Luxury Orlando Condos

By Mary Shanklin, Orlando Sentinel
10:31 p.m. EDT, May 2, 2010

Condominiums are now selling faster in Central Florida than they did at the peak of the real-estate market four years ago, when renters, retirees and eager urbanites, seized by condo fever, were snapping them up in Metro Orlando at the rate of 20 a day.

In March, buyers closed on 790 condo units in the four-county metro area – 25 percent more than in March 2006, when real-estate agents were celebrating a then-astronomical 630 sales.

With the region’s population basically stagnant and unemployment at or near record levels, the question is: Who is buying all of these units?

According to brokers, industry reports and others, foreign buyers are largely behind the surge.

For example, about 80 percent of the sales these days at the Mosaic at Millenia, a south Orlando apartment complex that went condo in 2004, have been to international investors.

“They are paying all cash, and their primary purpose is to get a monthly rented unit that provides cash flow with the expectation of some appreciation,” said Alec String, a broker with Coldwell Banker NRT Development Advisors in Longwood.

Unlike the deals that drove condo speculators during the homebuying frenzy of the mid-2000s, these sales aren’t based on incentives or inflated promises of rental income, String added. And they aren’t paying inflated prices, either: In March 2006, the median price of the condos sold in Metro Orlando that month was $159,600; by March of this year, the median had plummeted 69 percent to $49,700.

The sharp decline in prices since the market’s peak in 2005-06 is part of the reason Florida accounted for almost one-fourth of all U.S. property purchases by international buyers in late 2008 and early 2009, according to a report by the National Association of Realtors. California was second with a 13 percent share of the foreign market.

Nationwide, those foreign buyers paid a median of $247,100 during the period studied, compared with a median of $198,100 for all buyers. About 70 percent of the purchases were single-family homes, 18 percent were multifamily, and the rest were commercial properties.

In Florida, most foreign buyers hail from the United Kingdom, other parts of Europe, and Canada.

James Black, managing partner of a London-based company, Ultimate Holdings, said the British outfit has raised about $50 million to purchase distressed properties in the U.S., starting with properties in the Orlando area.

In February, Ultimate Holdings purchased 122 units in a 240-unit Davenport condominium called the Village at Town Center, paying a combined $5.38 million. The company has improved the units, which start at $54,000 for a one-bedroom model, and says it has 37 buyers under contract. Most of its customers are from the U.K., Canada and Switzerland.

“We’re a group that has invested in both the U.K. and in multiple locations outside the U.K.,” Black said. “We’re fairly experienced in looking for value …and pretty much the best value lay in Florida, and specifically in Orlando. We were very confident that the bottom has passed, and the belief is that the city can recover.”

Black said Ultimate Holdings is also negotiating to buy an apartment complex on Semoran Boulevard near Orlando International Airport, and it is shopping for deals in Miami and Chicago.

A recent survey by the Association of Foreign Investors in Real Estate ranked Orlando 12th among U.S. cities for investment opportunities. The group’s 200 members own more than $842 billion worth of real estate globally, including $304 billion in the U.S.

“They really have expressed some strong interest this year, but they’re having difficulties finding bargains,” said Jim Fetgatter, the group’s chief executive.

The last time members felt as strongly about U.S. real estate was in 2003, Fetgatter said. In the group’s fourth-quarter survey, two-thirds of those who responded plan to increase their U.S. holdings this year compared with 2009.

An influx of foreign investors snapping up the region’s distressed real estate is a two-edged sword, said Bob Daday, founder of the 40-member Oviedo HOA Presidents Association.

“People hoping to sell their condos or town homes – it’s good for them that they can sell,” Daday said. “The flip side is that we have 20 rentals in our community, and the difference in how they are kept – between homeowners and investors – is quite obvious.”

The owner-occupied places, he said, generally have manicured lawns and attractive paint jobs, while the rental units tend to give the appearance that the property’s owner doesn’t care.

Mary Shanklin can be reached at mshanklin@orlandosentinel.com or 407-420-5538.