Home builders ‘desperately’ need interest rate cuts, says the Miami developer

Miami real estate developer Jorge Perez said interest rate cuts are “desperately” needed to help builders control rising costs.

Borrowing costs have increased in recent weeks, boosted by stronger-than-expected economic data. Some developers who were hoping for more pronounced rate cuts from the Federal Reserve have now tempered their expectations for quick relief.

Developers “really need these cuts” because many projects are financed at variable rates, Perez, founder and CEO of Related Group, said in an interview on Bloomberg Television. “If you build a project and borrow at 3%, and now you pay 8%, I don’t need to tell you what impact that has.”

“There are a lot of people waiting for interest rates to drop,” Perez said. While he expects further reductions next year, “it will be less pronounced, but I believe we will continue to see cuts and we will continue to see an increase in demand based on people being able to afford more real estate because of the interest costs. ”

In recent months, Related has secured financing to begin construction on several residential projects in the Miami area. The company received one $527 million loan to build luxury apartments in the city’s South Brickell neighborhood, and a $400 million loan for luxury apartments on the city’s edge. Fisherman Island.

Perez also expressed concern about newly elected President Donald Trump’s comments on immigration.

“We must calm this rhetoric and find common ground because immigration made this country and will continue to play a major role in the development of this country,” Perez said. “We are very dependent on immigration to run our industry. I think the attitude of some of the most ardent opponents of immigration will soften.”