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High-rise construction cranes hover over downtown Miami, where billions are being invested in thousands of new condo units. - 

Miami’s building boom has featured prominently in many stories about the threat the city faces from rising seas and a changing climate. Scientists warn that parts of greater Miami — including some of its crucial water infrastructure — will be below sea level within a few decades. Meanwhile, developers are pouring many billions of dollars into many thousands of new condominiums and offices.

However, downtown Miami's condo explosion turns out to run on its own financial logic — far removed from rising seas.

Peter Zalewski runs Crane Spotters, an information service on the building boom, explains that the bulk of these condos are not residences. They are apartment-shaped financial instruments.

"In New York, you trade stocks. In Chicago we trade commodities. Miami, we trade condos," he says.

"This is what we do," he continues. "We trade down here. These are traders who are not looking to live the American dream with a family of four and a dog. They’re looking to make a hundred-grand a unit … with virtually nothing being done but making a phone call to your broker in Miami and having him unload it to somebody else’s broker, who’s representing somebody in Russia."

The basic idea is: Investors buy in before construction begins, betting that by the time the building is finished, prices will have gone up.

Many of the buyers are from outside the United States — often from Latin American countries where other available investments and home currencies make Miami real estate look like a stable place to park some cash.

Bill Hardin, a real estate professor at Florida International University, likes to tell people that real estate is Miami’s number-one export.

He anticipates the obvious question: How do you export real estate? And he has a ready explanation.

"In an economic sense, it’s not moving the product," he says. "It’s: where does the money come from that pays for those products?"

He sees the market at work every day from his office window. At the moment, his 11th-floor office overlooks the ocean. However, it also overlooks a construction site just below his window — soon to grow into an 87-story building.

"So somebody is going to have a great view in the future," he says. "But it won’t be me."

Follow Dan Weissmann at @danweissmann