Foreign Investors Heating Up Florida Commercial Real Estate Market
As residential and commercial property markets in Florida continue to thrive, wealthy investors are making their way into the market. The low rates of interest along with highly discounted prices are encouraging domestic buyers to seize the opportunity and purchase properties in the state.
Borrowing has been a problem for those interested in purchasing Florida homes and apartments. While some lenders have run out of funds amidst the worldwide financial crisis, Stewart Holley SVP of Sales and Marketing with the Forseti Group states that “tightened regulations have made mortgage-lending decline from $2 trillion four years ago, to $966 billion in 2012.” Since bank financing is an unfavorable option, new sources such as hard money, private lending, and others have emerged to help buyers.
However, market insiders say that these indicators do not tell the complete story. People who purchase high-end real estate assets usually have extra equity to dispose. The number of cash deals has also been rare, especially in South Florida’s condominium market, which is slowly recovering. Meanwhile, buyers who purchase semi luxury or normal residential properties, along with those who need a second mortgage on luxury properties, face a tough challenge when securing financing.
Although there have been signs of stability in the commercial real estate market, interest from the domestic market is not as high as expected. Instead, international investors with vast financial standing are completing cash-deals and acquiring their space in the state of Florida. US-based developers and buyers are in need of debt financing, and their inability to secure it closes the door for them, which leaves the market open to foreign investors with cash.
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