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Sandcastle

Beach Fanatic
Jan 6, 2006
343
10
81
Tallahassee, Florida
Market woes a matter of perspective

For international chain Engel & V?lkers, Florida has never looked better
By MICHAEL POLLICK
michael.pollick@heraldtribune.com
One of the hottest real estate outfits in Europe is moving into Florida, cherry-picking choice U.S. sites, including Southwest Florida, to ensure an unending supply of high-end properties to Europeans flush with euros and pounds.

After making a name for itself on the Continent, the Hamburg, Germany-based Engel & V?lkers plans to open hundreds of its "property shops" aimed at well-heeled clients.

It is going into the Hamptons on Long Island and Hyde Park, the upscale neighborhood in Tampa. A store on Main Street in Sarasota is also in the works, adding to the company's 270 residential property "shops" worldwide.

Within the next decade, Engel & V?lkers aims to open at least 200 offices in Florida.

That goal is in stark contrast to today's general view of the state and national real estate market, but speaks volumes about the long-term potential for Florida property.

Keen to satisfy wealthy European clients whose euros and pounds give them immense purchasing power in the struggling U.S. market, Engel & V?lkers is pushing forward as other firms are retrenching. The company is moving in despite all the talk of the crisis in sub-prime mortgages, high foreclosure rates, people "upside down" in their two-year-old home purchases and sagging home sales.

Timo Khammash, the Engel & V?lkers executive driving the push into Florida, has worked for the company for more than a decade and has relatives in Sarasota -- he even attended Sarasota High School for a few months.

He shrugs off the current state of the market.

"We had more and more of our clientele asking us, 'Why aren't you here?'" he said.

His headquarters is in Naples, but Khammash does laundry in Sarasota. He is one of three managers on the road six days a week courting potential franchisees.

Brand identity

When they opened the doors to their Punta Gorda property shop in October, Martin and Hilde Block, along with partner Greg Loomis, became the first Florida franchisee of Engel & V?lkers.

They also are setting up a storefront on Main Street in Sarasota.

Like the Engel & V?lkers shops from Argentina to Dubai, the downtown Punta Gorda store is decked out with white wood trim on the outside, giving it somewhat of an old-world look.

Inside, the store is modern and uncluttered, with furniture that is predominately white.

Just as consumers are brand-conscious in picking restaurants and coffee shops, Engel & V?lkers executives think they can train potential customers to be brand-conscious in picking a real estate firm, and Block says that brand loyalty is already paying off for him.

The Punta Gorda office is preparing for a visit from a German woman living in Rio De Janiero who is interested in buying a Sarasota-area home. She called the Engel & V?lkers agent she knew in Germany, who quickly referred her to the Punta Gorda office.

Since she is a past client, the referral package included not just her name and the properties in which she expressed an interest, but also a customer number.

"We know who this person is before they even come in the door," Dailey said. "We know they can afford it. We know what their tastes are. We know what their status is within their community, and whatever else we are supposed to be sensitive toward."

At Engel & V?lkers, the system and the approach to service is paramount. All agents receive the same training and are expected to use it to provide clients with a consistent experience. They use identical software, both for keeping track of clients and for making and getting referrals from the other shops.

"If we sell the house to someone referred to us by the property shop in Prague, a percentage of our earnings goes to that shop," Martin Block said.

Pounds of euros

The U.S. dollar has been in a gradual decline since the beginning of the decade, especially compared with currencies such as the euro and the British pound.

While that is bad for Americans, eroding their global purchasing power, it makes U.S. properties look absolutely juicy to Europeans.

For them, the primary competition for a piece of Florida beachfront might be coastal Spain.

There, real estate has appreciated strongly and "there are no currency discounts," for European buyers, said Lawrence Yun, senior economist of the National Association of Realtors.

In July, the dollar hit a 26-year low as measured by the British pound, and an all time low against the euro. It takes roughly $1.37 to buy a euro, and $2.05 to buy a British pound.

"From a British point of view, Florida real estate is selling at a 40 percent discount," Yun said during a recent trip to Southwest Florida.

Dailey, the Engel & V?lkers franchisee in Naples, knows full well the impact of the currency factor.

"In many cases, people from Europe or Great Britain can buy a million-dollar beachfront property for, in essence $500,000, when you consider the exchange rate discrepancies and the soft market," Dailey said.

"They are more bullish on us than we are."

_______

Staff writer Stephen Frater contributed to this report.
Last modified: August 06. 2007 4:23AM
 

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
.
Buying Florida Real Estate--So Simple, Even a European Can Do It!

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Last edited:

goofer

Beach Fanatic
Feb 21, 2005
1,165
191
This is what I have been talking about for over a year. Declining $ = real estate bargains for foreign buyers.
 

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
This is what I have been talking about for over a year. Declining $ = real estate bargains for foreign buyers.

Declining real estate values + declining $ = Not so good investment for foreign buyers

Purchase $400,000 <overpriced> condo = 291,970 Euro (@ 1 Euro = $1.37)

Condo price falls to $350,000 = 255,475 Euro (@ 1 Euro = $1.37)

Bernake lowers Fed Funds rate 50 basis points--dollar tanks (@ 1 Euro=$1.45)

Sell condo for $350,000 and convert to Euros = 241,380 Euro

Loss on "investment" = 50,590 Euro ($73,355) not including carrying costs.

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dsilvar

Beach Fanatic
Jan 12, 2006
307
0
66
Miramar beach
Declining real estate values + declining $ = Not so good investment for foreign buyers

Purchase $400,000 <overpriced> condo = 291,970 Euro (@ 1 Euro = $1.37)

Condo price falls to $350,000 = 255,475 Euro (@ 1 Euro = $1.37)

Bernake lowers Fed Funds rate 50 basis points--dollar tanks (@ 1 Euro=$1.45)

Sell condo for $350,000 and convert to Euros = 241,380 Euro

Loss on "investment" = 50,590 Euro ($73,355) not including carrying costs.

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Now go forward a "few" years.....

Condo price goes up...$450,000 and euro falls to even money.

Lots of profit for das European..yawhol?
 

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
Now go forward a "few" years.....

Condo price goes up...$450,000 and euro falls to even money.

Lots of profit for das European..yawhol?


You forgot to add "Once Upon a Time" to the above scenario.


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Last edited:

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
Just like you note that real estate prices cannot go up forever, I would say that they cannot go down forever. ;-)


But it can feel like forever...especially if there is negative cashflow on an investment. ;-)


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