The Real Deal Miami

Debating a rising dollar’s effect on South Florida

By Jennifer LeClaire | July 01, 2008 03:26PM

The dollar is coming off its most significant rally in the past several months against the euro

Still, the long-term prospects for the U.S. dollar are good, as a weak dollar is negatively impacting much of the world’s trade and steps are being considered to stimulate the greenback.

How would a rising dollar impact the South Florida real estate market? Real estate professionals have mixed impressions.

Some believe it could drive away foreign investors. Others say signals of a dollar recovery would have the opposite effect, attracting even more foreign investment. Still others say that anything could happen.

Most entrepreneurs and developers believe that the dollar can’t sink against the euro forever, and there is some concern that a rapid currency recovery could make real estate development more expensive.

“If the dollar rises gradually, there won’t be much impact,” said Les Byron, a principal of Sperry Van Ness/Kidwell-Byron in Fort Lauderdale. “If it rises rapidly, there could be a negative impact because it could drive away foreign investors. South Florida depends on foreign investors.”

Andrew Russo, principal of VIP Properties of Distinction in Jupiter, has a different take. As he sees it, the dollar is historically weak against the pound and euro, and the June rally could serve as a wake up call to get the foreign investors off the fence.

Many foreign investors and investment funds have been looking at Florida real estate, but have been weary about both the dollar and the real estate market weakening, he said.

As sectors of South Florida’s real estate market begin to stabilize, a slightly stronger dollar could draw more European investors.  

“With real estate prices down … 20 percent from the 2005 highs, the dollar remaining weak, and the demographics of South Florida very strong and only getting stronger, now is the time to invest, especially if you are buying real estate with a foreign currency,” Russo said.

Of course, there’s already plenty of recent activity from foreign investors in the South Florida marketplace. As the U.S. real estate market weakens, many foreign investors have invested in second homes or vacation property.  

“The rising dollar is just indication and impetus not to wait to get in on this market,” said Richard Swerdlow, CEO of Condo.com, a condo marketplace headquartered in Coconut Grove. “Housing prices will go up just as the dollar will, so I expect foreign investors to continue to invest in South Florida properties – maybe even more so – with the expectation that this down market and weak dollar are only temporary,” he said.

Alan Macken, principal of Macken Realty, a real estate brokerage and development firm in Miami, said he sees the good and the bad in a rising dollar. 

“Like every other buyer, although foreign investors are getting the exchange rate advantages, they are waiting for the bottom and we all know you can’t pick an accurate bottom,” Macken said. “I don’t think a rising dollar would immediately drive away foreign investors. It may cause them to make their move before that perceived bottom.”