Despite the variance in global demand patterns from year to year, such as currency exchange rates, visa, tax regulations and other factors that may influence demand, Florida has been a very attractive destination for foreign buyers and will be for the rest of 2015. Florida has and still is attracting the largest numbers of foreign buyers. According to housing market firm RealtyTrac, interest in buying Florida housing increased by 95% or more in ten countries, and at least doubled in nine of these nations.
Since the economic collapse of 2008, foreign buyers were mainly interested in purchasing distressed properties due to their inexpensive price and availability. Today however, we are seeing a huge demand in the commercial markets, including infrastructure projects as well as multifamily, office, hotel, retail and warehouse properties. And most often, the foreign investors are willing to accept lower rate of returns than local investors because they’re more interested in moving some of their capital - if not all to the US.
There are several reasons why our sunshine state is attractive to foreign buyers.
For South American, it is the strategic location of Florida relative to the Panama Canal and Latin America. Miami remains on top of the list for Latino investors. For countries like Argentina and Venezuela, investors are more interested in developing sources of income such as buying businesses, franchises, or commercial properties like hotels and multifamily complexes and they are ferociously moving with their business plan.
Recently, there has been an increase in demand from buyers and investors from Chile and Peru, along with Colombia that has been a feeder market from South America. Investors from these countries are not only interested in Condos for vacation, but single family homes where they can move their families for a better education and future.
Brazil has been a major player in the Florida market for several years and will continue to be due to the uncertain future of the country’s economy and the political turmoil in the last couple of years. In the past, Brazilian buyers have focused their attention to Miami, but recently there has been a shift from south Florida to Central Florida due to it’s home affordability. Many Brazilian Buyers find themselves paying more to purchase a south Florida home, which they sometimes can’t afford.
British buyers have always been on the top ten of Florida investors. The Brits Love Florida and the pound Sterling is still strong currency. British buyers have largely profited from the real estate boom in 2004- 2005-2006- and 2007 where many have bought low and sold high, but a large number have also suffered when the real estate market collapsed, finding themselves with homes below market value resulting in many going to short sale. This situation has scared other Brits from investing into Florida Real estate. We may see a major comeback of British investors due to major events in Britain : 1- The government help to Buy program which provided help to homeowners in the UK has recently drawn some controversy triggering the potential of driving home prices to unsustainable levels. UK buyers may see Florida homes as a safe or profitable investment. 2- Changes in UK pension regulations that will allow retirees to take out a lump sum in 2015. While some retirees will buy in nearby European countries, there will be plenty of interest in Florida as second home destination.
The Chinese constitute an emerging market for Florida investment. They’re considered one of the nation’s fastest growing segments. Traditionally, Chinese buyers would buy expensive homes in high end markets and take advantage of the appreciation of the Chinese Yuan. This trend is expected to continue in 2015, following a recent change in US visa policies. Chinese visitors can now obtain visas for 10 years rather than one year, making it easier for Chinese buyers and investors to spend more time in the US, including Florida. Despite the long distance between China and Florida, there has been an influx of Chinese investors in recent years interested in rental properties that provide strong return and cash flow.
Emerging markets to watch out for in the coming years:
People who are nervous about conditions in their home countries look to the United States as a safe haven for their assets. The Middle East and the Arabian Gulf investors will play a major role in Florida real estate market. According to RealtyTrac, the united Arab emirate will have the highest interest in buying American Homes at 352.2%. While the country has only nine million residents, more than 1000 ultra-high net worth residents in 2014. Despite oil’s recent price decline, that number has not changed. Also, the recent news of a direct flight from Orlando to Dubai will open up doors to rapid investment from that part of the world.
Saudi Arabian buyers are also on the rise. Orlando has the largest Saudi concentration due to the government program for higher education giving many young Saudi students the opportunity to study in Florida universities, mainly in the University of Central Florida. These students usually do not come alone; their families accompany them, which require them to buy large homes.
Other emerging market we may see is France, Switzerland, Italy, Australia and Sweden.
In the coming years, Florida may lead the nation in foreign investments and central Florida will most likely take the driver’s seat in the State.
Written by Mona L. Cherkaoui
International Real Estate Advisor and Investment Strategies Coach
World Properties Group