Headlines – Week of May 20, 2012
May 28, 2012
Florida Condo Markets Brace As European Currencies Weaken
According to a recent article on Condo Vultures.com, the South Florida condo market is bracing for the impact that the rapidly deteriorating currencies in Western Europe.
Western Europe’s two major currencies, the Euro and the British Pound have weakened noticeably against the U.S. Dollar in recent days as the debt crisis in Greece has reignited fears of a financial meltdown that could unravel the Euro and trigger a global contagion.
Some industry watchers believe that the weakening European currencies combined with a push for higher taxes by the new government in France could prompt foreign buyers to step up their investments in the United States (and Florida in particular).
International buyers have played a major role in acquiring the excess South Florida condo inventory that flooded the market beginning in 2007 at the start of real estate crash.
According to a report from the Florida Realtors association in conjunction with the National Association of Realtors, foreign buyers acquired an estimated $3.8 billion annually in condo, townhouse, and single-family house resales in the Miami – Fort Lauderdale – Miami Beach market,
According to the Realtors report, Western Europe, including the countries of France, Germany, and Spain account for 23 percent of all foreign transactions in the State of Florida,
The median resale price paid by a European for a Florida property is $232,500 for investors from Western Europe and $169,200 for investors from the United Kingdom.
In addition to resales, foreign buyers are also purchasing new condo units directly from South Florida developers or lenders that have repossessed troubled properties with unsold inventory from the boom that began in 2003.
As of the first quarter of 2012, buyers have acquired more than 90 percent of the nearly 49,000 new condos created during the boom in the seven largest coastal condo markets of Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood / Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island.
Foreign buyers are not only purchasing distressed properties but also playing a key role in the latest South Florida new condo boom where at least 31 towers with nearly 6,250 units are proposed as of May 23, 2012, according to the Preconstruction Condo Projects list from the licensed Florida real estate brokerage CVR Realty.
French with Money Plan to Relocate
In a related story from United Press International, the French national election will mean a change of residence for many more French than simply outgoing President Nicolas Sarkozy. The British newspaper, the Daily Telegraph reported that there has been a 50 percent jump in customer traffic from France since last weekend’s election, which analysts attribute to Socialist President-elect Francois Hollande’s plans to raise taxes on the wealthy.
Hollande, who defeated the center-right Sarkozy last weekend, has said his tax policy would include raising the tax rate to 75 percent for those earning $1.2 million per year or more. He also expects to raise the tax rate to 45 percent for those earning $193,000 per year or more. One French financier remarked that the new French president has triggered “the third-biggest exodus from France, the first being the Revolution and the second when (Socialist President Francois) Mitterrand got into power.
Florida is Second-best State for Business
In the annual survey of CEOs conducted by Chief Executive Group, Florida is ranked the second-best U.S. state for businesses. The same survey in 2011 ranked Florida third. Gov. Rick Scott cited the magazine’s results last year in his efforts to increase the number of jobs in Florida. In a letter, he jokingly told Texas Gov. Rick Perry that he was aiming for the No. 1 spot.
The 2012 results still found Florida falling short of that goal, but it’s now nipping on Texas’ heels. According to Chief Executive, the one-level boost in Florida’s ranking results from pro-business laws enacted since Scott came into office, including business tax and regulatory reforms, a 2.1 percent unemployment drop and 140,000 private sector jobs.
Texas received points for the quality of its workforce that, according to Chief Executive, is second only to Utah. North Carolina, Tennessee, Indiana, Virginia, South Carolina, Georgia and Utah rounded out the top 10 states that are best for business. California landed at the bottom of the list. The results are based on responses from 650 business leaders that graded states where they did business.
Posted by Scott R. Lodde