The dollar is up, and that means South Florida real estate has another reason to stay down.
Regional developers and brokers who cater to European investors say the
weakening of the continental currency could eclipse one of the few
bright spots of the 2008 market as bargain basement prices cease being
ultra-cheap for foreign buyers.
One euro on Monday was worth $1.26, a recent high against the U.S.
dollar, which has strengthened as the world’s economy slows. But the
dollar’s steady appreciation is expected to continue, and that will
affect an already beaten-up South Florida real estate market.
Will the foreign rush come to an end? There’s little consensus among
market observers, some of whom believe global investors will continue
to flock to South Florida, particularly Miami Beach. Others believe
brokers that rely on European clients will pull back as fewer buyers do
deals in the current climate.
Richard Swerdlow, CEO of Condo.com, a condo marketplace with offices in
Coconut Grove, reports continued interest from global buyers in both
sales and rentals, despite the euro’s slump. Because Miami retains
global cachet, he said deals are still getting done.
“The bright side to the declining euro is there is more of an impetus
to do the deal now,” Swerdlow said. “There was a wait-and-see attitude
before when the euro was so strong. Those potential buyers realize that
we did hit the bottom and they need to act.”
Whether the dollar has peaked remains a question linked to the length
and severity of the global recession. But exchange rates will likely
never return to the summertime peaks of over $2 to the British pound
and $1.55 to the euro, according to Marty Block, a realtor with Engel
& Volkers in Punta Gorda.
Florida real estate will become more expensive and less attractive to
overseas buyers in the short-term, especially marginal buyers, but
foreign investors with cash on hand are still in a strong position to
pick up bargains, Block said. He added that economists consider Florida
real estate one of the world’s safest and best long-term investment
“Realtors who are currently heavily vested in attracting the European
investors and buyers should consider repositioning their marketing
plans and budgets towards attracting more U.S. investors and buyers,
particularly from states and areas not hit as hard as most others by
the current recessionary cycle,” Block said.
Michael Ross, a senior partner at the law firm of Greenspoon Mader in
Fort Lauderdale, is pessimistic about the prospects with European
Ross sees a perfect storm where a credit crunch, a sliding euro,
declining oil prices and a psychological perception that a global
recession is upon us is causing foreign investors to hold tight to
“As soon as the economy changes, I do expect some foreign investment
back into the condo market because there will be incredible values,”
Ross said. “As it stands, a strong euro was causing condos to move.
Right now, few are moving and I don’t expect to see an improvement
until the third quarter of 2010.