The fall of the Dollar in 2007 has made real estate in the U.S. much more affordable for international home buyers. Severe dollar declines against the Euro (€) and the Pound (₤ ) have made U.S. homes much cheaper for Europeans, while problems with mortgage lending has kept many Americans out of the housing market. European currency advantages are benefiting further from the sharp drops in housing.

Housing in places such as Paris, London, and Southern France have jumped as much as 100 percent while U.S. prices have stayed put or dropped. Many are looking to second homes in the U.S. market for work or play and as investments. New York and Miami have long served as second home targets for affluent and accomplished foreigners, but now the list of target markets is growing.

Engel & Völkers Group a Hamburg real estate company is eager to take advantage of the opportunity created by the falling dollar by opening 300 residential sales offices across the U.S. in the next few years. The company has offices in Florida, Connecticut, and New York and is on track to open 30 more on the east coast.

The currency advantage is greatest for British citizens since each pound is worth well over $2. By contrast, the Euro is worth about $1.45. “The English are now actively looking more into Manhattan properties than Americans buyers,” says Ivan Hakimian of New York’s Itzhaki Properties. Where at one time British Executives traveling to the U.S. for extended periods would stay in corporate rentals, they are now buying properties outright.

The expansion of foreign real estate investment in the U.S. also means secondary areas are now receiving interest with international buyers. Properties in Durham, Raleigh, and Chapel Hill, North Carolina that are being sold to French and Scandinavian buyers are creating a new phenomenon.

South Koreans are buying condo towers and mid-level rise buildings in Los Angeles, which is helping to revitalize forlorn downtown neighborhoods. According to Johanna Gunther of the Ryness Co. in San Diego,” the demand for downtown Los Angeles has not been an attractive urban residential market until recently, but Korean demand has been a big factor in the change.” In recent years, the South Korean government has loosened restrictions on foreign exchange transactions, facilitating the large rise in Korean purchases of U.S. properties.

The National Association of Realtors found that 7.3 percent of the houses sold last year in Florida alone were sold to foreign buyers and Miami is a major magnet for Latin American and European buyers. The buy out is helping to mitigate the fallout from the area’s housing slump.
If the recent fall of the dollar against European currencies continues, the surge to buy up America will become more and more prevalent. The U.S. dollar is decreasing in value in large part because our Federal Reserve is printing money like a banana republic.

The countries we borrow money from are also buying up the U.S. Not too long ago, Citigroup made Abu Dhabi, ruled by President Khalifa bin Zayed Al Nahyan, one of its largest shareholders. Many companies have welcomed such investments from foreign sources because the funds come from stable investors, but some U.S. officials have expressed concern that their acquisitions could target sensitive industries with links to national security. European companies at large have dipped into their wallets to spend more than $280 billion buying U.S. companies.

Abu Dhabi’s move recalls the early 1990s investment in Citi Bank made by Saudi Prince Alwaleed bin Talal. After Citi Bank made some losing bets on U.S. and Latin American real estate, Alwaleed bought a stake in the bank for less than $600 million, which has since ballooned into several billions of dollars. In addition to real estate, the Citigroup/Abu Dhabi situation and other European buying binges are just punctuations in the ever changing real estate buyout of America.

Does the selling of U.S. Real Estate to multinationals impact the national good or community concerns?

Posted by: Robert on January 8th, 2008 | Filed under: General