A stretch of pristine land in Florida sees real estate boom amid Covid-19 pandemic

Walton County, Florida

TUCKED away in Florida's panhandle, Walton County is one of the fastest growing regions in the country, home to the best beach in the United States and some of the last pristine undeveloped land in the Sunshine State.

One developer already has a lock on it. St Joe Co, a real estate firm in northwest Florida, has seen its stock more than double since the end of September as the Covid-19 pandemic has fuelled a migration from the densely populated cities of the Northeast to Florida's sand and surf.

For Bruce Berkowitz's Fairholme Fund, the largest shareholder in St Joe, the stock's rise after more than a decade of fits and starts has provided vindication of his long-held belief that the area was a treasure waiting to be discovered.

"People for the longest time thought there was nothing going on there and for a long time that was true," Mr Berkowitz, 62, said. "But the time has come. This is an area that should have been developed a long time ago."

Fairholme first invested in St Joe in 2007.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

In 2011, Mr Berkowitz sought to remove the company's then chief executive officer and three other directors - a fight that he won and which resulted in his being elected chairman of the board, a role he still holds - but the tactic roused criticism for using a mutual fund to run an activist campaign.

Upending the board of directors was not the only uphill battle he had to face.

David Einhorn's Greenlight Capital shorted the developer's shares from 2006 until it closed the position in 2015, racking up profits of about 50 per cent in the process as the stock plunged in the aftermath of the 2008 real estate crash and came under US Securities and Exchange Commission scrutiny.

It was one of several bets that went wrong for Mr Berkowitz's fund, which runs a concentrated portfolio that produces wildly varying results. That year, the fund lost 11 per cent.

But as the Covid-19 pandemic ushered in an era of working from home, places like Walton County that offer low taxes, natural attractions and a welcoming climate have become top destinations for those able and willing to relocate.

"The place is hitting an inflection point," said Mr Berkowitz. "For a long time when I was invested people were valuing it like it was swampland."

St Joe's stock has jumped 48 per cent this month through last Monday and the US$1.6 billion Fairholme Fund is up 25 per cent over the period.

It marks a remarkable year for Mr Berkowitz, whose fund is up 61 per cent, beating 99 per cent of rivals, according to data compiled by Bloomberg.

The stock fell as much as 14.7 per cent in intra-day trading last Tuesday, its biggest drop since 2008, according to data compiled by Bloomberg. It closed down 3.13 per cent at US$42.45 on Dec 31.

Owning more than 58,528 hectares throughout Walton and neighbouring Bay County, St Joe is the only game in town for anyone looking to put their stamp on one of the last overlooked stretches of the Gulf Coast's white sand shores.

Currently, the company has entitlements to build over 170,000 residential units near Florida's Gulf Coast, according to its latest annual report.

"To my knowledge, that is the largest entitlement in the US," Mr Berkowitz said. "It's really the last place left."

The projects that St Joe is developing include a Jimmy Buffett-themed Latitude Margaritaville active adult community in Watersound.

The project is expected to have about 3,500 homes in its initial phase, with prices starting at less than US$250,000.

The land in Walton County is unique for the state of Florida: Much of the property St Joe plans to develop in the region is well above sea level, which Mr Berkowitz said few people realise.

Britton Hill, Florida's highest point at 345 feet above sea level, is located in Walton and a 2010 flood study by the Federal Emergency Management Agency said the county's "terrain along the Gulf of Mexico is high enough to form a barrier against many of the hurricane inland penetration surges".

That elevation could provide comfort to those looking to purchase a home in an area where the effects of rising sea levels has become a commonplace concern.

"I would move there tomorrow if my family would follow me," said Mr Berkowitz.

"A few years from now, you are going to be able to take an electric golf cart to the beach and to an international airport," he added. BLOOMBERG