From cnbc.com:
The Viceroy, a swanky condominium complex in downtown Miami, gives the impression that the United States is in another real estate boom. The sales office is strangely exuberant. Buyers gush about the glam condos — designed by hipster tastemaker Kelly Wearstler — and their hotel-like amenities: poolside libations, daily housekeeping and room service food stirred up by a celebrity chef.
Since January, 262 of the Viceroy’s 372 units have sold. But there’s a twist: Almost 90 percent of the buyers are foreigners. And they all paid cash.
The Viceroy’s story is playing out across Miami. Individual investors from as far as Argentina, Canada, Colombia, France, Israel, Italy, Norway and Venezuela are swarming the city’s sales offices to get in on what they see as one of the greatest real estate fire sales in the history of the United States.
At one time, these people would have invested in the U.S. stock market. Now they see the opportunity of a lifetime in America’s debilitated housing market. The idea is to rent out the properties and then sell them once the economy turns around.
The math is seductive: Prices at the Viceroy are roughly 52 percent off the 2007 peak. Units once sold for as much $670 a square foot. Today the average price is $319.
“I have never seen such a high concentration of foreign nationals acquiring real estate,” says Peter Zalewski, who has been in real estate for 15 years and founded Condo Vultures, a consulting and brokerage firm. “Eighty percent of the sales in downtown Miami are foreign-based. This is unprecedented.”
Miami is hardly the only hot spot for buyers from outside the United States. Real estate brokers say they’ve seen a surge in Washington, New York, Las Vegas, Los Angeles and San Francisco. In Seattle, Asians are buying property sight unseen, says Joe Brazen of Brazen Sotheby’s International. In New York, 25 percent of buyers at the Armani-designed 20 Pine building, near the World Trade Center site, are from overseas.
In October, agents from 11 Sotheby’s International branches will descend on Hong Kong’s convention center to regale wealthy buyers there with slick visuals on showcase properties. In Toronto, agents from Florida Home Finders play to crowds of 800 every other Sunday at a Holiday Inn banquet hall. Jenny Huertas, Condo Vultures’ international sales director, throws seminars for potential clients across South America.
“Their jaws drop. They can’t believe it,” Huertas says. “They think these deals are too good to be true.”
http://www.cnbc.com/id/39510454
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From the WSJ.com:
Sekisui House Ltd., one of Japan’s largest home builders and developers, is stepping into the U.S. housing market, an indication that land prices have fallen low enough to catch the attention of foreign investors.
Sekisui teamed up with Newland Real Estate Group LLC of San Diego to acquire nearly 500 acres outside Houston, which eventually could house more than 1,200 homes. Terms of the transaction weren’t disclosed, but local brokers said the price likely topped $10 million.
Newland Chief Executive Bob McLeod said a Sekisui representative contacted him last autumn to discuss a potential partnership.
“To have a company of that quality come in, track us down and say: ‘Now is the time to buy in the United States,’ we were pleased,” Mr. McLeod said. “Not only for ourselves, but also for the message it sent: ‘We believe in the United States, and we believe in the growth of the real-estate business.’ “
Mr. McLeod said Sekisui officials are touring housing markets nationwide with Newland, and more deals could be announced soon.
Sekisui isn’t the only foreign company circling bargain-priced land. Investor groups from Australia and Canada have visited the National Association of Home Builders’ Washington headquarters in recent months, asking about markets poised to recover first.
“For the first time since World War II, I think [foreign] people are more optimistic about the U.S. housing market than Americans,” said Stephen Melman, the trade group’s director of economic services. “Eventually, the glut will disappear and there will be a demand again.”
Here’s a rental at the Viceroy:
http://miami.craigslist.org/mdc/apa/1990194309.html
At $319 per sq ft (from the article), this place would sell for about $270K.
Is that a good investment?
The idea to rent out the properties and then sell them once the economy turns around is NOT a plan.
You need to estimate WHEN the economy will turn around on the UPSIDE.
The more Bernanke destroys the dollar, the more compelling real estate becomes, both for foreign buyers and for fixed-rate debt-leveraged U.S. investors.
Number 3, I have some bad news for you. In an inflationary environment like helicopter Ben is producing real estate prices will not increase. Only the things you need, like food and energy, which are interrelated and based on oil, an import. Increases in wages is the only thing that can increase the price of assests like real estate, not trashing the dollar. The (un)employment problem in the US is SYSTEMIC, not cyclical. It will never come back without a systemic change which is very unlikely and would take decades anway. Good luck on your real estate. And, by the way, almost all Latin American currencies are way overvalued, especially the Brazilian real. Lula is trying like crazy to devalue it and they will eventually do it. Yes, buy that junk at over $300 a ft. and rent it for a negative return that will only increase with taxes and how about hurricane insurance?
It only SEEMS a bargain. Heck, let them come. We need the foreign currency.
Jake (Number 4): I think your analysis is not accurate. In an inflationary environment where international value of US $ falls, buying US Real estate is better than holding U.S. paper assets. Even if U.S. wages remain flat or decrease in real terms, the international value of U.S. real estate will not decrease. i.e. the Chinese and Latins can still trade U.S. assets at good prices though U.S. buyers will stay out of market. Basically the trend points to classic economic model of how a highly indebted country copes: by increasingly selling capital assets for continued consumption. This will continue till there are valuable assets in U.S that foreigners want. Eventually, they will get tired and conclude we are not creditworthy enough to export their goods for our paper assets.
Number 6, if you what you say is accurate then why is the Chinese government spending their dollars on oil production and food production properties all over the world (except the US), especially in Latin America. The worst possible investment is in US real estate. Just check out the NY commercial real estate scence and see what the returns are.
Jake-What inflation? The United States had actual deflation in 2009 for the first time since 1955. A Japanese-style deflationary malaise is much more likely than hyper-inflation at this point.
http://www.inflationdata.com/inflation/inflation_rate/historicalinflation.aspx
We over 60 folks have seen this before. Remember when the Japanese were buying everything in sight? Well, I do, and also remember how they lost their shirts. Of course, there’s a demographic in RE that can ALWAYS find you a reason to buy NOW. Bubbleinfo is like a vaccination against their spin.
They are wrong in thinking that real estate will come back and they will sell for a profit. Real estate prices will take years, just like Japan, to find some kind of a bottom. Most of them will be long term landlords or will take a loss when they sell.
Number 9, what inflation? Oil is over $80.00 up over 200% from its low less that three years ago, and rising. Gold is up at a new all time high, silver is at an all time high, all the grains at way up. Meats and the soft grains, like coffee, sugar, cacao etc very high. As I said in an early post, the things you need are in an inflationary mode, while what you earn and own are in a deflationary sipral.
Jake-Housing costs are certainly down (I personally paid 62.5% off peak pricing on the house I live in). I don’t need gold, but I sure do need a roof over my head. And oil prices are down about 40% from their peaks (peak was over $130 and it has been basically steady at around $80 for over a year).
Jake
Foreign investors in RE will lose their asses.
1) They are buying for 15X expected rents.
Real Rent may well be less then they think.
2) as an investor you have to assume 10% vacancy and 10% Brokerage Fee and 10% property management fee.
3) Foreign investors are very vulnerable to currency fluctuation.
The japanese lost their ass buying real estate in NYC seemed so cheap compared to tokyo yet they still got wiped out.
This will end in tears, of course.
http://therealdeal.com/newyork/articles/irish-find-pot-of-gold-in-nyc