It was a bargain last year, and it is even much more of a bargain this
For a European buyer, Florida is still a steal.
In 2000, a Euro would only buy 85 cents per US dollar. Now, it US$
1.36 for each Euro. An increase of 60%. If one factors in the steady
decline of Florida real estate prices during the last couple of years,
it makes sense for a European investor to look at our side of the ocean.
A new 3 bedroom Orlando Condominium costing less that $200,000 is
appealing to any European sun lover. An Aventura Condo that has been
reduced to its pre-construction price levels and even less, a Miami
Beach Condo listed at 'short-sale' price, single family homes in
Miramar, or Pembroke Pines offered at 'distress sale prices' are great
deals. They all offer buyers great opportunities. High-rise and condo
developers are willing to negotiate. They've been holding out for almost
two years of slow sales and some of them are at the point where they
can't pay back their bank loans. Highly motivated to sell, they will
either discuss a price reduction or throw in additional amenities (e.g.,
upgraded kitchen and baths, extra parking space), or contribute to
closing costs or prepaid condo fees.
With the currency advantage in mind, I have tried to make some
comparisons. A recent trip to Europe helped me understand the complexity
of the task. Different types of construction, environment, lifestyle,
level of standard features and luxury are just part of the difficulty.
In any case, some quick calculations had to be complemented by direct
talks with prospective investors, familiar with Florida. Not
unexpectedly, nobody fails to admit that we are a bargain. Many of my
interviewees actually mentioned relatives who had recently bought
property in Florida. I would make a special mention of the Irish and
British as the most enthusiastic. It seems our prices are absolutely
Some objections were raised. Most asked if the prices had already
bottomed or if it would be advisable to wait a bit longer. Questions
about taxes and maintenances fees raised some eyebrows. At about 2% per
year of the property value, they seemed high, compared to taxes on
residential property in Europe. (It looks like European property taxes
might be about a quarter of what we are paying here). But the deal
killers could often be high condo maintenance fees, or insurance
premiums on single family homes. This could well add an annual charge of
one to three percent (of the property value). And Europeans will ask
these kinds of questions.
All in all, I still think that we will see more interest in the near
future. It is evident that there is a limited amount of land and
buildings available in South Florida's cities.
The continuing trend of well-to-do baby boomers migrating south is also
a factor that is not ignored by these sophisticated buyers. And Florida
hasn't lost its attraction. Just stroll on a crowded Prague downtown
street or a walk on the sand through thousands of bodies on a French or
Spanish beach and you will understand why. Russian buyers are still very
active. Sales to affluent Latin Americans are sluggish at this time but continue to
be a driving force.
It is evident that international sales will help absorb the excess
inventory and put Florida real estate back on track.
By Henry B. Nathan