With Porta Mondial Florida you have just launched your first real estate brand on the US market. What makes the Sunshine State so interesting for you?
Florida is one of the most exciting holiday real estate markets in the world. US citizens, Europeans and South Americans are all buying here. In Europe, it can perhaps be most closely compared with the market in Majorca. In both places, the clients are generally not living locally, which means that disproportionately greater use is made of the Internet when choosing a real estate agent. Since the professional marketing of real estate on the Internet is one of our core competences, our franchise partners benefit from correspondingly good search engine rankings.
In light of the euro crisis, how attractive is real estate in Florida at the moment for German buyers compared with properties in, say, southern European countries?
In southern Europe one must differentiate between the individual markets. Real estate in good locations such as the Côte d’Azur, Lake Como, Marbella, Majorca or Ibiza has held its value in the past, despite the financial and property crisis, so that such premium locations remain sought-after places in which to invest. Florida has the advantage that, in making an investment in the dollar region, one is independent of the euro. On the other hand, of course, there is always a certain currency fluctuation risk. However, the purchase of a holiday property is also decided at the emotional level and should therefore be made individually based on one’s personal objectives and circumstances.
Compared with just a few years ago, more buyers than ever are concerned by uncertainty in the capital markets and the fear of rising inflation. To what extent is a holiday property in Florida an element of good asset allocation and, possibly, even a part of the buyer’s retirement provision?
We have actually found that more and more buyers are acquiring holiday real estate as a capital investment – not only in the hope that it will appreciate, but also to earn attractive returns through holiday letting. This development prompted us to expand our services accordingly and, with “Porta Holiday”, to make it possible for a purchased property to be made available directly for holiday letting. Our pilot project was launched in Majorca in March 2013 and has been well received by our clients. When purchasing this kind of investment property one should bear in mind that, in the case of use by tourists, the location is a great deal more important: holidaymakers want a good infrastructure, easy access to the beach and, above all, a beautiful view. Letting a property in the USA also offers German owners specific tax benefits. Income up to USD 3,900 p.a. is tax free and any amount in excess of that is taxed in the USA. The local German tax office merely retains the right to take any such income into account when determining the individual’s tax bracket.
In your opinion, how are prices developing in Florida? Following the property crisis a few years ago, have prices now returned to a “normal” level? Have price bubbles even developed again in certain areas?
Our local partners – all experienced real estate agents who specialise in working with foreign buyers – tell us that there are fewer new properties coming onto the market than are currently being sold at present. They are also receiving an increasing number of multiple offers for individual properties. This means that more potential buyers are making offers, and the one offering the most gets the property. This situation has already led to a rise in real estate prices, especially in desirable locations such as Naples and Bonita Springs. However, these cannot be described as “price bubbles”. One should not forget that this is one of the most sought-after regions of North America. Or, to quote our partner, Gerry Wolf, you get the “biggest bang for the buck” in Florida.
In German media reports on Florida, one reads about “bargain hunting” on the one hand, but also about a discernible undersupply in certain segments, on the other. Where can buyers get objective information which will provide them with a reliable overview of the market situation?
We would recommend the association websites – which also publish statistics – such as the Association of Florida Realtors, www.floridarealtors.org, or the National Association of Realtors, www.realtor.org.
The US real estate market is organised in a completely different way to, say, the German one. For example, it is often not quite clear whether the agent represents the interests of the buyer or the vendor. As a potential holiday property buyer, how can I be sure that I really am getting the best value on my investment? And what should I bear in mind, in particular, when choosing a real estate agent?
Many buyers are not aware that, thanks to the American Multiple Listing System through which every registered real estate agent has access to all available properties, the “listing agent” represents the vendor and therefore does not necessarily act in the buyer’s interests. The buyer therefore usually chooses his own agent – at no additional cost – as the agents involved then share the commission. Based on the experience of our partner, Michael Sopka, when choosing a real estate agent – apart from the necessary specialist knowledge – the agent’s mother tongue is an important criterion when it comes to cross-border transactions, to ensure that no misunderstandings arise during negotiations, and that clients can transact the deal with peace of mind.