looking to relocate from their coastal homes to more elevated areas with minimal flood risks, such as Little Haiti, Overtown, and West Coconut Grove.

Gentrification does have its downsides: property prices in central areas soar, and social inequality widens. However, for the state and investors, there are numerous benefits to this process. Gentrification beautifies residential districts, restores cultural landmarks and parks, rejuvenates neighbourhoods, and enhances the overall quality of life. The more developed the state becomes, the higher the liquidity of its real estate.

So, what's in store for investors in New Florida?

In conclusion, addressing the primary concern of investors about what awaits them in Florida, it's clear: the state is undergoing positive transformation and development, a momentum that's unlikely to halt. Investing now could be highly profitable, as property values invariably rise during gentrification. Whether your objective is to buy for resale or for rental purposes, acquiring property in Florida today is a savvy decision, ensuring the preservation and growth of your capital.

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