My brother came into town from Boca Raton, Florida to celebrate my graduation from Southern Utah University. He and I have invested in millions of dollars of real estate over the last 20 years together. Real estate and finance are subjects we both understand quite well and enjoy discussing. One of the subjects that came up was the transition of international real estate investors in the Miami-Dade County market. From 2011 through 2013, investors from Brazil,Venezuela, Russia, and Argentina have been the primary international buyers of real estate in the south Florida market. This was due to the fact that these investors capital was extremely strong against the U.S. Dollar; obviously this gave investors from those countries stronger purchasing power.  

According to a first quarter residential market report released in January by the Miami Downtown Development Authority (DDA), "Due to the recent advance of the U.S. dollar versus most South American and European currencies, the advantageous buying power of foreign investors has been diminished significantly since 2011,” the report states. “While the Euro has not diminished as much as the South American currencies, its slide versus the U.S. Dollar has only recently started and is expected to continue to decrease over the next six to 12 months.”

As my conversation with my brother continued, the conversation moved to where the money was coming from now? One only had to look towards China, Mexico, and Canada to find the answers. These three currencies have made strong gains from the end of 2015 through 2016 against the US Dollar. The US Dollar has seen a drop in value due to international disbelief in the Federal Reserve as they continue to toy with another possible rate hike. My brother was explaining that his local market has seen more buyers from Canada, Mexico, and China starting to replace those buyers from Brazil, Russia, Argentina, and Venezuela. 

As I researched some of our conversation, I found that others real estate investors are taking a large gamble on the international buyers, in hopes of selling inventory. Russian property mogul and billionaire Vladislav Doronin, who is building three high-end condominium projects in Miami, is betting on the Chinese  to help. He believes fresh foreign buyers will step into Miami’s real-estate market, even as older ones have held back their spending. Chinese investors look particularly promising, he said.“The Chinese are coming now,” he said. “They buy baskets of apartments. Like, five apartments at a time.”

Whether it comes to investing, traveling, or consumer purchasing, the currency exchange will always play relevance in the supply and demand curve. Perhaps, my brother and I will start looking at real estate outside our backyard and see what countries such as Russia, Brazil, and Argentina can offer us with our strong US Dollar and their weak currency!





1 comment:

Dave Tufte said...

Anthony Graham: 100/100

I do not think a "weak" dollar had much to do with any of this. Rather, these people were moving their wealth from a place where it was not safe to where it was safer.

I do think it's relatively common for the legacy media to make that sort of claim though, as Anthony Graham notes in the second paragraph. Honestly, I think this is a way that they can be diplomatic. The exchange rate can influence where someone chooses to buy internationally, but it does not much influence their interest in getting their money into a richer, safer, developed country.

If I can quote here "My brother was explaining that his local market has seen more buyers from Canada, Mexico, and China starting to replace those buyers from Brazil, Russia, Argentina, and Venezuela." I would say the exchange rate story is correct for Canada and Mexico, which are fairly reasonable countries where people don't mind keeping their wealth. But the Chinese are bailing on China in the largest financial exodus in history. As to Brazil, Russia, and Venezuela, I would say that low oil prices mean a lot of people are just not making that money that they would have put into Miami. Argentina is a different story: this has been a country that people have been trying to get out for 15 years, but they just had elections that have led to a more responsible government, so people are willing to stay again.

It's an interesting tidbit that the Chinese by "baskets" of apartments. The reason they do this is that they are trying to get the whole, moderately extended family, out of China. The Chinese authorities frown on families emmigrating: leaving someone behind that can be potentially punished gives the authorities more power. So a rich Chinese person buys a bunch of apartments, and emmigrates to one. Then as family members get out of the country one by one, they all have a place to go.