Condo Panel: 2006 Market Hiccup is OK
November 16, 2005
By Colleen Corley, News Writer
From condo developers to converters to speculators, everyone wants to know how fast the condo market will reach its inevitable slowdown. But as a panelist asked at the CPN Executive Summit 2005 yesterday, is the recent deceleration the beginning of the end, or just a hiccup?
In markets with supply constraints, job growth and solid fundamentals, the condo markets should be okay, said Arthur Nevid, managing director of investment and lending at Mountain Funding L.L.C. "(But) when you go to Miami and you know that 80 percent of the condos have been purchased by investors," he noted, "there has to be a slowdown in those types of markets."
Developer Enrico Plati said that a slight oversupply in the market, heightened construction costs and the anticipated rise in interest rates are all contributing to the slowdown. "(But) I was developing when rates were 18 percent--and I was selling," said Plati, who is president of Monaco Development L.L.C.
Plati added that he does more condo conversions than other projects now, but named the non-professional converters as responsible for a rise in condo prices. Co-panelist Louis Dubin, president & CEO of The Athena Group Inc., said that the market might experience a hiccup in 2006 as non-real estate professionals who have bought condos as investors--or, speculators--begin to see lower rates of return and exit the market.
"The professionals are going to take this industry back," Dubin said. "I look forward to the year of professionals getting back to their business." Dan Harrington, managing director of The Patriot Group L.L.C., and Dennis Russo, a partner with law firm Herrick, Feinstein L.L.P., also joined the panel.
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