The Panama newspapers, the Miami real estate market and the news that has an impact on all countries. When the history of Panama Papers began, the whole planet was upset by the tricks of the rich around the world to protect their wealth and avoid taxes. The story appeared after a group of influential newspaper investigative journalists went to great lengths to expose the scandal.
When they finally had their story, many were stunned. The history of Panama Papers involved the discovery of data relating to the secret transactions of a Panamanian company known as Mossack Fonseca. The company was the favorite of billionaire and millionaire customers around the world who wanted to create front companies and offshore accounts to hide money from their governments.
There is a famous saying that rich people all over the world speak the same language. The publication of the data of the Panamanian company proved the point. The client list included prominent entrepreneurs, politicians, celebrities and criminals. Once all relations were absorbed, a European leader was forced to leave office. governments opened investigations and others chose to initiate damage control measures.
Closer to home, the US Treasury Department immediately went into action and began developing rules for banks to reveal the identity of people behind screen companies. The ministry has also set standards to prevent the opening of accounts abroad.
The real estate industry in Miami has been one of the most affected. The reports stated that some of the money used to buy overpriced condos came from people named in the list. It should be noted that even before the mention in Panamanian newspapers, the real estate sector of Miami was under the control of the United States government for money laundering. The authorities were not comfortable with the idea that people buy a significant number of Miami condos and luxury properties in cash without a trace. Considering that some of the listings cost millions, he was curious to see how buyers could afford, such as cash transactions, without any legal documentation.
Miami Florida at sunset, colorful skyline of illuminated buildings
The US government has brandished a red flag regarding the type of investment in Miami-Dade County and has put in place measures to track the origin of money from a buyer paying more than a million dollars in cash. The main concern of the authorities was that, as the money did not pass through the formal banking sector, it was considered suspect. In 2015, approximately 53% of the properties in the region were recorded as cash sales.
When foreigners bought Palm Beach, Broward and Miami-Dade for $ 6.1 billion, there was a lot of suspicion about where the money came from. It was thought that most of this money represented a capital flight from Latin American companies. When the real identity of property owners emerged, it was a shock to the industry players. Paulo Alves Pereira, a Brazilian politician and real estate developer was among the names. He was discovered as the real owner of Mateus 5. Paulo resigned from his governorship of Brasilia a few years ago after being accused of corruption. When the Miami Herald decided to further investigate the report, he discovered at least nineteen foreign nationals owning real estate in Miami appearing in Panama newspapers. These nineteen people are suspected of being involved in fraud, corruption and tax evasion at home. The survey also revealed that many Brazilian clients who used the services of a particular local real estate attorney had questionable backgrounds. Most were politicians, politically connected individuals and judges. The newspaper revealed that the Miami Association of Realtors had organized an event to advise its investors on ways to circumvent the new tax rules introduced by the government.
It is easy for foreigners to buy a property in Miami using ghost legal entities. Secret trusts, limited liability companies and offshore companies can buy any property in Miami without any problem. This arrangement is not illegal as long as companies pay taxes and declare their assets. The fact that foreigners who invest between $ 500 and $ 1 million in a US project have a chance to become US citizens through the EB-5 visa program has also generated a keen interest for Latin American nationals.
Although many factors have contributed to the recent downturn in the Miami condominium market, one of the reasons should be the release of the Panama Papers. Foreign buyers can no longer do as usual. They find that many more questions are asked about the offers of last year. At the same time, many Latin American companies are going through difficult economic and political times.
Panama papers may affect condominium prices in Miami, which can reach affordable levels. At one point, massive influxes of money pushed real estate prices so high that they were no longer accessible to residents. Rental prices can also reach affordable levels when empty condo owners decide to lower their rates to attract tenants. The year 2016 has seen the completion of many new developments and the market is about to reach the saturation point.
Investors in new developments are now choosing to convert them into rental properties until the market readjusts. For now, it seems that the impact of Panamanian newspapers has tarnished the image of Miami and its luxury condos. It remains to be seen whether the revelations will have a significant impact on the industry. The authorities will certainly look more closely at the Miami real estate transactions involving foreigners and money. The effect of Panamanian papers has left its mark for years to come.