Where is the money going in property sales today?

With the UK the Buy to Let property market is currently considered by many property analysts as at best, flat. The question that many people now ask is “where are property investors putting their money today”? Well, according to research carried out by the Butterfield Private Bank and published by the Financial Advisor paper, overseas property investments have become the next big thing with UK buyers wanting to take advantage of the better value property on offer as well as the lifestyle options that an overseas development purchase can bring.  So much so in fact that Barclays Bank recently carried out a survey that reported there being 2.2 million current overseas home owners in the UK, with this figure the report states, set to double to nearly 5 million by 2010.

The USA is a key player in overseas second and vacation home investing, with Florida being the biggest property investment zone outside of Europe for the British. This is not unexpected due to the high legal compliance and ease of investment there. In fact a look any many large financial institutions overseas, property funds will reveal that in many cases fund managers have 50% or more of their assets invested in the USA. The key to successful buying as many of you will know is having local market knowledge and information on new developments in key locations. We hope that you will find this report useful.

How is the Florida property market performing today?

The market here is currently going through a slow down - not unexpected following five years of high equity growth. It is now certainly a buyers market and those holding property are not getting the speed of sale or price of 12 months ago due to more resale property coming on with many investors releasing gains.

Many people are however holding onto their property until lower priced unit sellers are out of the market with a hope of supply and demand change in the near future and because the longer term gains look interesting. The cost of land and developers build costs have also sharply increased over the past few years, resulting in new build keeping prices higher in this region. Developers cannot build property at the price they have in the past few years, due to a rise in labour costs, concrete costs and general contract costs and our research shows continued pressure on developers to at least hold and in most cases increase prices considerably going forward.

The key to buying right now however has not changed. Look for great opportunities from developers or sellers in locations set for growth and with clear market advantage or unique selling propositions. The savvy investor can also expect sellers to offer deals right now. Property here is still very good value when one compares price per sq ft to other major destinations around the world and when you add in the safe economy, buying process and the current pound dollar exchange its easy to see why many from the UK are pouring millions in to Florida property investments.

With nearly 80 million visitors expected to travel to Florida each year and almost unlimited year-round sunshine you can see clearly why the Association of Foreign Investors in Real Estate (AFIRE) voted only last year the United States as the country that provides the most secure and stable real estate investment opportunities in the world, with Orlando one of the top places to invest in the USA. In Orlando however we strongly recommend our buyers to stay away from the Davenport and Kissimmee areas right now and look for opportunities more central to all the attractions and where there is a strong and proven hotel market such as Orange County and the Buena Vista area if renting you home, apartment or condo hotel unit is important.

“Demographics in the US are the single most important element and the demand for housing will be solid for the next 20 years, with the US Census Bureau projections indicating the number of US households to grow from 24 million in 2000 to between a huge 105-109 million by 2020.”

The great baby-boomer effect

The baby-boomers are coming of age, with many US as well as UK senior citizens purchasing second or investment homes in the Southern Sunshine State. This new generation of second-home investors has more money partially through equity in their first homes to purchase on a second; and they seem to be hooked on this new trend in investment, as opposed to traditional stock market equities and pension funds. In fact US over 50’s had $2.2 Trillion in income last year making them the most cash rich generation in history. It is the dream of many American’s to own a second home in the Sunshine States of the south ( 46% in a recent survey ) and we believe that this factor alone will help drive the property markets here over the next decade.

Buyers however will expect to see cycles in liquidity for resale in any market and should budget in any home purchase for the release of equity.

Immigration fuels housing demand

There are currently 1100 immigrants arriving in Orlando each and every day and with a population currently of only sub-18 million, there is plenty of room for growth in a state of similar size to the UK with its 65 million+ population.

Since 9/11, many US vacationers have decided to stay in the US, with many choosing Florida as their vacation choice because of safety and entertainment, along with increasing numbers of UK vacationers whom often request apartments, villas and large suites as opposed to traditional hotel rooms.

One of the biggest challenges facing prospective buyers in Orlando is actually securing the resort home they want, with developers reporting literally thousands of people on waiting lists for their homes prior to release. The key here is to work with companies such as BuyRight Florida Properties who can link you up with opportunities as they develop. To have a chance of getting in on this real estate revolution, we recommend that prospective buyers register their interest early to secure inventory on a pre-release basis.