Foreign Buyers Flock to Buy Orlando Real Estate

Foreign investors have poured more than $120 million into the Central Florida housing market from January through June of this year, on everything from student housing to downtown office space, a new report shows.
That makes the Orlando area the 19th-largest market for foreign investment in the United States and the largest in Florida, according to the report from New York-based Real Capital Analytics.

Foreign investors spent $54 million in the same period last year, making Orlando the 27th largest metropolitan market for foreign investors.

Orlando maintained its 27th-place ranking for all of 2006, when investors spent $130 million, according to Real Capital Analytics. In 2004, foreign investors spent a record $222 million on Orlando real estate, making it the 15th-largest U.S. market for foreign investors.

Though foreign investors have always invested heavily in New York, Chicago and cities along the West Coast, companies have only recently begun buying properties in “secondary locations,” such as Orlando, said Dan Fasulo, Real Capital’s managing director.

Orlando is an attractive smaller city for investors and/or Florida mortgage borrowers simply because they’ve heard of it.

“There’s Disney World there and everyone goes,” he said. “Foreign investors invest in markets where they can take the property back to investors back home and they’ll know the city.”

Australians have invested the most in U.S. real estate so far this year $7.7 billion followed by Middle East and German investors, according to Real Capital Analytics.

But Australians aren’t quite as eager for Orlando property. They haven’t bought any real estate in the Orlando area this year, while Raleigh, N.C.-based Highwoods Properties and the German company Kapital Consult shelled out $40 million for Eola Park Centre in downtown Orlando two months ago. The Bahrain and London-based Investcorp paid $19.5 million for a Holiday Inn Select in East Orlando in April.

Foreign investors have bought seven properties in the Orlando area so far this year. They bought only four in the same period last year. It’s safe to assume the steady, low Florida mortgage rates have played a role in this jump.

But the increase in closed deals does not necessarily mean foreign interest in Orlando real estate has jumped, Fasulo said.

“Sometimes there’s not just properties that come up for sale that are attractive to foreign investors,” he said.

Central Florida real estate offerings have become more diverse in the past few years, which attract investors who want to buy a range of properties, Fasulo said. And rising exchange rates are encouraging foreign investment in the United States, said Jeff Sweeney, president of the Orlando office of Grubb and Ellis/Commercial Florida.

“If I gave you $1,000 and told you you could go to London and buy $1,500 worth of stuff because of the exchange rate, you’d be a happy shopper,” Sweeney said.

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