Survey: Foreign investors see lucrative housing market By RIDDHI TRIVEDI-ST. CLAIR, rtrivedi@naplesnews.com August 7, 2005 The investors represented by Tony Spencer's company, Ashkey Property of Florida LLC, are what he calls "high net worth" individuals. They have money to spend and are looking for a high return on their investments. About 10-15 percent of the United Kingdom-based company's 1,000-plus investors consider Florida real estate the best investment for their money. To Spencer, it is no surprise at all. "There has been tremendous growth in the area. It is one of the fastest-growing areas just behind Las Vegas and there already are a lot of high net worth ' rich people ' moving to the area and living there," Spencer said. "That makes it a very enviable area. With the UK market in the doldrums, savvy investors looking for good returns are turning to Florida." Spencer himself just closed on a Naples house that will serve as his family's vacation home. Anecdotal evidence about investors and investment companies like Spencer's can be seen all across the Southwest Florida market. For the first time, a joint study between the National Association of Realtors and the Florida Association of Realtors attempts to quantify the number of foreign home buyers and investors in the state. A total of 986 Florida Realtors who closed 1,844 home sales transactions to non-U.S. residents in the previous 12 months responded to the survey. Survey results indicate that foreign buyers who bought in Florida between May 2004 and May 2005 come from 100 different countries in all regions of the world. The highest portion ' 58 percent ' were European buyers. The United Kingdom led Europe with one-third of all international buyers. British home buyers paid a median of $293,300 for their Florida property, and 23 percent paid $400,000 or more. Another third of the buyers were from Central and South America and the Caribbean. Eastern European countries, including countries from the former Soviet Republic, make up about 3 percent of buyers. While Miami is the major gateway for buyers from Latin America, a large majority ' 70 percent ' of all German buyers preferred the Southwest coast of Florida. The Naples-Fort Myers market ranked third in the survey in the number of international transactions with 13.7 percent of the foreign market. Naples-Fort Myers was behind only Miami-Fort Lauderdale (30.4 percent) and Orlando (22.7 percent). It was ahead of the Tampa-St. Petersburg, Sarasota and West Palm Beach markets. The Naples-Fort Myers market also saw the highest percent of German (36 percent) and Canadian (22 percent) buyers of any market in the state. The next closest location for those two markets was Sarasota with 21 percent of the German buyers and Tampa-St. Petersburg with 17 percent of the Canadian buyers. In an office of 75 agents who handle the Estero and Fort Myers market for Coldwell Banker, there are 10 agents who speak a second language, said Bill Barnes, managing broker. Several speak more than two languages. Coldwell Banker even has a company-wide list of interpreters ' agents who can help in transactions with foreign language clients. Those agents get 25 percent of the commission just for helping with the transaction and interpreting. "If you are a new real estate agent or Realtor, your chances of getting hired are much higher if you speak more than one language than if you just speak English," Barnes said. Gerard Swart knows that first hand. Swart worked in real estate in Europe before moving to Southwest Florida and was originally hired by Premier Properties of Southwest Florida because he was multi-lingual and could specialize in foreign clients. Even 10 years ago, that was a significant market in the area, Swart said. He speaks French, German, Dutch and Spanish fluently and some Scandinavian and Italian as well. It gave him an edge, Swart said. "Here we complain when it rains for five hours a day. . .I came from Holland ' there it rains 10 weeks of the year," Swart said. "Besides it (Florida property) is a good investment." It is a good investment in more ways than one, Spencer said. "They get a lot more for their money. Given the land mass of the United States, what they are able to buy is much larger. Here (in the United Kingdom) everything is built much smaller," he said. "We talk about a two-bedroom flat here and it will probably be only 600 square feet. A good size flat will be 750 square feet." Southwest Florida also provides urban amenities normally found only in big cities. Comparative purchases in one of the major urban centers would cost almost double what they cost here, said Dinesh Sharma, a Coldwell Banker agent. Sharma, who immigrated to the U.S. from India, said about 10 percent of all his transactions are with foreign buyers. That doesn't include buyers within the local Indian community. Counting them, about 25 percent of his transactions are with foreign buyers. "The appreciation rates in the U.S. have always been much more consistent than other places and the market doesn't fluctuate as much," Sharma said. "In general real estate values are much more attractive here. If you were to buy a house in Buenos Aires or Mexico City or in the heart of London, you would be paying several times as much." The values have been attracting more investment companies to the area as well. Perrine Phipps-Dowling, an Ameriwest agent in Naples, is dealing with another English company similar to Spencer's. That company represents more than 1,000 clients and has instructed her to find new construction and pre-construction properties for investments up to a total of $10 million, Phipps-Dowling said. "They buy pre-construction and then they can either sell it later for a huge return or they can rent it out," she said. "Either way they get great returns." She, like many agents, works with a UK-based agent who sends her clients and referrals. Not everyone buys as an investment, though the tremendous returns are an added attraction. Edward and June Percival live in South England about 30 miles from London and have been vacationing in Naples for nearly 15 years. If she had known how easy it was to buy a home here, June Percival said, they probably would have bought something years ago. The couple closed on a home for more than $1 million at the end of 2003 and already their home has appreciated. They spend May, June, September and October here every year, rather than the winter tourism months. That means during tourist season their agent rents the home out. So, even though they purchased the property as a second home, not necessarily as an investment, the Percivals have been making fantastic returns from rent as well as appreciation. The Percivals are typical of the individual clients that buy homes in the area, said Liz Coyne, of Bonita Springs-based Coyne Realty. Coyne and her two daughters who are in business with her have been dealing with foreign clients since the late 1980s. "We have an extensive network throughout Europe where we do a lot of sales and resales too," Coyne said. "We help them buy property and then rent it out for them when they are not using it." In recent years, a weak dollar has made the market even more attractive to foreign investors. Spencer's company has sold about 20 properties to various investors in the $250,000 to $400,000 range. It's a price range that he ' and his clients ' consider a great value. "Something similar in the UK would probably be double the price. The whole region seems to be getting it right. It is clean, organized and low crime," Spencer said. "The attraction is obvious. They get a great value for their money and a great property of a good size. And apart from the fact that you get a hurricane now and then, the weather's great."