With $2.4 trillion in foreign currency reserves, China is among the richest countries in the world. For the last decade, China has invested its massive surplus in U.S. Treasury bonds. But with the continued devaluation of the U.S. dollar, China wants to diversify its investments. The problem for China is that there are not many places it can invest $2.4 trillion in cash. But that is exactly what makes the U.S. real estate market the perfect solution.
As much as $1.4 trillion in U.S. commercial real estate loans need to be re-financed in the next 3 years. U.S. banks are unwilling to lend money to even the most credit-worthy investors. This is what China is taking advantage of and is partnering with top U.S. hedge funds for a real estate buying spree.
In addition to the institutional investing organizations, however, China has over 350,000 millionaires and they are investing over 30% of their wealth into real estate. More and more cash-rich Chinese investors are touring the United States looking for investment opportunities in high-quality homes, safe investments and luxury lifestyle.
The Chinese, however, are not the only ones that bring new capital to the U.S. in general and South Florida in particular. The Russians are returning to the international property market with Florida real estate agents reporting a definite jump in first quarter 2010 inquiries. Driven by a rising ruble, booming oil prices and greater job security, Russian overseas home buyers are searching for a safe place to invest their money outside the country and the US has always been a safe heaven for long term investments in real estate, with Miami being a very attractive location to acquire luxury condominiums at extremely attractive prices and with a tremendous upside potential for those that understand how to invest in real estate.
We have already seen that the real estate market in the Downtown and Brickell area of Miami, for example, has not only shown signs of stabilization, but it is also showing clear signs of strengthening. According to a recent study of the Miami Downtown Development Authority (DDA), and based on recorded closings in new condominium buildings through December 31, 2009 and survey of occupancy in new condominiums as of February 2010, first-time sales of new units amounted to 68% of total units in completed new buildings compared to 62% reported in the initial study last year. Occupancy in new condominium buildings including owners and renters climbed 12 percentage points from 62% to 74% of completed units.
Average monthly residential sales in the Downtown Miami Area during the fourth quarter of 2009 reached over 350 units, a 200%+ increase over total sales volume during the same period in 2008.
Buyers purchased more than 700 new condo units in Greater Downtown Miami in the first quarter of this year, pushing the overall closed sales ratio for the epicenter of Floridaâs condo crash to more than 70 percent, according to a new Condo VulturesÂ® White Paperâ¢. A year ago, buyers purchased units at half that pace, acquiring only 370 new condos between January and March of 2009. At that time, only 59 percent of the more than 22,200 new condo units constructed in Greater Downtown Miami since 2003 had been sold.
A recent front page article in the Miami Herald (May 12th) under the title âFueled by overseas buyers, condo sales soar,â states that ââ¦in South Florida, international buyers are scooping up property, particularly condos, at relative bargains â a reason why home sales are rising.â The article further explains that ââ¦in Miami-Dade, sales of condos skyrocketed 46 percent during the first quarter, to 1,920, compared to the same period of 2009. [â¦] The market reflects a real estate market where prices have generally bottomed out. [â¦] Real estate agents say that buyers who were on the fence before are signing contracts, and renters are realizing it now makes sense to own.â The article emphasizes that Brickell, Downtown Miami and Key Biscayne is seeing a surge in international buyers including those from Italy, Germany, Spain, Sweden, Greece and China, among others.
All of this adds up to great news for Miami real estate!