Miami condos are "for sale" for foreign buyers

Business Materials 20 February 2008 06:21 (UTC +04:00)

( Reuter )- Canadian retiree Sheldon Kovensky felt the lure that attracts so many foreign buyers to sunny Florida these days -- falling prices for luxurious oceanfront condos that can be bought with weak U.S. dollars.

Kovensky has been scouring south Florida from Miami Beach to Palm Beach in search of a three-bedroom apartment on the sand. Armed with a Canadian dollar that has gained 25 percent against the greenback in the last two years, he is expecting a big bargain.

"We're hoping to get an apartment worth about a million (U.S. dollars) that I can purchase for about 20 percent less," he said by phone from his home in Unionville, Ontario, as he faced digging out from a snowstorm.

"The Canadian dollar is on par and the Florida market has dropped 20 to 30 percent, so you get a lot of bang for your buck," he added.

Realtors, analysts and buyers say the strength of the Canadian dollar, the euro and other foreign currencies, on top of a falling real estate market, is making the United States an enticing place for foreigners looking to buy property.

In fact, they say, the combination of the weak dollar and the allure of Miami as a cosmopolitan, multilingual city may be helping to prop up a faltering, overbuilt condo market that had been expected to crash but has seen, to date, only a small drop in prices compared to other Florida cities.

In a study by the National Association of Realtors last year, Florida was the top destination for foreign buyers, accounting for 26 percent of all transactions, ahead of California at 16, Texas at 10 and Arizona at 6 percent.

More than 7 percent of all Florida homes were sold to foreigners, the study found, and 65 percent of realtors said they had brokered at least one foreign deal.

Online property auction site FastHomeAuction.com in December reported a record number of foreign visitors, citing the weakness of the dollar as a key contributor.

Jan de Vetten, a Dutch toy trader who has built a side business helping friends and business associates buy Florida homes, said that in some cases they are getting properties at half price.

"They negotiate typically 25 to 30 percent off the asking price and the euro is almost a dollar and a half now, so they probably have another 10 to 15 percent in value," he said.

Foreign buying was also reported brisk in Arizona, New York and elsewhere.

In New York, Manhattan's average sales price soared to a record $1,439,909 in the fourth quarter last year as foreigners pushed up demand.

In Phoenix, cash-toting Canadians are snapping up second properties, mostly high-end homes on golf courses as refuges from the harsh winter, agents said. Many hail from Calgary, Canada's oil boomtown.

"There's definitely some Canadian money in town," said Julie Goodman, a Remax agent who said she had sold six properties and had another four families coming this month for visits. "They pay cash and know that cash talks."

After the U.S. market peaked in late 2005 and the subprime mortgage crisis set in, sales and prices began tumbling across Florida. The worst was felt in west coast cities like Punta Gorda, where condo sales fell 50 percent, and Fort Myers, where the median price of an apartment fell 21 percent in 2007.

While Miami sales fell -- 39 percent for existing single-family homes and 41 percent for condos -- median prices remained resilient before finally weakening in December, 2007.

For the year, the median Miami condo price rose 6 percent. But analysts expect a drop in coming months as thousands of new condo units come onto the market.

The weakness in the greenback, agents say, is attracting buyers to Miami from continental Europe, Scandinavia and Canada in addition to the traditional influx of cash from volatile South American countries, particularly Venezuela.

A strong pound has Britons Florida looking outside their traditional stomping ground in Orlando, said Vani Ungapen, director of research at the Florida Association of Realtors.

"Most of them are buying high-end homes," she said. "They are looking for a big house with a swimming pool, and you can't buy that in London."

Brokers say Miami Beach's famous South Beach district is luring Italians, French and Germans; Russians are flocking to Sunny Isles Beach to the north; Venezuelans who may be fearing socialist President Hugo Chavez are buying in Doral, to the west.

Miami broker Brigitte Benichay said middle-class French entrepreneurs are eager to join a 30,000-strong French community in Miami and open businesses here.

"Because of the strength of the euro they are paying cash," she said. "Eighty percent of the ones I meet want to pay all cash. Business is very strong."

The Beacon Council, Miami's business development agency, said foreign businesses are increasingly setting up shop in the city. The number of multinational projects it is working on has virtually doubled in five years, and those companies are bringing employees interested in buying property.

"The economic market here is diversified. We're not any longer dependent on one industry, like tourism, or on one region, like Latin America," president Frank Nero said.

Despite explosive price increases in recent years, Nero said, prices can look cheap to someone from Paris or Madrid.