Santiago Vanegas, Founder, CEO & President, HabitatGroup

Invest: spoke with Santiago Vanegas, founder, CEO and president of HabitatGroup, about the factors shaping Miami real estate, the advantages of vertical integration, and the growth of co-ownership models. “A big part of it is vertical integration,” Vanegas said.

What is your view of the current real estate market in Miami?

In the last five years, the market has been active, but in the last two years we have been relatively flat. When the market is flat, or down 3%, it still feels like a long period when you are operating for 24 months in that environment. You are dealing with annual valuation pressure and rising months of inventory. These have been two long years, and we hope the market changes, reactivates, and regains speed.

How has your background in economics shaped the way you analyze the real estate sector?

I try to connect the macroeconomy with the industry using a small number of variables. At the macro level, I follow interest rates, inflation, GDP growth, and unemployment. If you track those four variables every month and every quarter, you can begin to understand what is happening at the top level of the economy.

Then you bring that down to the industry and study supply and demand. In real estate, you can identify the existing market supply and also what is in the pipeline. You can count the existing inventory, track what percentage of the market is available, measure transactions, and watch months of inventory. Then you can look at the future supply because the pipeline is relatively predictable. You can count buildings under development, cranes, permits, and deliveries.

Once you combine the macro picture with industry indicators and the specific supply and demand in your product type, you can start to understand whether you are in a buyers’ market or a sellers’ market.

What indicators matter most in that framework?

One important indicator is demographic growth. Historical and projected demographic growth in a territory is the main component of demand. If Miami grows by a certain number of people per decade, you can begin to estimate how many new units the market should absorb over that same period. Then you can segment that by product type, such as multifamily and condo, and by neighborhood.

Interest rates are also critical because they are what ultimately accelerate or slow the market. When rates become complicated, everything slows down.

Another useful indicator is the S&P Case-Shiller Index. It helps track residential valuation trends nationally, in the 20 major cities, and specifically in Miami. That creates a bridge between the macro view and the micro view of the market.

How do you think about monetary policy and its effect on real estate?

Monetary policy is fundamental. Central banks, especially the Federal Reserve, are focused primarily on inflation and employment. In that sense, the Federal Reserve has a dual mandate, and it uses two main tools: interest rates and liquidity.

I think monetary policy is more predictable than many people believe. If you study the last 25 years of Fed rates, you can see that it does not move like a yo-yo. There are periods of rate increases to control inflation, then periods of stability, and then periods of cuts. If the Fed wants to help the economy without changing rates immediately, it can use liquidity as another tool.

Understanding that helps you see the broader structure behind what is happening in real estate. These decisions affect the cost of capital, the pace of investment, and the behavior of both buyers and developers.

How would you describe HabitatGroup’s strategy in Miami?

Our strategy has been to consolidate investment in one specific area, especially West Brickell. We focused on understanding exactly what was happening there, including the land supply, the different types of real estate products, and the composition of buyers. In that market, we saw a mix of buyers from the United States and Latin America, roughly 50-50.

We identified an opportunity to create disruption in the condo-hotel segment. At the time, standard condo pricing was already high, and we believed there was space for a different type of product, one that combined hospitality and residential use in a more flexible way. We were among the early groups helping reactivate the condo-hotel market in Brickell and Downtown Miami.

That market has since grown significantly. Today, there are thousands of condo-hotel units either delivered or in process across Brickell and Downtown. Developers introduced a new type of hotel-room supply into the market through this model, in an area that had not been delivering enough traditional hotel rooms.

What has allowed HabitatGroup to stay competitive as the market has evolved?

A big part of it is vertical integration. Developers often hire outside firms to manage construction, architecture, sales, and operations. We wanted to build capability across more of those functions ourselves.

That matters for two reasons. First, it improves margins. The construction component is important because if you rely entirely on outside general contractors, their pricing power can reduce the developer’s margin. If you build those capabilities internally, you can retain more value.

Second, it gives you control over velocity. A project does not always move at the same pace. Sometimes you want high velocity, sometimes medium velocity, and sometimes slower velocity because you are managing resources, cash flow, financing, investor timing, buyer deposits, and other components. If your architecture and construction teams are aligned internally, you can adjust more effectively.

That structure gives you more control over scheduling, permitting, drawings, and execution. You are not just managing consultants. You are the consultants.

How are boutique projects performing relative to larger developments?

Boutique projects are moving faster through the delivery pipeline. Large projects have faced more delays, especially after the pandemic. Many have been delayed by two years or more. They are more complex to finance and to build.

Boutique projects, by contrast, can move more efficiently. They can still offer differentiated design and hospitality concepts, but they are easier to execute. That has made the boutique concept more attractive in the current environment.

How do you think about returns for investors and buyers in your projects?

Real estate has several phases in the creation of value, from development to operation. Investors who come into a project with us at the development stage are participating in one phase of return. Buyers who purchase a finished unit participate differently because the operating return of the product becomes part of the equation.

A condo-hotel or short-term rental product usually offers two main return components. One is operating return, and the other is appreciation. The operating return on stabilized real estate is typically in the 5% to 6% range. It is difficult to see a real estate asset consistently generate 12% operating returns. That is not how the market normally works.

The other component is appreciation, but appreciation depends heavily on macroeconomic conditions and on supply. If the market has too much supply and interest rates are high, then extra appreciation becomes more difficult. In those situations, the owner may depend more on operating income or on selling strategically at the right time.

How is HabitatGroup approaching international buyers?

We are pursuing a globalization strategy. We opened offices in Brazil and Colombia because a large share of Latin American investors comes from those markets. Having teams from those countries helps a lot. When people are approached by someone from their own country, who understands their timing, culture, and way of doing business, conversion is easier.

That local cultural understanding matters. Selling to a Brazilian buyer is different from selling to a Colombian, Chilean, or Argentine buyer. We wanted to build that capability inside the company so we could communicate more effectively with each market.

What new areas of innovation are you most focused on now?

One area we are watching closely is co-ownership. It is a relatively young industry, but it is growing quickly. We created a co-ownership marketplace to offer that model in our condo-hotel products.

The structure is based on eighths. A buyer purchases 12.5% of the title to an apartment. Instead of buying a full unit, the entry ticket can be in the $60,000 to $70,000 range for a finished apartment. That gives the buyer use rights and also exposure to appreciation and operations, but with a much lower entry price.

I think this model can help address some of the uncertainty around tokenization. Tokenization is a large idea, but the legal and accounting supports are not fully established yet in a way that makes investors feel close enough to the asset and to the title. Co-ownership is more understandable because the investor is much closer to the title structure.

We are still trying to create disruption and expand the share economy model in real estate. I think co-ownership and other forms of fractional ownership will continue to grow because they lower the entry point and broaden the buyer base while keeping the structure more tangible for investors.