Market woes a matter of perspective
For international chain Engel & V?lkers, Florida has never looked better
By MICHAEL POLLICK
michael.pollick@heraldtribune.com
One of the hottest real estate outfits in Europe is moving into Florida, cherry-picking choice U.S. sites, including Southwest Florida, to ensure an unending supply of high-end properties to Europeans flush with euros and pounds.
After making a name for itself on the Continent, the Hamburg, Germany-based Engel & V?lkers plans to open hundreds of its "property shops" aimed at well-heeled clients.
It is going into the Hamptons on Long Island and Hyde Park, the upscale neighborhood in Tampa. A store on Main Street in Sarasota is also in the works, adding to the company's 270 residential property "shops" worldwide.
Within the next decade, Engel & V?lkers aims to open at least 200 offices in Florida.
That goal is in stark contrast to today's general view of the state and national real estate market, but speaks volumes about the long-term potential for Florida property.
Keen to satisfy wealthy European clients whose euros and pounds give them immense purchasing power in the struggling U.S. market, Engel & V?lkers is pushing forward as other firms are retrenching. The company is moving in despite all the talk of the crisis in sub-prime mortgages, high foreclosure rates, people "upside down" in their two-year-old home purchases and sagging home sales.
Timo Khammash, the Engel & V?lkers executive driving the push into Florida, has worked for the company for more than a decade and has relatives in Sarasota -- he even attended Sarasota High School for a few months.
He shrugs off the current state of the market.
"We had more and more of our clientele asking us, 'Why aren't you here?'" he said.
His headquarters is in Naples, but Khammash does laundry in Sarasota. He is one of three managers on the road six days a week courting potential franchisees.
Brand identity
When they opened the doors to their Punta Gorda property shop in October, Martin and Hilde Block, along with partner Greg Loomis, became the first Florida franchisee of Engel & V?lkers.
They also are setting up a storefront on Main Street in Sarasota.
Like the Engel & V?lkers shops from Argentina to Dubai, the downtown Punta Gorda store is decked out with white wood trim on the outside, giving it somewhat of an old-world look.
Inside, the store is modern and uncluttered, with furniture that is predominately white.
Just as consumers are brand-conscious in picking restaurants and coffee shops, Engel & V?lkers executives think they can train potential customers to be brand-conscious in picking a real estate firm, and Block says that brand loyalty is already paying off for him.
The Punta Gorda office is preparing for a visit from a German woman living in Rio De Janiero who is interested in buying a Sarasota-area home. She called the Engel & V?lkers agent she knew in Germany, who quickly referred her to the Punta Gorda office.
Since she is a past client, the referral package included not just her name and the properties in which she expressed an interest, but also a customer number.
"We know who this person is before they even come in the door," Dailey said. "We know they can afford it. We know what their tastes are. We know what their status is within their community, and whatever else we are supposed to be sensitive toward."
At Engel & V?lkers, the system and the approach to service is paramount. All agents receive the same training and are expected to use it to provide clients with a consistent experience. They use identical software, both for keeping track of clients and for making and getting referrals from the other shops.
"If we sell the house to someone referred to us by the property shop in Prague, a percentage of our earnings goes to that shop," Martin Block said.
Pounds of euros
The U.S. dollar has been in a gradual decline since the beginning of the decade, especially compared with currencies such as the euro and the British pound.
While that is bad for Americans, eroding their global purchasing power, it makes U.S. properties look absolutely juicy to Europeans.
For them, the primary competition for a piece of Florida beachfront might be coastal Spain.
There, real estate has appreciated strongly and "there are no currency discounts," for European buyers, said Lawrence Yun, senior economist of the National Association of Realtors.
In July, the dollar hit a 26-year low as measured by the British pound, and an all time low against the euro. It takes roughly $1.37 to buy a euro, and $2.05 to buy a British pound.
"From a British point of view, Florida real estate is selling at a 40 percent discount," Yun said during a recent trip to Southwest Florida.
Dailey, the Engel & V?lkers franchisee in Naples, knows full well the impact of the currency factor.
"In many cases, people from Europe or Great Britain can buy a million-dollar beachfront property for, in essence $500,000, when you consider the exchange rate discrepancies and the soft market," Dailey said.
"They are more bullish on us than we are."
_______
Staff writer Stephen Frater contributed to this report.
Last modified: August 06. 2007 4:23AM
Replies
30
SoWal Insider
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Buying Florida Real Estate--So Simple, Even a European Can Do It!
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Buying Florida Real Estate--So Simple, Even a European Can Do It!
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Edited
Beach Fanatic
This is what I have been talking about for over a year. Declining $ = real estate bargains for foreign buyers.
SoWal Insider
This is what I have been talking about for over a year. Declining $ = real estate bargains for foreign buyers.
Declining real estate values + declining $ = Not so good investment for foreign buyers
Purchase $400,000 <overpriced> condo = 291,970 Euro (@ 1 Euro = $1.37)
Condo price falls to $350,000 = 255,475 Euro (@ 1 Euro = $1.37)
Bernake lowers Fed Funds rate 50 basis points--dollar tanks (@ 1 Euro=$1.45)
Sell condo for $350,000 and convert to Euros = 241,380 Euro
Loss on "investment" = 50,590 Euro ($73,355) not including carrying costs.
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Beach Fanatic
Declining real estate values + declining $ = Not so good investment for foreign buyers
Purchase $400,000 <overpriced> condo = 291,970 Euro (@ 1 Euro = $1.37)
Condo price falls to $350,000 = 255,475 Euro (@ 1 Euro = $1.37)
Bernake lowers Fed Funds rate 50 basis points--dollar tanks (@ 1 Euro=$1.45)
Sell condo for $350,000 and convert to Euros = 241,380 Euro
Loss on "investment" = 50,590 Euro ($73,355) not including carrying costs.
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Now go forward a "few" years.....
Condo price goes up...$450,000 and euro falls to even money.
Lots of profit for das European..yawhol?
SoWal Insider
Now go forward a "few" years.....
Condo price goes up...$450,000 and euro falls to even money.
Lots of profit for das European..yawhol?
You forgot to add "Once Upon a Time" to the above scenario.
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Edited
SoWal Expert
You forgot to add "Once Upon a Time" to the above scenario.Just like you note that real estate prices cannot go up forever, I would say that they cannot go down forever. ;-)
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SoWal Insider
Just like you note that real estate prices cannot go up forever, I would say that they cannot go down forever. ;-)
But it can feel like forever...especially if there is negative cashflow on an investment. ;-)
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Beach Lover
and it can feel like forever when it has positive cash flow
Beach Fanatic
But it can feel like forever...especially if there is negative cashflow on an investment. ;-)
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I'm not quite sure how you'd know...Red
SoWal Insider
I'm not quite sure how you'd know...Red
It shows up "red" on a spreadsheet.
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Beach Fanatic
SHELLY
It would behoove you to take the blinders off. Maybe a foreigner would see our beaches and the natural beauty of our country, realize that America is the safest place for property owners, and feel like this is not only a bargain in August 2007 exchange rates but that this is a pretty cool place to have a home. IT IS NOT ALL ABOUT MONEY BUT QUALITY OF LIFE. At this time it is a great opty for a foreigner to buy a vacation getaway place in America.
It is analogous to an American traveling to Paris when the exchange rate of the dollar to the Euro is advantageous ( very strong dollar )and prices in Paris are at low levels. I think many Americans would pounce on that situation. Perhaps that circumstance may come some day. Never say never. But the point is, Shelly, it is not all about investment. If one can AFFORD it and the opty is there, then one should act and enjoy life, whether one is European, Asian, American or Martian.
It would behoove you to take the blinders off. Maybe a foreigner would see our beaches and the natural beauty of our country, realize that America is the safest place for property owners, and feel like this is not only a bargain in August 2007 exchange rates but that this is a pretty cool place to have a home. IT IS NOT ALL ABOUT MONEY BUT QUALITY OF LIFE. At this time it is a great opty for a foreigner to buy a vacation getaway place in America.
It is analogous to an American traveling to Paris when the exchange rate of the dollar to the Euro is advantageous ( very strong dollar )and prices in Paris are at low levels. I think many Americans would pounce on that situation. Perhaps that circumstance may come some day. Never say never. But the point is, Shelly, it is not all about investment. If one can AFFORD it and the opty is there, then one should act and enjoy life, whether one is European, Asian, American or Martian.
Beach Lover
Doom and gloom Shelly:
Show her some good news and she says its a fairytale. If you ask me she is living in her own depressed world. Shelly: we shall see, we shall see.
Love the area and others will love it too.
Seagrove Lover
Show her some good news and she says its a fairytale. If you ask me she is living in her own depressed world. Shelly: we shall see, we shall see.
Love the area and others will love it too.
Seagrove Lover
SoWal Insider
Article published in the British Daily Mail:
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=458067&in_page_id=1770
I've got several European friends and although they enjoy their visits to Florida, they would not live here full-time....ever. One even asked me about purchasing a pre-construction condo for visits/investment when he was here in 2005:shock: ...he still thanks me for talking him out of it whenever we chat (and he owes me several nice dinners and a bunch of drinks when I travel to Europe next spring).
I can tell from the rah-rah Real Estate (albeit dwindling) articles we've still got some time to go before Florida bottoms out.
Gloom & doom?....from my standpoint it is just "sticking a fork in it to see if it is done." Apparently the RE bulls are still mooing--so it's not quite done just yet.
<Oh yeah...the disclaimer: JMO>
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http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=458067&in_page_id=1770
I've got several European friends and although they enjoy their visits to Florida, they would not live here full-time....ever. One even asked me about purchasing a pre-construction condo for visits/investment when he was here in 2005:shock: ...he still thanks me for talking him out of it whenever we chat (and he owes me several nice dinners and a bunch of drinks when I travel to Europe next spring).
I can tell from the rah-rah Real Estate (albeit dwindling) articles we've still got some time to go before Florida bottoms out.
Gloom & doom?....from my standpoint it is just "sticking a fork in it to see if it is done." Apparently the RE bulls are still mooing--so it's not quite done just yet.
<Oh yeah...the disclaimer: JMO>
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Edited
Beach Fanatic
"I've got several European friends and although they enjoy their visits to Florida, they would not live here full-time....ever. "
from The British Daily Mail:
"Many bought apartments off-plan, hoping to sell them on at a huge profit as soon as they were built. However, they have been left with property they can't sell - even for less than the original price - because of rising interest rates and a glut of condominiums for sale."
Shell,
I know you think condos in general are a blight on the fair skin of SoWal, but I heartily disagree.
I live here, in a condo, full time....and let me tell ya, its a hellva lot better than living in London, or anywhere in the UK, for that matter. If you have traveled there you know of what I speak..from the weather to the immigrants and declining infrastructure..and lets leave the cost of living out of it for now. Other than Spain parts of France and Portugal (where the Brits are heavily invested), I would live here anyday.
I am very happy that the "investulators" are taking it in the shorts..I have no sympathy for them..short term "daytrading" in real estate is fraught with volatility..they knew it going in and were too stupid to see the end of the top in the market.
There is no need to lump those of us who are long on condos and will hold for a decade in the same bag as "investulators" . You know the cyclic nature of all things monetary and real estate is no different. Historically real estate will return as well as index stocks (can't cite the source right now) and in my book although we may not see a repeat of 2003-2004, I remain confident that over the next decade I will do well with my condo.
Your crystal ball is made from the same material as mine is....
SoWal Insider
You know the cyclic nature of all things monetary and real estate is no different. Historically real estate will return as well as index stocks (can't cite the source right now) and in my book although we may not see a repeat of 2003-2004, I remain confident that over the next decade I will do well with my condo.
Historically, residential real estate returns a couple of points above inflation--meaning just shy of 6%.
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SoWal Insider
Historically, residential real estate returns a couple of points above inflation--meaning just shy of 6%.Are you lumping in Malibu with rural Oklahoma?
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Beach Lover
There are 6,576 homes & condos for sale in Destin & South Walton.
Do you think the Europeans will buy that many? This looks very serious to me.
This time next year, do you think there will be more or less homes & condos for sale in Destin & South Walton? I would guess over ten thousand, hold on if you can.
Do you think the Europeans will buy that many? This looks very serious to me.
This time next year, do you think there will be more or less homes & condos for sale in Destin & South Walton? I would guess over ten thousand, hold on if you can.
Beach Fanatic
Are you lumping in Malibu with rural Oklahoma?The answer is a cautious yes. Between 1926 and 2006, the annual average rate of return on Real Estate was 11.1%. During the same period the rate of inflation was around 3%. So, it was obviously a better investment to buy Real Estate than to bury cash in jars in your backyard. However, the rate of return for small stocks checked in a bit higher at around 12% while the Dow Jones Industrial Average was a bit lower at 10%. These figures would suggest that Real Estate investments were right there at a par with Stock Market Investments.
http://www.realestateinvestmentarticles.net
SoWal Insider
These figures would suggest that Real Estate investments were right there at a par with Stock Market Investments.
....then subtract carrying costs for holding real estate and cost of selling...
http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html
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Beach Fanatic
....then subtract carrying costs for holding real estate and cost of selling...
http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html
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carrying costs < 1% annualized and cost to sell 6% in the last year of holding?
Brings the rate of return over the life of the investment down ..what?..a percent?
Still good money!
But ur da man, Shel...and let everyone heed your voice of caution. I certainly have and will.
Beach Lover
You so smart.
SON
SON
"I've got several European friends and although they enjoy their visits to Florida, they would not live here full-time....ever. "
from The British Daily Mail:
"Many bought apartments off-plan, hoping to sell them on at a huge profit as soon as they were built. However, they have been left with property they can't sell - even for less than the original price - because of rising interest rates and a glut of condominiums for sale."
Shell,
I know you think condos in general are a blight on the fair skin of SoWal, but I heartily disagree.
I live here, in a condo, full time....and let me tell ya, its a hellva lot better than living in London, or anywhere in the UK, for that matter. If you have traveled there you know of what I speak..from the weather to the immigrants and declining infrastructure..and lets leave the cost of living out of it for now. Other than Spain parts of France and Portugal (where the Brits are heavily invested), I would live here anyday.
I am very happy that the "investulators" are taking it in the shorts..I have no sympathy for them..short term "daytrading" in real estate is fraught with volatility..they knew it going in and were too stupid to see the end of the top in the market.
There is no need to lump those of us who are long on condos and will hold for a decade in the same bag as "investulators" . You know the cyclic nature of all things monetary and real estate is no different. Historically real estate will return as well as index stocks (can't cite the source right now) and in my book although we may not see a repeat of 2003-2004, I remain confident that over the next decade I will do well with my condo.
Your crystal ball is made from the same material as mine is....
Banned
Doom and gloom Shelly:
Show her some good news and she says its a fairytale. If you ask me she is living in her own depressed world. Shelly: we shall see, we shall see.
Love the area and others will love it too.
Seagrove Lover
shelly is experiencing how lonely it is to be a voice of reason.
but thanks for the rational approach to the ups and downs shelly!
sometimes the truth hurts, for most of us we'd still rather know the truth even if it's not ideal than have a pretty phony picture painted for us. thanks for sharing your experience and perspective shelly!
p.s. it's funny to hear someone comparing london to this area on this board, i wouldn't begin to do that,
but since you opened the can of worms....
having lived here and in london for a couple years each. despite how expensive london is, i can tell you cost of living is comparable here if you are employed in the economy, but the health care, amenities, education, restaurants and cultural offerings are better in london. there are more varied opportunities for business and career as well.
housing is a little more expensive there, but they also have fantastic trasportation and i happily lived without a car in london. not possible here. so i feel that those two things even each other out.
i'm not sure what you meant by "immigrants" but in the uk, immigrants are legalized and have opportunity, whilst here they are illegal and employed as slaves by local businesses and live in deplorable conditions not even speaking english. that does not make for a safe or civil community. i venture to say the class system here is just as bad as england, but the immigrants and the community certainly have it better there as immigration laws are enforced.
london also has plenty of public outdoor spaces..they have loads of parks and a few hours drive out the beach or lakes, but our beach is definitely waaaay better!
simply to have visited somewhere else doesn't really give one a good idea of what it's like to live somehwere. our visits here are very different than our experience of living here for instance.
in other words, having many foreign friends and family, few of them would see the benefit of investing in this area, at least quite yet until it's up to speed. most who have done or are considering it, will do so in areas that offer excellent economic opportunities, easy and affordable travel from europe and world class health care. often, those places are more urban.
if they want a beach, they just go to a resort hotel on holiday.
Edited
Beach Fanatic
shelly is experiencing how lonely it is to be a voice of reason.
but thanks for the rational approach to the ups and downs shelly!
sometimes the truth hurts, for most of us we'd still rather know the truth even if it's not ideal than have a pretty phony picture painted for us. thanks for sharing your experience and perspective shelly!
p.s. it's funny to hear someone comparing london to this area on this board, i wouldn't begin to do that,
but since you opened the can of worms....
having lived here and in london for a couple years each. despite how expensive london is, i can tell you cost of living is comparable here if you are employed in the economy, but the health care, amenities, education, restaurants and cultural offerings are better in london. there are more varied opportunities for business and career as well.
housing is a little more expensive there, but they also have fantastic trasportation and i happily lived without a car in london. not possible here. so i feel that those two things even each other out.
i'm not sure what you meant by "immigrants" but in the uk, immigrants are legalized and have opportunity, whilst here they are illegal and employed as slaves by local businesses and live in deplorable conditions not even speaking english. that does not make for a safe or civil community. i venture to say the class system here is just as bad as england, but the immigrants and the community certainly have it better there as immigration laws are enforced.
london also has plenty of public outdoor spaces..they have loads of parks and a few hours drive out the beach or lakes, but our beach is definitely waaaay better!
simply to have visited somewhere else doesn't really give one a good idea of what it's like to live somehwere. our visits here are very different than our experience of living here for instance.
in other words, having many foreign friends and family, few of them would see the benefit of investing in this area, at least quite yet until it's up to speed. most who have done or are considering it, will do so in areas that offer excellent economic opportunities, easy and affordable travel from europe and world class health care. often, those places are more urban.
if they want a beach, they just go to a resort hotel on holiday.
Agreed with what you say - and comparing London to Sowal is in many ways bizarre - they are 2 completely different places and offer a different way of life - simplistic statement I know but true!
I still believe that we are years and years from seeing significant number of foreigners here - airport or no airport!
Beach Fanatic
SHELLY
It is analogous to an American traveling to Paris when the exchange rate of the dollar to the Euro is advantageous ( very strong dollar )and prices in Paris are at low levels. I think many Americans would pounce on that situation. Perhaps that circumstance may come some day. Never say never. But the point is, Shelly, it is not all about investment. If one can AFFORD it and the opty is there, then one should act and enjoy life, whether one is European, Asian, American or Martian.
Except that now the Euro is much stronger than the dollar and it totally SUCKS going to Europe now because the exchange rate is so bad - good for them though as their money stretches far here - whether or not that translates into them buying RE, I have no idea!!
Beach Fanatic
quote the raven:
"but since you opened the can of worms....
having lived here and in london for a couple years each. despite how expensive london is, i can tell you cost of living is comparable here if you are employed in the economy, but the health care, amenities, education, restaurants and cultural offerings are better in london. there are more varied opportunities for business and career as well.
housing is a little more expensive there, but they also have fantastic trasportation and i happily lived without a car in london. not possible here. so i feel that those two things even each other out.
i'm not sure what you meant by "immigrants" but in the uk, immigrants are legalized and have opportunity, whilst here they are illegal and employed as slaves by local businesses and live in deplorable conditions not even speaking english. that does not make for a safe or civil community. i venture to say the class system here is just as bad as england, but the immigrants and the community certainly have it better there as immigration laws are enforced."
I too lived in London (Dartford..just south of London) and housing in London is way more expensive. Not sure where you lived, but decent housing cost me many $$.
I never compared London with Sowal. Only said I would live here over London because I found it over crowed and racist. The transportation system was always overloaded, the tube was not the most pleasant..smokers abound on the train. The people were on the rude side..I am asian and was quite aware of the way immigrants are and were treated in the UK.
There was and is a festering immigrant problem in London and the UK in general. If you think they are all there legally then you are simply not in touch. There are many many illegal asian immigrants who form a underclass, that are despised by the white majority. Those that are discriminated against, in my experience, were educated professionals..not the Hispanic gardener variety found here.
Yes London is a large metropolitant city rich in culture and Architecture ..but not my cup of tea..thats all, carry on.
"but since you opened the can of worms....
having lived here and in london for a couple years each. despite how expensive london is, i can tell you cost of living is comparable here if you are employed in the economy, but the health care, amenities, education, restaurants and cultural offerings are better in london. there are more varied opportunities for business and career as well.
housing is a little more expensive there, but they also have fantastic trasportation and i happily lived without a car in london. not possible here. so i feel that those two things even each other out.
i'm not sure what you meant by "immigrants" but in the uk, immigrants are legalized and have opportunity, whilst here they are illegal and employed as slaves by local businesses and live in deplorable conditions not even speaking english. that does not make for a safe or civil community. i venture to say the class system here is just as bad as england, but the immigrants and the community certainly have it better there as immigration laws are enforced."
I too lived in London (Dartford..just south of London) and housing in London is way more expensive. Not sure where you lived, but decent housing cost me many $$.
I never compared London with Sowal. Only said I would live here over London because I found it over crowed and racist. The transportation system was always overloaded, the tube was not the most pleasant..smokers abound on the train. The people were on the rude side..I am asian and was quite aware of the way immigrants are and were treated in the UK.
There was and is a festering immigrant problem in London and the UK in general. If you think they are all there legally then you are simply not in touch. There are many many illegal asian immigrants who form a underclass, that are despised by the white majority. Those that are discriminated against, in my experience, were educated professionals..not the Hispanic gardener variety found here.
Yes London is a large metropolitant city rich in culture and Architecture ..but not my cup of tea..thats all, carry on.
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