As soon as he graduated as an electromechanical engineer, he traveled to Miami to perfect his English. He was 22 years old. Edgardo Defortuna was born in Buenos Aires, but grew up in the province of Córdoba. The original plan was to explore southern Florida and return to Argentina. But his road map was modified along the way. The Fortune International Group firm has just completed four decades of life in Miami. Along the way, the real estate developer built almost one million square meters, redesigning the city's skyline. And Defortuna became a real estate giant in the United States.
Based in Miami, the company specializes in luxury towers near the sea, river and beach. But in a city where free land is not abundant, that seal is not a dogma. And right now the company is building the Ora by Casa Tua tower, in the heart of Brickell's financial district. It is a condominium with a distinctive feature. It has restaurants, bars and entertainment areas open to the public, because Defortuna believes that the traumatic experience of the pandemic enhanced the collective desire to go out into the streets, to seek connections between people. In parallel, the Group is advancing with the two 75-story towers titled St. Regis Residences in Sunny Isles Beach.
At this point in his career, the Argentine businessman is motivated to improve the lifestyle of his clients. Of course it gratifies me when someone tells me that they bought one of our apartments in 2002 and sold it in 2010, earning a large percentage. It's important. But it gives me much more satisfaction when people tell me that their children and family enjoy what I think. "It's what excites me the most," he admits.
Defortuna speaks with LPO in one of his offices located in Brickell. Without rushing or assistants timing the interview, the founder of the Group reflects on the economy, finances and politics of both the United States and the country in which he grew up. "I still feel very Argentine." He says that the pandemic was paradoxically beneficial for real estate development in Florida and lists the three challenges that Miami faces. He is excited about Javier Milei's direction in Argentina and confesses his disappointment with the US presidential bid. "We could have better candidates," he punishes Joe Biden and Donald Trump equally.
Given the scarcity of land, what less established areas of Miami do you find attractive for real estate development?
Since we always like to work on water or the beach, we have moved north instead of west. So we are developing a project in Pompano Beach, an area not so recognized, even though the beaches are extraordinary and it is only less than an hour from here. We got a piece of land on the beach across the street and another piece of land on the bay. We built a tower with a beach club and another with a Marina that were very successful. We focus on that. We are potentially looking for properties even further north, but that still have the DNA of what we do.
With the high interest rate, low inflation and a lot of internal migration of wealthy people to Miami, how do you characterize this moment of real estate in South Florida?
I do not forget about the health problem and the pain caused by the loss of so many lives, of course. But although the pandemic seemed like a negative factor for Miami, in Florida it was very positive from an economic and demand point of view. People discovered that in Florida you can live outdoors, despite being isolated. They warned that it helps a lot to live in places like this, because of the climate, because of the geographical location. Furthermore, many people realized that they could live here and work anywhere in the world. So it attracted not only the typical audience we had, the Latin American or European investor or buyer, but also many buyers from the United States. Above all, from areas with a not-so-benevolent climate, or from states that charge you state taxes added to national taxes. Living in Florida is much more attractive.
Is it a comparison especially with New York and California?
New York and California, basically. Also, New Jersey, Connecticut, Chicago. All those states in which taxes could previously be deducted from national charges, but since Trump's reform no more could be done. These factors definitely promoted the rise of Florida. And it is not only a question of the tax, but the liberal modality that many of the governments of New York and California have. People are a little disillusioned with freedom as it is applied and understood there.
Do you mean the migratory crisis?
Freedom is very nice, but when freedom is putting up a tent in the center of the city, settling there and having no one to take you out, it's really a problem. Today Miami has less than 1,000 homeless people. Los Angeles has 79,000, according to September data. San Francisco, 64,000. Los Angeles or San Francisco are not bad cities, but in my opinion they are poorly run.
Do you give Governor Ron DeSantis credit for that?
To DeSantis and the great efforts of local authorities and communities. A little jokingly, I say that not only the governments of the rest of the world, but also other governments in the United States seem to be pushing to make Florida better and better. If you take a look to Latin America, with the exception of Argentina, thank God, almost everyone went to the left: Chile, Colombia, Peru, Brazil. Thus, those who normally look to South Florida now do so even more, because people with a good economic class are looking for security, looking for alternative investments that are protected.
Internal migration and the renewed interest of Latin Americans with a good economic class has a consequence: inflation in Florida exceeds the national average. How is that?
In Miami or South Florida we have three challenges. One is to be able to have houses for middle and low income people. As people with a lot of purchasing power come, products are made for that sector instead of making them with lower values, so that the average employees can access their home. Interesting laws have recently been created to be able to convert commercial properties such as a Street Mall into residential properties that can have the highest possible density within the area of influence.
Are you referring to the Florida Live Local law that gives tax breaks for developments that reserve units for low-income housing?
Yes, that allows you to go from a Mall that has 6, 10 or 15 stores to being able to have a building with 30 or 40 floors. Many of those properties are going to be transformed and that you must have 40% units that are low purchasing power for buyers or renters. This will help and somewhat solve the problem we have from the point of view of affordable housing. The second problem is transportation. With so much migration, people rightly complain that our traffic is getting worse. And unfortunately, we do not have efficient public transportation. It's not easy to do, but improving public transportation is very important.
What do you think of the projects to improve public transportation that are underway in Miami?
What is being planned is to expand the train that now only goes to South Miami, and turn it into a metro-mover. But it takes time and a lot of investment. And at first it creates more problems than benefits. Construction generates additional traffic.
What is the city's third urban challenge?
Education. Many recent movers are young, high-income couples with school-age children. The creation of new schools is another challenge for Miami. Some important schools in New York are opening, but it is not an easy field. A large, well-located piece of land is required. According to our possibilities, we must all do our bit so that these problems do not become unsustainable situations, and that people complain about how expensive it is, that they have nowhere to send their children, or that it takes them 2 hours to get there to work and back.
What will Miami be like in 20 or 25 years?
I hope it doesn't become the madness that other cities share with the problems I mentioned. Let them not be transferred here. But, in my opinion, and obviously I am not very impartial because I love this place, Miami has already become one of the most important cities in the world. And it has tremendous potential to be even more important in all aspects. That is why the largest companies in the world are moving or setting foot in Miami. We are waiting and we want growth to avoid what happened during other Miami cycles.
What happened during other growth cycles in Miami?
There were a lot of investors. It went up and up, but it fell suddenly because there were a lot of speculative investors, a lot of foreign people moving with volatility. And if something happened abroad, or if the perception of the economy or the United States government scared them, they would stop violently. This cycle is much more robust. There are no people who come on vacation or who come to speculate. There are many companies and people moving permanently. There is activity in office, retail, entertainment, food and art buildings. That generates activity and people bring more people. I think it is an almost unstoppable movement. But we have to turn it into something sustainable and with the appropriate infrastructure, because if not, in some years it will generate a problem.
Are you optimistic that it will not be a growth bubble?
I am very optimistic. Both in the government and in the private sector, there are many initiatives that help make it sustainable. Growth continues and is very stable. It's like New York or San Francisco at the time. There was a real need and not just a speculative demand. Inflation and rates always have their impact. But in this case the effect is smaller, because so many people coincide, there are strength and economic power that make it much more sustainable.
Can the highly polarized climate of the presidential campaign influence Miami's real estate market in any way?
In general, the president or the party itself really has relatively little influence on what happens on the macro level in South Florida. It creates uncertainty and a state of pause in people, because it is not only the presidential election, but the Senate and Congress. And to implement radical policies that change the direction of the country's economy, all three legs are needed aligned. But I think that the panorama in Congress is going to be quite similar, regardless of the presidential result.
What do you think of the presidential menu reduced to Joe Biden or Donald Trump?
It's a little sad that, with the ability and level of people in the United States, we have two candidates who are not ideal. They are both quite old and not a reflection of what the country's leadership could be. But in our activity the impact is a bit of a pause to see what happens in November. We build and buy, but with more reasoning and analysis. On the other hand, the campaign causes a lot of money to be spent promoting a region. There are advantages and disadvantages. Whoever wins, both are going to have to push the economy and try to control inflation.
Do you have a preference between Biden or Trump?
I like Republican economic policy more than Democratic, but from a people's point of view, I really think we could have better candidates.
How do you evaluate Milei's presidency in its first 100 days?
It is difficult to evaluate it, it is very short term. I think that a radical change was needed, and unfortunately due to the situation the country was in, it is difficult for the change not to have very significant costs at the beginning. It's not easy to handle. I admire that Milei continues on that path with conviction. Unfortunately, many people along that path continue to suffer. Possibly the one who suffered the most continues to suffer even more. But if they don't, it's a little more of the same. It is continuing what has been proven not to work for 30 or 40 years.
What Milei moves excite you?
Eliminate a large part of public spending, balance the coffers, promote local and international investment, and push for more freedom in every sense. It is very difficult to argue that that is not the best. But there are obstacles from people for whom it is not convenient. And it's not easy. Furthermore, he does not have the apparatus or the legislators to enact laws. In any case, it has been widely accepted internationally. I hope he achieves it, because I feel very Argentine and I would love to see us succeed in other thing that soccer. If we could all get on the same boat and push forward, regardless of whether we like one player more than other, we would probably be much more successful. In soccer we just needed to be world champion. Maybe here we just need to become recognized among some of the most serious countries.
What difference in idiosyncrasy do you perceive between Argentina and the United States regarding politics?
Perhaps it is a cultural issue, something that is not instilled in you as much as a child in school. This thing about loving your country and giving more than you get from it is something very created in the United States, that you have to contribute more than what you ask for or what you get. It's Kennedy's famous phrase: "Ask not what your country can do for you, ask what you can do for your country." People really feel that and live it here.
Los abogados de Trump abren un bufete jurÃdico y de lobby en la Argentina de Milei
Do you think that the two main challenges that Milei faces are social viability and political resistance to his plan?
Sure. I'm not super knowledgeable about what's happening politically, but from outside I think those are the two biggest challenges.
Does Milei look like Trump?
Perhaps on political or ideological issues he may be a bit like Trump. But Trump has a big problem. His ego and his personal opinion care him more than the country in general. In other words, if things impact him personally, a decision is made that may not be the best for the country. On the other hand, I see Milei much more from the people. He gets on an airliner, takes photos with everyone and is like any other person. He seems like a more normal guy in that sense, even though he doesn't seem normal in others.
Which ones?
Perhaps, and I say this in quotation marks because I don't know him, in aggressiveness. He thinks that what he says is what it has to be and he is really very convinced. But partly it is the way to achieve things. If you are not very convinced of ideologies and what you think, it is very difficult to carry out things.
Do you have contact with anyone from the Milei government?
Not direct contact. I would like to have it from now on. I have more contact with people close to Mauricio Macri, much more than with Milei, although today they are a little similar spaces. But I don't have it, I would like to have an exchange.
In Argentina, you are partner with the Soldati brothers in real estate. Do you plan to deepen your investments under the Milei government?
I love looking at Argentina. But real estate projects like the ones we like to do take a long time. From the moment you analyze, buy the land, start, finish and be able to withdraw any type of investment, four, six, eight years pass. Unfortunately, the rules change so much that you start with a set of parameters, no matter how good Milei is, and everything changes when you want to repatriate your capital or solve the tax part. And it's no longer what you thought. I would love to and we are looking for alternatives, yes, definitely. It's not easy, because I would do it with someone local who knows better.
You developed residential projects in Córdoba several years ago...
I made two or three. Although everyone, when they go to Córdoba, tells me that they are the best residential projects in the province, I joke that I am still waiting to I get the first dollar back. A lot of fame, but zero money.
You did not go well...
It just can't go well. I did well in sales and construction. Throwing random numbers, when you contributed a million dollars, which at that time was a million pesos. Four years or five years later the sales were for ten million pesos, but they are still the same million dollars. And when you want to take it out, you have to pay the tax for nine million pesos, which is 40%. You lost half of the investment. It doesn't make sense. You will never get foreign investment if there is no adjustment regarding inflation, if there is no much more rational system of doing things. Not to mention that you have to go through a lot of tricks to get permits and approvals. It is a very different way of doing business. I would only do it again with a very good local partner.
Is it difficult for Argentina to receive large investments if the macroeconomy is not stabilized and the stocks are not released?
It is very difficult, unless these large investments are so exclusive from the point of view of the product, such as gas or...
Lithium?
Lithium or whatever you can't get anywhere else, and potentially the margins are such that people will take a chance. But in other more normal areas, like mine, it is not easy to convince someone like me to do the same thing they do in Argentina.
Argentine people remain at the top of investors and appear third in the ranking of web searches to buy properties in Miami. What explains it? Have you noticed any recent changes in that interest?
The Argentine was in love with Miami for many years. He loves to come, whether on vacation, to work, or enjoy. But the economy and the peso are so deteriorated that the price of tickets that the average Argentine can buy or invest in is increasingly falling. And the curve here was the other way around: prices are getting higher and higher. So, although it is a little more difficult for them to come, the appetite and love are always there. Unfortunately, many capable and intelligent young boys tried to emigrate. It is another problematic part of the government of the previous years. If they could not emigrate to the United States, the youth went to Spain, Portugal or wherever they were admitted and could have a slightly clearer outlook. Luckily, there is still a lot of talent and possibilities to do things in Argentina.
Aliados a los hermanos Mas, dos magnates argentinos desembarcan en el negocio del rugby en Miami
What economic potential do you see in Argentina?
From a technological point of view, for example, we made an alliance with Globant, a company based in Argentina. We work together on a blockchain-based platform to allow Argentine investors to participate in our projects with smaller amounts. And we do all the technology and programming part in Argentina, not only because it is cheaper, but because it is done very well. There is a very capable human resource. It's a shame it can only be exported.
Together with Argentine businessmen Marcos GalperÃn and Alejandro Macfarlane, you also invested in a rugby team, the Miami Sharks. What is that bet about?
It's still in its infancy, but I loved the group more than anything. It's hilarious. I am a River Plate fan and I love sports in general. It was a mix of bringing another professional team to Miami, which is basically the only thing that was missing, and on top of that with a group of people led by Marcos GalperÃn, who I really admire. I'm very excited. But from a sporting point of view, organizing something like this costs a lot of effort.
Rugby is not such a popular sport in the United States...
No, but the same thing happened ten or fifteen years ago with soccer. And the MLS today is watched a lot and has a lot of strength. Something similar could happen with rugby in the long term. And it helps lead a healthy, sporty life and promote Miami. It is an interesting and fun investment.
Did the arrival of Lionel Messi have an impact on Miami's economy?
It is difficult to measure and quantify the economic impact. Messi's popularity is incredible. Looking only at the point of view of the Instagram followers that Inter had before and after his arrival, today they are the professional team in the world with the most followers. And only in 7 months, something impossible any other way. T-shirt sales, trips to watch games, Apple subscriptions... Miami was mentioned everywhere. Everything Messi touches creates a very special interest.
Translation: Bibiana Ruiz.
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