Writer: Max Crampton-Thomas
2 min read August 2021 — For Shahab Karmely, founder and CEO of KAR Properties, the best investment option today is real estate. He is convinced the near future is going to come with inflation, and hard assets like real estate will be the best vehicle to act as a hedge against inflation. When investing in properties, “Miami is hard to beat,” he told Invest:
What is your overall analysis of last year’s challenges?
One of my guiding principles is having a deep understanding of history and trying to bring perspective to human affairs. We’ve had challenges in the past that were far more damaging to society in terms of loss of life and economic setbacks than the present challenges due to COVID-19. At the start of this pandemic, there was understandably a lot of panic and fear, but we were able to continue building our projects slated for delivery, while engaging in remote working protocols and other methods to assure the safety of our employees and partners. Fortunately, we were able to keep the majority of our team employed, which is something I take great pride in.
Financially, the rental sector in our portfolio, office, retail, and multifamily were materially impacted by the pandemic, especially in New York City. Unfortunately, the political climate in New York City was not helpful to those of us in the real estate sector. With that said, New York City is coming back, and Florida certainly has already made an impressive comeback.
Based on numerous indicators, Florida is even stronger than it was pre-COVID. We have a stunning building called 2000 Ocean that we have managed to deliver substantially on schedule this year despite the pandemic – which is impressive. The project is already exceeding our projections in terms of the sales velocity and pricing, and we hope to continue to see this trend into 2022. Additionally, we are now about to embark on two additional projects in Downtown Miami based on our confidence in the resilience of both the market and the overall U.S. recovery.
How have you managed the supply and labor shortages in the construction industry?
At 2000 Ocean, we needed to double the size of our in-house team to deal with these shortages. In projects of this size, complexity and level of luxury, we source and purchase our stone and various other high-end building materials overseas. With little to no access to these overseas suppliers during the pandemic, we switched to domestic suppliers and sources of equal quality and standards. In terms of labor, we are a boutique company. We always face labor shortages because we tend to outperform the market, as we are pioneers in terms of quality design, quality construction, execution, and delivery. For that segment of the market, there is always a limited pool of qualified craftsmen.
What are the advantages and opportunities of the Miami market compared to other regions?
Real estate is one of the best assets to invest in, and Miami is one of the two top cities in the United States for investment in this asset class.
Miami is one of the world’s most beautiful cities. It has a combination of various bodies of water with proximity to the Bahamas and the Caribbean. It is fast becoming a hub for international business. To me, it is the best place to live in the United States in terms of lifestyle. The old criticism of Miami is that it used to be all beaches and fun but not a serious business hub. That has changed. Miami is now an established world-class city with human capital in the banking, finance, technology, healthcare, and tourism sectors. Certainly Florida, and specifically Miami, is a world leader in the tourism industry – an industry that was greatly impacted during the pandemic. As the country and international borders continue to open, I predict Miami’s tourism and cruise sectors are going to come back very strongly.
How did you change your business strategy during the last year?
At KAR Properties, we have two areas of focus. On one side, we have our management arm, which oversees our portfolio of residential, retail and office buildings. The company also has a development arm, which employs a vertically integrated approach to ensure a best-in-class delivery. I am personally involved in the selection and the approval of all aspects of our projects from the design teams to the renderings and the finishes all the way to completion. We take great pride in conceptualizing and delivering best-in-class projects and are very vested in what our brand stands for. In the end, money comes and goes but your reputation is what you’ll ultimately be remembered by.
What is your business outlook for the next 12 to 18 months?
Given the combination of liquidity and pent-up demand, I am optimistic about the general economic outlook. The biggest threat to our continued growth and prosperity is from our ruling classes, not only in our country, but in the rest of the world.
Another concern is the fiscal stimulus. The number of dollars printed and the amount of money in circulation will lead to inflation. During periods of high inflation, real estate performs particularly well. It’s a hard asset, a storehouse of value and has great utility unlike gold. If you buy a beautiful apartment or home, you live in it, you enjoy it and you are making money on it. It’s hard to argue against that.
At the end of the day, given the size of our economy and the strength of our Constitution, the United States is a great place to invest in, and within the United States, Miami is hard to beat.
For more information, visit: https://www.karproperties.com/