Weak dollar makes Atlanta a good buy for overseas investors

Weak dollar makes Atlanta a good buy for overseas investors

By JULIE B. HAIRSTON
The Atlanta Journal-Constitution
Published on: 02/08/08

Canadian real estate investor Beau Jarvis came to Atlanta by way of Hong Kong.

Representing Onni Group of Companies, one of western Canada's largest developers, Jarvis encountered Kerman Haynes, president of Atlanta-based InterConnect Worldwide, last fall at a Hong Kong trade conference.

What Haynes told him about metro Atlanta's real estate market piqued his interest enough to prompt a recent visit to tour available properties.

Investors like Jarvis are helping to buoy Atlanta's real estate market in the tough 2008 economic climate. Increasingly, as U.S. buyers struggle under the weight of a slowing economy, marketing executives are searching the globe for potential customers.

Haynes, representing a range of U.S. developers, many of them in Atlanta, spent almost two months participating in trade shows in the Middle East and Asia making connections with international buyers like Jarvis. His company provides a range of services for investors who want to buy residential real estate in the United States.

Despite slowed sales and an oversupply of unsold homes, Atlanta's home prices are showing only a 2 percent decline, ranking it fifth among metro markets nationwide for price stability.

That stability, and the promise of future growth, is attracting a meaningful share of foreign investment.

In a 2007 study, the National Association of Realtors estimated that about 3 percent of all residential real estate transactions nationwide involved international buyers.

And properties in the South dominated their investments. Almost half, 49 percent, of foreign investment in U.S. residential property is in the South. The West follows in popularity at 31 percent.

Florida topped the list of states favored by international investors at 26 percent. California and Texas followed at 16 and 10 percent respectively. Georgia, with 2 percent, ranked ninth among the states for foreign investment in residential real estate in 2007, according to the Realtors' study.

Weak dollar, strong buy

Although he represents Atlanta properties including Trump Tower, Atlantic Station and the W, Haynes also has clients in Los Angeles, New York, Las Vegas and Florida.

The weak dollar has made American properties popular among global investors, he said. And Atlanta ranked high in investor interest at Asian trade shows, eclipsed only by Los Angeles, according to Haynes.

"What made a huge difference for Atlanta ... is the fact we have big-name, global real estate players here," Haynes said.

Names like Trump and W sell well among foreign buyers, Haynes said, because they are known and trusted. AIG, which owns Atlantic Station, also invokes worldwide recognition.

Some of Atlanta's foreign real estate investors buy in bulk, such as clusters of condo units or whole floors of buildings, but others make single-unit purchases to be rented or used as a base for U.S. travel.

"They're very educated on what's happening in our market right now, so they know that now is the opportune time to invest," Haynes said.

Although Onni, which has holdings in Mexico and Vietnam, has resisted investment in U.S. properties in the past, Jarvis said the company now thinks the time may have come to add some American properties to its portfolio.

"Our [Canadian] dollar is stronger now, so it makes more sense," Jarvis said.

He came to Atlanta on Feb. 1 during a tour of U.S. markets the company is interested in. Those interests also include Miami, San Diego, San Francisco, Los Angeles, Denver and Phoenix.

Jarvis surveyed the city skyline from Horizon, a new Marietta condo built by Wood Partners. Wood's Southeastern Director Mark Randall directed the tour as Haynes and executives from The Marketing Directors offered additional support.

"It's not as overbuilt as some of the places I'm visiting," Jarvis said after looking over units ranging in price from $240,000 to $850,000. "The fundamentals here look good. I can say with confidence we'll be back."

U.S. is "on sale"

New York attorney Joseph Forte also spends his time helping foreign investors overcome legal, financial and cultural barriers to buying American assets. He said the weak dollar and declining home prices are causing a stir overseas.

"For most Europeans, especially people in the [United Kingdom], the United States is on sale," Forte said. "It's like buying stuff for 50 cents."

In addition to attractive prices, Forte said foreign investors are attracted to American political stability and the transparency of its laws on property ownership.

The Realtors' study drew a similar conclusion.

"The U.S. market contains a large supply of real estate," wrote Lawrence Yun, senior economist for the Realtors. "It is also fairly easy to purchase a home in this country; the U.S. does not restrict or scrutinize most property purchases by foreigners, as happens in other countries. There are few barriers to owning a property."

The Olympics put Atlanta on global investor's radar for the first time, Forte said, and when potential buyers arrived to look it over, they found a lot to like: an international airport with a large selection of intercontinental flights, a diverse economy, a wide array of property types and styles and an increasingly sophisticated cultural infrastructure.

"Atlanta is a much more cosmopolitan place [than before the Olympics] and it is the economic heart of the southeastern part of the United States," Forte said.

Dutch auction

Dutch businessman Ewoud Swaak sees opportunity in metro Atlanta's declining home sales. His company, Westplan Investments, is organizing a $40 million fund created by investors from The Netherlands to buy local repossessed development lots from lenders.

Swaak's plan calls for the fund to hold the land until the market recovers, when the discounted lots will again begin to reclaim their value.

"We will just have to wait and sit on it," Swaak said. "I think the market will come back."

His Dutch investors are attracted to Atlanta's open spaces, warm climate, friendly people, growing cultural life and accessible international airport.

"We think it will continue to grow despite its infrastructure challenges," Swaak said, referring to metro Atlanta's ongoing efforts to ease traffic gridlock and manage its water resources.

The Realtors' study suggests that foreign investment in U.S. real estate is likely to grow, especially as the housing slump and weak dollar make American markets a bargain-hunter's stalking ground.

"While U.S. housing markets are no longer performing at record-breaking levels, U.S. real estate is still considered a prime investment opportunity for foreign buyers and a 'safe haven' in which to put their money," the study said.

William McDaniel | Commercial Managing Broker
Re-Source Realty Brokers, Inc.
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I specialize in commercial  transactions and representing professionals in the purchase and sale of homes.   With more than 30 years of legal experience, and 17 years of Brokerage, I can get the job done. Emory University (1968), University of Georgia School of Law (1973). Member, Georgia Nar Association, National Association of Realtors, Georgia Association of Realtors, Atlanta Board of Realtors, Atlanta Commercial Board of Realtors, FIABCI (International Association of Real Estate Professionals), AGREE ( Association of Georgia Real Estate Exchangers,) Georgia Association of Real Estate Investors, National Association of Property Managers.