With the recession of 2008 – 2009 leveling off, foreign direct investment into the South Florida market could prove to be lucrative for investors. The increasing stability of the American market will make it easier for foreign investors to keep more of their cash flow and utilize such capital for a higher volume of investment properties or cash out of this increasingly lucrative low risk South Florida market.
Prognosticated high level of inflation, increased governmental expenditures, and the Federal Reserve maintaining a low Discount Rate are all signals to foreign investors of a lucrative commercial real estate market. An indicator of investors’ feeling of incoming inflation is the increase of gold purchases in the commodities market to combat a devaluing Dollar. As the Dollar weakens in the ForEx markets, foreign investors using the Euro or the Pound Sterling will have a great vantage in pursuing stable tangible asset-backed investments as opposed to the more volatile securities of the stock market.
The American real estate market was at one of its lowest points in the past two decades; there is a still great opportunity for the savvy investor. Despite the pessimism expressed by many political and economic pundits, commercial real estate can still be a thriving and viable investment depending on the regional markets and underwriting guidelines. A substantial GDP increase [reference chart published byWorld Economic Situation and Prospects 2009 (United Nations publication, Sales No. E.09.II.C.2), released in January 2009.], forecasts a halt of GDP contraction as worst case scenario with an increase of growth of 2.3% expected for 2010 as best case scenario. Other indicators in the American market have also hinted at a bullish market including the rise of REIT IPO’s in the NYSE and increased home construction. Private lenders are feeling confident in a rebounding market and evidently feel this time is best for raising capital in anticipation of increasing their ROI.
The opportunity to take advantage of a quickly rebounding market is slowly dissipating. With higher GDP forecasts, and the availability of capital in the market, investors can expect a higher demand for commercial real estate properties which will be manifested in higher property values. One such thriving regional market is the South Florida/Miami market. This particular market has cooled down from its previous untouchable hot status. European investors wishing to minimize risk and realize higher ROIs should consider commercial real estate investments in regions such as South Florida which are becoming quite lucrative. The stability of the Florida commercial real estate market coupled with prudent underwriting guidelines based on income potential could prove to be a diamond in the rough investors have been waiting for in South Florida.
