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Published: Saturday, 10/9/2010

Foreign buyers with cash snap up bargains created by housing bust

ASSOCIATED PRESS

MIAMI — 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 exuberant. Buyers gush about the condos and their hotel-like amenities: poolside bars, 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 bargain opportunities in the history of the United States.

At one time, these people would have invested in the U.S. stock market. Now they are rushing into in the nation's debilitated housing market. The idea is to rent out the properties and then sell them once the economy turns around.

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,” said 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. Brokers say they've seen a surge in Washington, New York, Las Vegas, Los Angeles, and San Francisco.

This year in Phoenix, for the first time, buyers from Canada have outnumbered those from California, according to Information Market, a real estate data firm.

For foreigners with cash, the deals can make money from day one. Jim Chuong, a 38-year-old Novartis sales manager from Toronto, buys two-bedroom condos for less than $40,000 in low-crime areas. He limits his purchases to units that have renters.

After paying association fees and taxes, he has $300 a month from each. The deals are easy to do, thanks to the cottage industry of companies that has sprung up to manage virtually everything for foreign buyers, down to badgering tenants for the rent.

A National Association of Realtors report released in July said that 28 percent of brokers who responded to the trade group's survey had worked with at least one international client, up from 23 percent a year earlier. Among those, 18 percent had completed at least one sale, compared with 12 percent in the 2009 report.

“I was going invest in the stock market, but I decided to invest in real estate instead,” said Diego Garcia, a Mexico City native on assignment in New York City with Pfizer Inc.

Mr. Garcia paid $850,000 for a Manhattan one-bedroom in a gleaming new high-rise and plans to live in it for now. “I'm a conservative guy,” he said, “and this was more conservative.”

Although foreign buyers make up a mere 7 percent or so of today's total, in some cities, such as Miami and Washington, they are helping to stabilize the markets.

In past downturns, buying a property in the United States was for only the wealthy, but today the market is within reach of the swelling ranks of the global upper-middle class.

Colombians have always been drawn to Florida. Now, buying in Miami is cheaper than in Bogota, and flights between the two cities cost $59 each way.

“Mucho mucho mucho mucho opportunity,” said Elsa de Blaschke, who owns a construction company with her husband in Barranquilla, Colombia, and is searching for an investment property in Miami. Jenny Huertas, Condo Vultures' international sales director, who is Ms. de Blaschke's agent, said of clients from South America, “They can't believe it. They think these deals are too good to be true.”



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