It was a bargain last year, and it is even much more of a bargain this year.

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 LOW!

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

September 2007