Strengthening dollar still attracts foreign buyers

Amid worldwide recession, the world’s currencies have retreated and the dollar is once again a safe haven — a point that hasn’t escaped foreign buyers of South Florida real estate. While the dollar’s rise has weakened the euro and the Brazilian real, it’s also underscored the value of hard assets on U.S. shores.

Buyers from Europe, Brazil and Venezuela — a significant percentage of the area’s real estate investors — have long been a vital component of the South Florida property market, but are now drawn more by price plunges than dollar-denominated bargains. That means buying waterfront condos, homes in Kendall or office space for a new business near Miami International Airport remains an option for foreigners, even if it’s not the bargain it once was. 

“They want to put their money into U.S. dollar assets,” said Andrea Heuson, a professor of finance and real estate at University of Miami.

Because of the exchange rate, an investor from France would have to pay about 10 percent more to get into a property, but the expectation is that the dollar will continue to strengthen. In theory, property values will also rise, creating a double whammy return on the investment. “I don’t think the big investment money has come in yet,” Heuson said. “But I think it will. There is a lot of investment capital sitting on the sidelines. And a strengthening dollar will help bring investors in, as long as they think the dollar will continue to strengthen. They want to get in when it is low.”

Tourism and exports suffer from a stronger dollar, but its rise reinforces the value proposition for American real estate. The dollar has been strengthening over the past three or four months in part because analysts and investors in other countries see a recovery, or at least a slowing of the U.S. economic decline — which indicates it may also be the first to emerge from recession, Heuson said.

Foreign investors want to get in when the dollar is still near the bottom and rising, and realtors are already seeing an upswing in activity after several months of little action following the economic crash and leading up to the presidential election.

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“They stopped investing because they weren’t sure what would happen with the market,” said Isabel M. Gonzalez, a realtor with Keyes Real Estate’s Kendall office. “It was slowing down. Now we have foreign investors who are buying because property prices are near the bottom and the dollar is getting stronger.”

Gonzalez has sold several homes in Kendall to Venezuelans, many of whom also buy office/warehouse flex space near Miami airport to move a company here as a possible hedge against the economic policies of President Hugo Chavez.

“They just want to put their money in a safe country,” Gonzalez said.
French and Spanish investors are looking in Miami Beach and North Miami Beach, while Brazilians have shown interest in Miami Beach also. Miami Beach condos such as the Blue and Green Diamond Towers on Millionaire’s Row and the Akoya are seeing more purchases by foreign investors.

Some foreigners are also setting up businesses in the area. Gonzalez points to a couple from England who moved an Internet company to South Florida. “They had to move from England because there was not enough work there,” Gonzalez said.

Many foreign buyers still face obstacles getting into the market, including a requirement from most lenders that they put 35 percent down in cash to secure a mortgage and difficulty obtaining visas.