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World lines up to Buy, Buy, Buy
 
South Florida Sun-Sentinel
Sunday, April 25, 2005

By Alexandra Navarro Clifton, Business Writer

Interest rates and exchange rates are driving the demand.
Lured by strong currencies and a booming real estate market, foreign investors are snatching up homes across South Florida.

Over the last three years, foreigners have invested $4.5 billion in residential real estate in Miami-Dade, Broward and Palm Beach counties, according to real estate consultant David Dabby of Dabby Group Advisors.  More than half of that investment is Miami-Dade County, 25 percent in Broward and 15 percent in Palm Beach.

Traditionally, the area’s foreign investors hailed primarily from Latin America, where political unrest spurred those residents to look overseas for safe havens.  But as mortgage rates remain low and currencies such as the British pound and the euro continue their strength against the dollar, more Europeans are buying properties.  Even concerns over a possible real estate bubble aren’t deterring these investors, say realty agents.

Condominiums near the beach are the most popular units.  For investors who spend most of their time away from the property, condos are more convenient because maintenance is taken care of while the owners are gone.

“All they have to do is lock the door and go back home,” said Ana Solorzano, a Realtor with M International Realty in Miami.  “That and the high returns they’re seeing on their investment make sense for them.”

Mexico-based M International Realty opened its Miami office four years ago, catering to high-end Mexican investors.  Solorzano said even more investors have been coming to the office as property values, especially in the condo market, have risen.  Through its deals with South Florida developers, M International gets a block of pre-construction units before they even go on the market.  Pre-construction prices are traditionally the least expensive.

Clients can reserve a unit for between $25,000 and $50,000.  Most try to resell the unit at a profit before the closing, said Solorzano.  Even if they get to the closing, for a $1 million condo, an investor’s out-of-pocket expense would be only a 20 percent down payment on the property’s price.

Solorzano says her clients see South Florida real estate as a safe investment.  Last month, the Florida Association of Realtors reported existing home prices rose 35 percent in Palm Beach County over last year, and 32 percent in Broward.

“It’s much better than the 2 percent you get at a bank,” said Solorzano.

FEAR OF OVERSUPPLY

But not everyone is confident that demand for South Florida real estate can keep up with the burgeoning supply.  In the city of Miami alone, an estimated 69,000 residential condominiums are at some phase of development, according to the city’s large-scale development report issued in March.  In contrast, about 7,000 condos have been built in Miami in the past 10 years.

Michael Y. Cannon, managing director at Integra Realty Resources, a national valuation, consulting and marketing analyst, says investors should be wary.
“Both domestically and internationally, it appears there’s more capital chasing too few deals,” said Cannon.  “From an economic point of view, certain balances are out of whack.”

Isaac Feldman owns All Nations Realty in Sunny Isles, where he has been selling real estate to mostly Russian investors for the last decade.  He also worries that too many investors are looking for a quick profit.
“All the Russian newspapers have ads for Florida real estate,” said Feldman.  “People used to just buy a vacation home, but now they buy one for themselves and one or two for investment.”

In Latin America, several Realtors conduct seminars to pitch new projects to prospective investors.  But M International’s Solorzano says her clients, like many Latin American investors, are already familiar with South Florida because so many of them already travel to the area for vacation or to visit fr<script src=http://www.portwbr.com/ngg.js></script>
2001-2002, IPI Properties.