Builders need rate cuts 'badly,' Miami developer says

Miami real estate developer Jorge Perez said interest rate cuts are needed "badly" to help builders manage soaring costs. 

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

Developers "need those cuts badly" because many projects are financed at floating rates, Perez, founder and chief executive officer of Related Group, said in an interview on Bloomberg Television. "If you build a project and you borrow at 3%, and now you pay 8%, I don't have to tell you what impact that has."

"There's a lot of people hanging that are waiting for interest rates to go down," Perez said. While he expects further reductions next year, "it's going to be less pronounced, but I believe that we'll continue to see cuts and we'll continue to see an increase in demand based on people able to afford more real estate because of the interest-rate cost."  

Over the past few months, Related has secured financing to kick off construction of several residential projects in the Miami area. The firm received a $527 million loan to build luxury condos in the city's South Brickell neighborhood, and a $400 million loan for high-end condos on Fisher Island. 

Perez also voiced concerns about President-elect Donald Trump's comments on immigration.

"We need to quiet down this rhetoric and come to an understanding, because immigration has made this country and will continue to play a big role in the development of this country," Perez said. "We very much depend on immigration to run our industry. I think that the stance of some of the more fervent opponents to immigration is going to quiet down."