The Value of Venezuelan Buyers

Years of deteriorating economy, political upheaval and rampant crime have pushed Venezuelans to search for locations beyond their borders to call home and invest their wealth. But the recent victory of the political opposition could foster change in the country and influence its citizens’ migration and investment decisions. In midterm elections last week, the Democratic Coalition unity in Venezuela obtained a majority in congress for the first time in more than 15 years, potentially opening the door for reforms in a country marred with a three-digit inflation and the second-highest homicide rate in the world. Whether these changes will impact Madrid or Miami real estate, where Venezuelans lead in international home purchases, is yet to be seen, but experts expect some type of market response. If a more empowered opposition leads to progress for Venezuela, citizens of the South American country could have fewer reasons to emigrate, which would, in turn, reduce their demand for homes abroad, said an economist in Caracas who asked not to be identified out of fear of political retaliation. At the same time, added the expert, the lifting of currency controls and limits on the sale of U.S. dollars, which have made it difficult for many Venezuelans to take their money outside their homeland, could liberate the purchasing process. Furthermore, if crude oil prices recover, “rich Venezuelans would be in a better capacity to diversify their portfolio and continue investing,” including in real estate, said the economist. As a top oil producer, Venezuela has been hard hit by the commodity's plummeting prices, which started their free fall in the summer last year. “The average Venezuelan gets richer or poorer depending on where oil stands,” he said. Venezuela lost 479 high-net-worth individuals between 2013 and 2014, when the group stood at 13,221, according to Knight Frank. The London-based real-estate consultancy, however, expects that number to grow to 27,081 individuals by 2024. Ultra-high-net-worth Venezuelans, those with at least $30 million in assets, would reach 413 by that same year, from 192 in 2014. Florida accounts for about 25% of foreign home buyers in the U.S. and of that group, Venezuelans take the lead. Venezuelan buyers favor Miami in particular, which is a less than a three-hour flight away from the South American nation’s capital. According to 2015 Profile of International Home Buyers for the Miami Association of Realtors, 26% of foreign buyers in Miami-Dade County come from Venezuela. When it comes to the type of housing, 72% of Venezuelans prefer condominiums, while 21% opt for a single-family home. As in the case of most foreign property buyers, 74% of Venezuelans pay for real estate in cash. Masoud Shojaee, president and chairman of Shoma, a real estate development company in Miami, has been working with clients from Venezuela for more than 15 years, traveling to different cities in the country for one-on-one meetings and attending events with local real estate agents and potential investors twice a month for the past four or five years. He thinks that a change in Venezuela’s fortunes shouldn’t discourage their citizens, who make up 75% of his business, from investing in Miami. “No matter who is in power, it is always good to have a plan B,” he said. “If something goes wrong, you can pack, hop in a plane and you have a house waiting for you here.” Francisco Angulo, manager at Coldwell Banker Residential Real Estate in Coconut Grove and a Venezuelan immigrant, says that he is already heard some of his countrymen talking about going back home. Still, he thinks the decision to return may be too hasty. “Obviously (the recent elections) could bring a change and people could adopt a wait-and-see mode, but we can’t declare victory yet,” he said. “It is going to be interesting to see what the next year brings.” Write to Andrea López Cruzado at andrea.lopez@dowjones.com