At Epcot, a 300-acre park at the vast Disney World resort near Orlando, Fla., there are 11 massive pavilions that represent nations around the globe. The Mexico Pavilion resembles an Aztec pyramid, the United Kingdom Pavilion includes a reconstructed English city with a sampling of architecture from several time periods, the Canada Pavilion includes outdoor scenes such as a waterfall and gardens, and the Germany Pavilion features a Biergarten with traditional food.

Looking beyond the borders of this sprawling attraction, which drew about 9.9 million visitors last year, actual international communities have grown and spread throughout the state of Florida. The waves of foreign buyers – mostly from Europe and Latin America – are drawn to the sunshine and comparative affordability of properties in the state, and particularly to luxury homes.

The weakening of the U.S. dollar versus other currencies and the availability of direct international flights to Florida destinations are also factors in fueling the global market for Florida homes.

Basically, they’re not just there for Disney World.

Globalization appears to be in full swing for the real estate industry, with foreign buyers playing a significant role in some U.S. markets and U.S. buyers showing a growing interest in international markets. As they say at the Magic Kingdom: “It’s a small world, after all.”

The National Association of Realtors estimated in a report last year that perhaps 15 percent of all homes sold in Florida from May 2004 to May 2005 were purchased by foreign buyers – and real estate professionals say this influx of international buyers continues to leave its mark on the luxury market.

The median sales price of homes purchased by foreign buyers in Florida was $299,000, which was 52.4 percent higher than the state’s overall single-family median sales price of $196,200 during the survey period for the Realtor group’s Profile of International Home Buyers in Florida report.

And about 22 percent of foreign buyers are purchasing homes priced at over $500,000. The report is based on a survey of 986 respondents who closed 1,844 home sales transactions to non-U.S. residents from May 2004 to May 2005.

The U.S. dollar has lost significant worth against the euro, British pound and Canadian dollar in the past five years. One U.S. dollar could buy about $1.60 in Canadian dollars in January 2002, for example, compared to a current value of about $1 U.S. dollar for every $1.11 in Canadian currency.

One U.S. dollar bought almost 1.2 euros in 2002 and is now worth a fraction of the euro. The British pound is worth nearly twice as much as the U.S. dollar, and has hovered around this level for the past couple of years.

The exchange rates have not been as favorable for Latin American buyers, though other factors such as political or financial instability in their home countries have played a role for those buyers.

Tony Macaluso, a real estate educator and owner of Portside Properties Inc. in Palm Beach Gardens, Fla., who was born in Falmouth, England, said, “We’re not the only country that has (baby) boomers. There is a whole group in Europe of pretty much the same mindset – looking for a second-home location.”

Different groups of foreign buyers seem to favor different communities in Florida, Macaluso said. British and German buyers are fond of the Orlando market, he said, and Florida properties are viewed as “a true bargain” by British buyers. Florida’s West Coast is popular with Germans and Europeans in general – there are direct international flights from Frankfurt to Fort Meyers, Macaluso noted.

Venezuelan, Nicaraguan, and Central American and South American buyers seem to purchase in the Miami and Boca Raton markets and South Florida in general, he said. Many Russian buyers choose the Broward County area. Foreign buyers are typically not interested in rural areas north of Orlando, Macaluso said.

The Realtor association’s report found that the Miami-Fort Lauderdale area was most popular with foreign buyers, with 30.4 percent of purchases by foreign buyers occurring in that area. Next on the list was Orlando, with 22.7 percent, and Naples-Fort Meyers, with 13.7 percent. About 33 percent of foreign home buyers were from the United Kingdom, and 7 percent were from Germany, 7 percent were from Canada, 7 percent were from Venezuela and 5 percent were from Colombia. Brazil and France were next on the list.

Alex Shay, broker associate for Beachfront Realty in Miami Beach, Fla., said that despite increasing prices for Florida real estate property is cheap to foreign buyers. The Florida Association of Realtors reported that median sales price in Florida increased 17 percent in March to $248,200, and has more than doubled since March 2001, when the statewide median sales price was $121,600.

“When (Europeans) come here everything is dirt cheap,” Shay said. The Miami area is truly international, he said. “It’s got a very international flavor. People come here and they don’t feel out of place.” The beaches and weather are definitely a draw, too, he said.

The increasingly international character of the area owes a lot to a growing trend in international travel, he said. Foreign buyers of Florida real estate typically have a pretty good grasp of the English language, Shay said. “When you get into the luxury market like I’m in, there is not much explaining you have to do. You are dealing with people who are wealthy, who have been out there in the marketplace for a long time. This is not their first property.”

Among his recent clients: “I’ve had a gastroenterologist from Spain, a dental surgeon from Taiwan. I’ve had a Russian client, I’ve had Latin clients, Israeli clients,” he said. “I can get a call from almost anyone in any country and it doesn’t surprise me.”

While prices continue to escalate in Florida, sales have been sliding. In March, sales were down 22 percent compared to March 2005, the Florida Association of Realtors reported.

Foreign buyers, just like domestic buyers, are concerned about the sustainability of price increases in Florida, he said. “Foreign buyers are just like everybody else – everybody is talking about a real estate bubble.”

Real estate speculators – both domestic and international buyers – have a lot to do with the current slowdown in the real estate market, said Jack McCabe of McCabe Research & Consulting in Deerfield Beach, Fla.

“Speculators were just rampant down here,” he said, and particularly with luxury condo projects in South Florida. “Speculators and speculative development and speculative lending created an oversupply in multi-family units – many of these are luxury. A lot of these purchases, both internationally as well as U.S., were done over the phone through brokers. Now a lot of properties are getting cancelled.”

But as speculators have left the market, the timing is good for serious foreign buyers who are purchasing a second home, McCabe said. “It has become more of a buyer’s market for them. Sellers are now willing to negotiate. We’ve seen sales velocities in a lot of markets come to a standstill, with inventories two and three times what they were 12 months ago.”

While overall home prices have still been increasing in double digits year-over-year, condo price increases have moderated, and in March the median price of existing condos rose 2 percent compared to March 2005, according to the Florida Association of Realtors, while dropping 4 percent in the Miami area.

The onslaught of numerous damaging hurricanes over the past two years in Florida haven’t dented the real estate market too much, though McCabe said another big storm would really hurt. “There is a lot higher anxiety down here,” he said. “The big question we ask in Florida is what (a big storm) might change in the mentality of baby boomers as far as future migration.”

Lewis M. Goodkin of Goodkin Consulting, a real estate and financial industries consulting company in Miami, said that international buyers got caught up in the fever of the U.S. housing boom just like domestic buyers. “The level of speculation had been at a record high. It just dwarfed anything we’ve had in the past. (Buyers) were putting money out as an investment in U.S. properties.”

The Internet has been a powerful tool in reaching foreign buyers, Goodkin said, and “any national developer, anyone who has a major project, will tell you they get a tremendous amount of inquiries via the Internet.” During the most heated days of the housing boom in Florida, it was common for new projects to sell out long before ground had been broken at the development site, and foreign buyers were among the participants in these sight-unseen purchases, he said. “It was the first time in all the years I’ve been in business that residential developers were outbidding commercial developers for a site.”

But as the market normalizes the buying will likely occur in a more traditional way, he said, and land and home costs may ease.

While foreign buyers are a force in the luxury real estate market in several Florida regions, Goodkin said that foreign buyers generally purchase a wider range of property types – everything from single-family homes to luxury high-rise units – in the central part of the state while favoring more high-end properties in the coastal and southern regions.

Source: Inman News