• Critics of Single Family REITs: They See Much Money to be Made, But Distrust Benefits In the Long Run; and
• More on Single Family Rental REITS: Is Investing in Florida's Distressed Single Family Housing The Next Big Thing? Maybe.

By October 2012, experts like Maxwell Drever were opining that the Florida real estate market was "terrific" and that Drever was planning on investing significantly in Florida within the short term -- to the tune of $100 million.  Drever will do so via Concierge Asset Management, which he helms as its CEO; CAM focuses on three kinds of real estate investment now -- one of those three are REITs.  

Real Estate Investment Trusts Are Bringing In Double-Digit Returns to REIT Investors

American Capital Agency (for details, click above image) returned a dividend yield of 15.60% according to Motley Fool's study.

Of course, the investor who gets that REIT dividend must report that dividend at the higher tax rate (FIT rate).  Who's gonna get dividends?  Motley Fool provides a list of the 25 highest-yielding REITs that have a market cap of $1 billion+.  The top five are:

1. American Capital Agency
2. ARMOUR Residential REIT
3. American Capital Mortgage Investment
4. Annaly Capital Management
5. Two Harbors Investment

Motley Fool's bottom line:  REITs these days are offering "seemingly irresistible yields" but they may be "ticking time bombs."  

With yields ranging from 12.6 at Two Harbors and 15.20 at American Capital Agency, those are very tempting investments, indeed.  Time bombs?  Bigger question for real estate investors to answer.  

Venezuelan Bolivar 6.3:1

In Venezuela, for example, the Venezuela bolivar has been devalued 5 times since 2004 and in February 2013, the bolivar fell to 6.3 bolivars to 1 U.S. dollar.  What happens now, after the recent death of Hugo Chavez, remains an issue: Chavez ordered the February devaluation to combat a growing budget deficit in his country.

Argentina's Corralito

In 2001, Argentina devalued its currency as part of an overall economic plan to avoid bank runs and other big, bad things from happening in an economic situation that many are currently comparing to what Greece is experiencing today.  The Argentine plan, called the Corralito, devalued the peso and by 2002, it had fallen from the fixed rate of 1 peso to 1 U.S. dollar to an exchange of 4 pesos to 1 dollar. 

Brazilian Real 2:1

Meanwhile, in Brazil, economists are looking at the Brazilian Real as being akin to the Australian dollar as being overvalued and at least one leading analyst is concerned that this means big trouble for Brazil in 2014 unless something is done quickly in Brazilian currency policy.  Right now, the Brazilian real has fallen from a high in 2011 to a present exchange of 2 reals to 1 U.S. dollar.  

Latin American Economies Fluctuations Provide Incentive for Florida Builders

Currency exchange rates, and their correlated inflation cycles, are just a few examples of how the national economies in Central America and South America are fluctuating in ways that are influencing land developers in those countries to look elsewhere to build.

Like South Florida.  

As we've discussed in the past, there has been growing interest over the past few years of international investors in Florida real estate developments.  Consider our past posts for details:

• Mexican Investors Doing Real Estate Deals in Florida is Not a Surprising Trend
• Foreign Investors Making More and More Real Estate Deals in Florida: A Trend That Should Continue into 2011

However, as covered by Reuters this week, more and more foreign development is happening in Miami and the rest of South Florida.  From their coverage, the following examples:

• Argentine developer Jose Luis Melo and the Melo Group real estate company are building a 17-story, 98 unit condo tower on a $1.4 million parcel of land here in Miami;
• Latin American developers are tied to around 30% of newly announced South Florida residential projects; and   
• Consultatio, one of Argentina's biggest real estate developers, is developing two sites in Miami. One has already begun: a 154 unit condo tower in Key Biscayne.  They had purchased the land for another big project in a huge deal (one of the biggest last year) for Miami Beach, but the company has yet to break ground on that Bal Harbour tract. 

New Report Shows Housing Demand Among Immigrants to Grow Nationwide

WASHINGTON, DC (March 6, 2013) – Homeownership and rental demand of foreign-born households will continue to increase as growing numbers of immigrants settle longer in the United States, according to a new report sponsored by the Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA).

The report entitled 'Immigrant Contributions to Housing Demand in the United States: A Comparison of Recent Decades and Projections to 2020 for the States and Nation,' constructs a demographic-based projection through 2020 of the growth in homeowner and renter households headed by immigrants in the states and regions of the nation. The report was prepared by Professor Dowell Myers and Senior Research Associate John Pitkin of the Population Dynamics Research Group at the University of Southern California School of Policy, Planning, and Development and sponsored by RIHA, MBA’s independent research foundation. 

Key findings from the study include: 

• The volume of growth in foreign-born homeowners has increased each decade, rising from 0.8 million added immigrant homeowners in the United States during 1980¬-1990, to 2.1 million added in 1990–2000, to 2.4 million added in 2000–2010, and is projected to rise further to 2.8 million in growth in the current decade (2010–2020). 

• Foreign-born ownership demand comprised the majority of all growth in homeownership in the established gateway states of California and New York. From 2000–2010 immigrants accounted for 82.2 percent and 65.1 percent, respectively, of the growth in homeowners in those states. In that decade immigrants also accounted for the major share of net growth in owner households in Illinois, New Jersey, Pennsylvania, Massachusetts, Ohio and Michigan. 

• Aggregate increases in foreign-born renter households peaked in the 1990–2000 decade at 2.3 million, slowed to a net of 1.6 million in 2000–2010, and are projected to be 1.3 million in the current decade. 

• Between 2010–2020, immigrants nationwide are projected to account for 32.2 percent of the growth in all households, including 35.7 percent growth in homeowners and 26.4 percent growth in renter households. 

• Between 2010–2020,foreign-born ownership demand is projected to remain a majority of the growth in six states: California, New York, New Jersey, Massachusetts, Connecticut and Michigan. 

• Foreign-born homeownership demand rose most dramatically in the newer destination states. For example, in Georgia and North Carolina, immigrants accounted for 34.1 percent and 24.8 percent respectively, from 2000–2010, nearly triple immigrants’ shares of homeowner growth of the 1990s in those states. 

• Despite the projected rise in immigrant housing demand, the immigrant share of all demand growth is somewhat reduced in the current decade as compared to the last, because a larger increase is projected among native-born homebuyers. The combined projected growth of nearly 8 million added homeowners is much greater than the 5.1 million growth of the last decade. 

• In the current decade, foreign-born renters comprise over one third of projected total growth in seven states: California, Washington, D.C. metro area, New York, New Jersey, Massachusetts, Connecticut and Illinois. 

“Immigrants are an important and growing source of demand that has bolstered housing markets in recent decades,” said Professor Dowell Myers of the Population Dynamics Research Group at the University of Southern California. “Growth in housing demand in recent decades has been more stable among foreign-born than native-born households. This is because increases in native-born demand have been subject to large swings in the size of cohorts reaching ages 25 to 34, the most common age of entry to the housing market. In contrast, inflows of new immigrants have not varied widely in recent decades, and in addition the strong upward mobility of prior immigrants, has led to continued increases in aggregate demand for home ownership.”

“Rising numbers of foreign-born households are driven by the continued increases in homeownership rates achieved as immigrants settle longer in the United States. For example, among the cohort of Hispanics who arrived in the United States during the 1980s, homeownership rose from just above 15 percent in 1990 to nearly 53 percent in 2010 and is projected to rise to above 61 percent in 2020 when the cohort will have resided more than 30 years in the United States,” said John Pitkin Senior Research Associate of the Population Dynamics Research Group at the University of Southern California. 

“As the housing market continues its recovery, it is important to understand the demographic trends which are likely to impact housing demand in the years ahead,” said Michael Fratantoni, RIHA’s Executive Director. “This study provides information for lenders, builders, and policymakers regarding the future shape of housing demand, which the authors clearly show will be substantially impacted by the housing choices of foreign-born households, whether they are renters or homeowners.” 

To read the report, click on the italicized title, above; the Executive Summary can be read here.

In fact, Venezuelans have been leaving their homeland for new lives in Florida for many years now: for over a decade, South Florida - and particularly the Miami area - has been a welcoming community for people wanting to escape from Chavez's Venezuelan government. 

Why Miami?  

Venezuelans have long felt Miami to be welcoming - its widespread Latin American influence and the large number of people who speak Spanish fluently, together with a growing Venezuelan population have made our area one of the main relocation targets of Venezuelans for many years now.  

This week, the Sun Sentinel reported on how many Venezuelans have indeed come to the Sunshine State to build new lives in an article entitled, "Venezuelans increasing their presence in South Florida's real estate market."  

As referenced in the article, the United States Census reports that within Broward County and Palm Beach County (together with Miami-Dade, the three counties that form the South Florida Metropolitan Area), between 2000 and 2011, the number of Venezuelan-born residents more than doubled.  

What happened?  

Hugo Chavez was first elected in 1999, and Venezuelan's educated population began looking for alternatives, particularly after Chavez rewrote the constitution. Other factors also played a part:  skyrocketing crime, economic crises (including a devalued currency), and other issues of instability have contributed to the influx of Venezuelans into the Florida area.  

Last fall, Caracas had become known as the "city of departures" among Venezuelans as citizens were fleeing the capital due to growing dangers there.  Kidnapping is a profitable business there.  Murder rates in Caracas are said to be higher than some areas of open war.  

Venezuelans in Miami are Buying Lots of Real Estate

Venezuelans are making more foreign real estate purchases in Miami today than any other country according to the Miami Association of Realtors.  According to their records, Venezuelans are buying 16% of all international real estate purchases in our area.

Which is good news for Miami not only for the influx of revenue into the local economy.  The folk that are relocating to Miami from Venezuela are highly educated, professionals and entrepreneurs and their families.  Not only are they bringing their cash to real estate closing tables, they are also bringing their ability to contribute to our culture and our communities in many other ways.  

What's next?

In February, Venezuela gutted its authorized system for foreign exchange of the nation's currency, the bolivar, as well as devaluing the bolivar by 32%.  This has serious repercussions for Venezuelans and their ability to move their funds out of Venezuela and into more stable financial institutions in other countries as well as their ability to purchase real estate here. 

Meanwhile, the Venezuelean government issued an official report this morning that President Hugo Chavez was facing serious health issues and his condition was characterized as "delicate."  

Which means that the instability of Venezuela is expected to continue, if not escalate, and those wishing to expatriate from their homeland to Florida and elsewhere may be doing so sooner rather than later.  Which is good news for Florida.

For several years, foreign buyers of Miami real estate either had to deal with their lenders in their home countries or bring cash to the closing table.  For many foreign buyers, particularly those from Latin America, cash buys of condos and other Miami real estate was not that strange: in their local economies, cash buys are much more commonplace than they have been in the United States.  

For more details, check out our earlier posts on growing number of foreign cash buys of homes in South Florida including:

• Florida International Real Estate Investment Soars in 2012 Media Coverage: Foreign Investors' Cash Buys in Miami Real Estate Generating a Growing Excitement; and
• Venezuelan Capital Flight to South Florida as Venezuelan Nationals Consider Relocating to Miami Area After Hugo Chavez Re-Elected

U.S. Banks Opening Lending to International Buyers of Residential Real Estate 

In 2013, it appears that American lenders are discovering a profit niche in offering mortgages to foreigners who are interested in buying U.S. real estate.  Among them, First Choice Bank, Citi, and Deutsche Bank.  

True, these lenders are dipping their toes into this market: they are limiting the properties they'll consider to luxury homes (high dollar buys) and they're tending to go with borrowers with whom they've had a past banking relationship.

Addressing the risk involved in loaning significant sums to foreign borrowers, these mortgages also face additional requirements, things like requiring up to half the purchase price as a down payment on the deal and requiring the borrower to open an account at the lending bank where a minimum balance equal to one or two years' mortgages payments must be maintained.  

South Florida Residential Real Estate Target of Foreign Real Estate Buyers

According to the National Association of Realtors in their Research Division's report "Profile of International Home Buyers in Florida 2012," the most popular places for international real estate investment in Florida are:

1. Miami / Miami Beach
2. Fort Lauderdale
3. Orlando - Kissimmee
4. Brandenton - Sarasota - Venice
5. Palm Beach
6. Cape Coral - Fort Myers
7. Tampa - St. Petersburg - Clearwater.

Their report also revealed that 82% of these foreign buys of Florida real estate were cash transactions.  European and Latin American buyers tend to buy higher priced homes and condos; Canadians buy a lot of Florida property, but they tend to buy more reasonably priced properties (between $150-200,000).

This month, the Miami Association of Realtors released numbers regarding foreign buyers of Miami real estate, and in the Miami area, 90% of international buyers of Miami residential property was in cash last year.

What will happen as these foreign buyers with the ability to buy properties in cash have the opportunity to purchase Florida real estate with an American mortgage?  One can assume that the number of foreign sales of residential real estate will jump - and this is good news for Florida's economic future.  

From Houses.com:  Average prices in 6 Miami-Dade areas specifically, saw very high increases when compared to the end of last year....While international buyers come from all over the globe, Canada, China, Mexico, India and the United Kingdom account for 55% of all transactions in the U.S.... Florida is one of four states that comprise 51% of all international transactions in the U.S.

This week, Goldman Sachs' analysts Hui Shan and Jari Stein are forecasting home sales in the United States will continue to rise over the next several years.  They are giving numbers here:  

• 5.2 million in 2013;
• 5.7 million in 2016.

Goldman Sachs is also predicting unemployment to drop (prediction: 6.2% by 2016) and home prices to rise (17% by 2017).  

The National Association of Realtors Shows Rising Home Sales

Meanwhile, the National Association of Realtors reports that in January 2013, home sales rose and the NAR's chief economist, Lawrence Yun, is explaining this as being the result of a growing number of sellers and a steady rise in home prices:

"Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller's market in much of the country."

According to the NAR, the total existing home sales (seasonally adjusted annual rates) are:

• January 2013 4.92 million 
• December 2012 4.90 million 
• January 2012 4.51 million 

Skeptics Don't Agree with Goldman Sachs

Of course, not everyone agrees with these nice, juicy housing forecasts.  Yale economist Robert Shiller is one voice of skeptism here, telling CNBC interviewers that things are not that clear on the housing horizon.  Maybe housing will rise, but Shiller is of the opinion that it's not that certain (yet).

And as we all balance these opinions and evaluate things, there is that about-face that Goldman Sachs did last March, when Hui Shan announced that the December 2011 predictions were not panning out and that the predicted housing recovery wasn't happening then, after all.  

How to value Goldman Sachs' latest report?  Well, maybe the investment banking research hasn't always been accurate - but Goldman Sachs has been around for many, many years - withstanding many economic valleys.  There's merit in considering what their research team is reporting this week.

Image:  Marcus Goldman (1821 - 1904) one of the founders of Goldman Sachs.

Turning Foreclosures into Rental Investment Properties in Bulk Buys

We've been monitoring investors, both foreign and domestic, coming into Florida to buy foreclosures for investment purposes - including these volume purchases where companies are counting on a strong rental market here in hard-hit Florida.  For details, see our past posts where Beezer Homes out of Atlanta was buying up homes here in Florida for Rental REITS back in May 2012, and by August 2012, real estate experts all over the country were opining that Rental REITS were the next big thing in real estate investment.

Heck, back in August Warren Buffett was quoted as thinking that buying up all these foreclosures, fixing them up a bit, and then renting them out for a profit was a smart thing to do right now, given the depressed housing market in the United States generally.  And there's no place in the country that's got more bargain buys in real estate right now than the State of Florida.   

In the Sun Sentinel article, other names pop up as investment groups buying in Florida, adding their names to biggies like Beezer and American Residential Properties.  These include:

1. Waypoint
2. American Homes 4 Rent
3. Invitation Homes (Blackstone Group) 

Investor as Landlord - Will This Work in the Long Term? 

One of the criticisms of these rental REITs is the problem of daily duties that must be met by a landlord.  There's upkeep.  There's dealing with tenant squabbles.  There's slow pays and sometimes, the need to start eviction proceedings.  Toilets will need repair and trees will need trimming.  Will the investor find these cumbersome in the future and regret taking on the role of landlord?  Some have thought so.

However, as the wave continues to hit the Florida market, interesting things are emerging that speak to the success of these ventures in the future.  Waypoint, for example, is offering tenant incentives called "Waypoints" that give the tenant "points" for things like keeping up the property, paying the rent on time, and participating in classes on finances.  

What do these Waypoints provide?  Not cash. Instead, as explained by Waypoint on its website:

As a resident in our Lease Plus Rewards program, you have options when it comes to putting your Waypoints to use. During the course of your lease, you can redeem Waypoints for a variety of home customizations. If you're interested in pursuing homeownership, Waypoints can be put to use at the end of your lease as a home purchase credit - or simply redeem your Waypoints for cash back. With our Lease Plus Rewards program, you have the flexibility to make the most of your rental experience.

With creative ideas like Waypoints, these rental investments look to be good deals in the long run for both the tenant as well as the investor.  

In this latest suit, filed around a week ago in Kentucky state courts, Kentucky is alleging that MERS and its parent company, MERSCORP Holdings, Inc. violated Kentucky law - allegations that have come about after a lengthy Kentucky Attorney General investigation.  There's an intent prong to the claims being brought by Kentucky, too: the lawsuit alleges MERS acted intentionally to avoid paying these fees so as to unjustly enrich MERS at the expense of consumers' pocketbooks and Kentucky's coffers.

In essence, the Kentucky argument is that MERS did not record mortgage assignments with Kentucky County Clerks as mortgages were sold (transferred) between banks.  Kentucky charges a twelve dollar ($12) fee for each of these recordings in the county real estate records.  The fees are owned by the Commonwealth of Kentucky.

Those $12 fees for each of these assignments adds up to lots of damages being alleged by Kentucky Attorney General Jack Conway. 

"Kentucky's statute is clear. It requires assignments be recorded with County Clerks, and MERS directly violated that law by creating this system that provides no public record of sales or transactions and deliberately circumvents paying recording fees to states," General Conway said. "The process makes it difficult for consumers to access data to find out who owns their loans, and the Commonwealth is ripped off when it comes to recording fees."

You can read the entire complaint filed by Kentucky against MERS and MERSCORP here.  

MERS Comes Back Swinging

MERS isn't new to the ballgame here, and the company was quick to issue a news release slamming the Kentucky claims.  

Here is the MERS' released response to the Kentucky lawsuit:

“There is no merit to the allegations leveled at MERS by Kentucky Attorney General Jack Conway in today's news conference. All MERS mortgages are registered in the local land records and all recording fees are properly paid. The MERS® System's role in the mortgage industry has reduced chain of title issues, provided efficiencies through e-commerce, and resulted in lower mortgage borrowing costs. Our business model is straightforward and transparent, and MERS role is clearly spelled out in the contract between borrower and lender. MERS® System data is not used by servicers to make loan modification, refinance or foreclosure decisions. 

In Kentucky, all foreclosures are judicial foreclosures and as such are processed by the court system. MERS’ standing as mortgagee has been upheld in –In re Jessup, No. 09-5229 (Bankr. E.D. KY 2010). MERS and CitiMortgage’s Motion for Summary Judgment was granted and the court held that “the language in the Lender’s own instrument is sufficient to identify MERS as [the mortgagee].”

If the internet is any indication of interest in real estate purchasing and investment - and most real estate brokers argue that online searches are a valid indicator of buyer interest (not just where, but in what kinds of properties) then Florida real estate developers and those selling real estate here in Florida should take note of Trulia's latest study, detailed here in our News Release of the Week.

February, it seems, is the hottest month for Florida real estate buyers to be interested and investigating property here:

TRULIA IDENTIFIES STATE-BY-STATE SEASONAL REAL ESTATE SEARCH PEAKS AND VALLEYS

Bucking Typical Springtime Real Estate Season, Online Home Searches Highest in February in Florida and in August in Montana and Oregon

SAN FRANCISCO, January 30, 2012 – Trulia (NYSE: TRLA) today published the findings from the Trulia Real Estate Search Report, which tracks and analyzes the online search behavior of U.S. house hunters. Based on all home searches on Trulia from 2007 to 2012, this study provides the inside scoop on the seasonal peaks and valleys in real estate search activity across all 50 states. To see the seasonal pattern, we used a seasonal adjustment model to strip out the upward trend in our search traffic, to reveal whether a state’s search activity in each month is above or below the annual average for that state.

Online House Hunting Hot in March and April, Cold in December

After the holidays, prospective homebuyers and renters typically begin or renew their home search at the start of a new year. At the national level, online real estate search activity picks up in January and reaches its peak in March and April, after stripping out the upward trend from Trulia’s traffic growth over time. Following a slight dip in May, a second peak occurs during the summer months of June and July. As the year ends, home searches slow down, hitting their lowest level in December.

Home Searches in Hawaii, Florida, Montana and Oregon Peak Off-Season

While most online home searches happening at the state level correspond with typical seasonal patterns, local markets follow their own rhythms. For example, in January, search activity in Hawaii and Florida is more than 10 percent above each state's annual average, but almost 10 percent below the annual average in Maine. Meanwhile, summer is when searches peak in the South, and a few states in the Northwest and Northeast. The last two states to peak are Montana and Oregon in August. By October, every state is below its annual average of search activity, and in December, every state is 10 percent or more below its annual average.

When Online Real Estate Searches Peak

Month / U.S. State

January

Hawaii

February

Florida

March

Arizona, California, Delaware, Georgia, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Pennsylvania, Virginia, Washington

April

Colorado, Connecticut, District of Columbia, Illinois, Indiana, Kansas, Minnesota, New York, North Dakota, South Dakota, Utah, West Virginia, Wisconsin

May

*

June

Mississippi

July

Alabama, Alaska, Arkansas, Louisiana, Maine, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Wyoming

August

Montana, Oregon

September

*

October

*

November

*

December

*

* Indicates that real estate search activity does not peak in any state during this month.

PRE-APPROVED QUOTES

“Home-search activity swings with the seasons in every state. Buyers and sellers can use these ups and downs to their advantage,” says Jed Kolko, Trulia’s Chief Economist. “Sellers looking for the most buyers should list when real estate search traffic peaks. Buyers, however, should think about searching off-season, when there is less competition from other searchers.

“Local weather patterns have a big impact on when people search for homes online. If it’s too cold or wet to check out open houses, people search less online,” says Jed Kolko, Trulia’s Chief Economist. “Search activity in warm-winter states, like Florida and Hawaii, peaks in January and February. But for most of the country, search traffic is highest in March or April, especially in regions where summer brings rain. In general, people search more online when it’s warm and dry outside.”

MULTIMEDIA

To view the full Real Estate Search Study, click here.

To view an interactive U.S. map illustrating the peaks and valleys of online real estate searches across the country, click here.

ABOUT TRULIA, INC.

Trulia (NYSE: TRLA) gives home buyers, sellers, owners and renters the inside scoop on properties, places and real estate professionals. Trulia has unique info on the areas people want to live that can't be found anywhere else: users can learn about agents, neighborhoods, schools, crime, commute times and even ask the local community questions. Real estate professionals use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyper local advertising services, social recommendations, and top-rated mobile real estate apps. Trulia is headquartered in downtown San Francisco. Trulia is a registered trademark of Trulia, Inc.

For further information: Daisy Kong, pr@trulia.com, 415.400.7391

Urban Land Institute Convenes Investors, Insurers and Public Officials to Explore Emerging Business Risks for Property in Coastal Regions 

For more information, contact Trish Riggs at 202-624-7086 

WASHINGTON (January 24, 2013) – The impact of climate change will play a greater role in shaping coastal development in the years ahead, influencing decisions on what is built and rebuilt, where and how it is built, and how it is insured and financed, according to insurance and real estate professionals speaking at a global policy and practice forum hosted by the Urban Land Institute (ULI). 

The increased frequency of property casualties associated extreme weather events, including severe hurricanes, tornadoes, floods, storm surges, and drought-fueled fires, as well as significant sea level increases are changing how property risk is valued, noted the panelists. The changes in both extreme weather events and risks are compelling the real estate industry to explore new development practices that implement adaptive measures that better protect both the built and natural environment. Increased climate risks are also raising awareness of the need for more investments to make existing buildings more energy efficient and reduce the carbon emissions associated with buildings. 

“For the real estate industry, the risk posed to urbanized coastal areas by climate change has become a global issue with dramatic local ramifications. It’s one of several drivers – along with economic, demographic and societal changes – that are necessitating a different approach to coastal development in the twenty-first century,” said ULI Chief Executive Officer Patrick L. Phillips. “Whether necessitated by reasons related to market demand or environmental concerns, rebuilding presents an opportunity to reduce risk in the future, enhance livability, restore natural resources, and increase community resilience.” 

The forum, “Resilience and Risk in Coastal Regions,” held January 16-17 in Washington, D.C., included representatives of the federal government, local governments, investors, property owners and leading members of the insurance and reinsurance industries.Among the panelists’ observations and predictions: 

• Mark-to-market pricing could be replaced by “mark-to-future” pricing that reflects external factors such as a community’s sea wall height and internal factors such as whether the building mechanical systems are elevated in a building. “This century will be about high volatility and huge uncertainty…Planning will be stepped up for events related to climate change, and buildings will be assessed for what will break.”
• Population growth and the rise of the global middle class is accelerating the urbanization of coastal cities worldwide, increasing their vulnerability to high losses of life and property damage from catastrophic storms.
• In the U.S., compromised infrastructure systems are adding to the risks faced by these rapidly growing areas. “Reinsurers and insurers are facing increasing losses around the globe, and what it boils down to is how to deal with uncertainty going forward.”
• Risk assessments are being adjusted to account for the fact that storms originating off the coast are increasingly having a major effect on geographic areas far beyond the initial landfall point, reaching places where buildings are not constructed to the same standards as those on the coast.
• Several lessons resulted from Hurricane Sandy that can be applied to urban planning for the future: 1) Critical infrastructure (such as electricity grids) should be restructured to provide more individualized service on a block-by-block basis, so whole communities do not lose power at once; 2) Land uses need to be reevaluated, in terms of which areas should not be rebuilt or rebuilt differently; 3) Consideration should be given to elevating water and sewer systems to factor in sea level increases; and 4) a new system of infrastructure financing, such as an infrastructure bank, is needed to generate funds to upgrade and build more weather-resilient systems.
• The carbon footprint of buildings will increasingly affect property values and the availability of financing. Tenants seeking to lower their own carbon emissions will choose to lease space in high performing buildings, even if the rent is more expensive. “Carbon is the new asbestos for real estate; and it’s on everyone’s balance sheet.”
• Property insurance underwriting is being driven by the desire for market share, which is causing many companies to be heavily exposed in areas inadequately prepared to withstand natural and manmade disasters. More programs are needed to incentivize cities to implement adaptation measures.
• The costs of business interruption are often far higher than those for replacing properties and repairing damage, but business interruption is seldom reflected in policy coverage. In addition to the vulnerability of their own locations, companies need to gauge the risks posed by the locations of partners such as parts suppliers. As storms become more frequent and intense, long-term economic losses will eclipse property destruction as the major threat to urban prosperity.
• More and more coastal areas are being affected not just by major storms, but by “non-event” weather that is flooding heavily built-up shorelines. A more balanced approach is needed that reflects the likelihood of future damage (and thus avoids rebuilding in the most disaster-prone areas), but which also recognizes that coastal real estate is a key economic driver. One likely outcome: greater use of the waterfront as open space, which creates value for the entire community but can also act as a protective barrier to storm surges.

Observed forum keynote speaker Fred Krupp, president of the Environmental Defense Fund: “Finding solutions to climate change is not an easy path, but a necessary path. We must keep talking about these issues, because we have paid a heavy price for our silence.” 

About the Urban Land Institute

The Urban Land Institute (www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines.

###

Many were hoping that these Final FATCA Rules would not take effect until next year (January 2014) but no such luck.  Debuting last Thursday, the Final FATCA Rules are a done deal and basically they are requiring foreign financial institutions to report to the Internal Revenue Service of the United States any accounts on their books held by Americans that hold $50,000 or more.

Seems that the federal government is not willing to wait in waging its war against offshore tax evasion and these new rules are only a part of the U.S. fight against foreign tax shelters. Banks are targets, as well as individuals.

Consider this: just this month there was the guilty plea entered by the oldest bank in Switzerland in a case brought against it by the Internal Revenue Service in a New York federal district court.  Wegelin & Co. took the plea deal rather than go to trial on allegations that the Swiss financial institution worked with American clients to keep $1.2 billion in Swiss accounts and away from U.S. taxation.  The bank is no more: after this case and its fine of $57.8 million, Wegelin & Co. went out of business. 

Final FATCA Rules - Treasury Releases Its Own Synopsis

They've been on the runway for awhile now, and there's been much waiting to see what the final regulations regarding FATCA were going to look like and what they were going to do.  According to the Treasury Department, these FATCA Rules do the following: 

• Build on intergovernmental agreements that foster international cooperation. The Treasury Department has collaborated with foreign governments to develop and sign intergovernmental agreements that facilitate the effective and efficient implementation of FATCA by eliminating legal barriers to participation, reducing administrative burdens, and ensuring the participation of all non-exempt financial institutions in a partner jurisdiction. In order to reduce administrative burdens for financial institutions with operations in multiple jurisdictions, the final regulations coordinate the obligations for financial institutions under the regulations and the intergovernmental agreements.
• Phase in the timelines for due diligence, reporting and withholding and align them with the intergovernmental agreements. The final regulations phase in over an extended transition period to provide sufficient time for financial institutions to develop necessary systems. In addition, to avoid confusion and unnecessary duplicative procedures, the final regulations align the regulatory timelines with the timelines prescribed in the intergovernmental agreements.
• Expand and clarify the scope of payments not subject to withholding. To limit market disruption, reduce administrative burdens, and establish certainty, the final regulations provide relief from withholding with respect to certain grandfathered obligations and certain payments made by non-financial entities.
• Refine and clarify the treatment of investment entities. To better align the obligations under FATCA with the risks posed by certain entities, the final regulations: (1) expand and clarify the treatment of certain categories of low-risk institutions, such as governmental entities and retirement funds; (2) provide that certain investment entities may be subject to being reported on by the FFIs with which they hold accounts rather than being required to register as FFIs and report to the IRS; and (3) clarify the types of passive investment entities that must be identified and reported by financial institutions.
• Clarify the compliance and verification obligations of FFIs. The final regulations provide more streamlined registration and compliance procedures for groups of financial institutions, including commonly managed investment funds, and provide additional detail regarding FFIs’ obligations to verify their compliance under FATCA.

Other Experts Still Reviewing Final FATCA Rules For What They Mean to Clients

Experts are still reviewing the Final FATCA Rules released this week, but already there are reports that these Final Rules, while jiving with the proposed regulations for the most part, do have changes that seem to focus upon solving problems in administration of FATCA along with targeting specific areas of Treasury concern.  Expect more details over how the final FATCA rules are different from earlier proposed versions of FATCA Rules in the future.  

Differences that are already apparent include:

• Extensions (expansion of scope).
• Covered Financial Institutions (expansion of scope). 
• "Deemed compliant" (expansion of definition). 
• Changes in the interaction of U.S. with Intergovernmental Agreements (IGAs). 
• Diligence Procedures (changes made for identification and documentation).

For a detailed discussion of these differences, check out yesterday's analysis by Robert M. Kurucza at Mondaq.

Florida Venture Capital Investment in 2012: the Money Tree Report is Out

Which brings to what has been happening with investors around the country and their decisions regarding investing - specifically, investing venture capital here in Florida.  What's venture capital really?  Venture capital, according to Investopedia, involves:

Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.

And according to year-end money analysts' take on things, Florida didn't fare too well on enticing venture capital to the Sunshine State last year.  The National Venture Capital Association reports, in an analysis published as the "MoneyTree Report," together with Pricewaterhouse Coopers and using information and numbers from Thomson Reuters, that Florida had 34 venture deals last year.

Those 34 venture capital deals in Florida during 2012 brought $202.9 million to Florida business. The MoneyTree Report compares this to the previous year's total of $346.3 million from 55 venture capital deals.

Florida Venture Capital Funding Fell in 2012 (As Did the Nation as a Whole)

Florida took a hit in venture capital investment last year.  In fact, Florida ranked at one of its lowest points on the national venture capital investment scale, in comparison to other states, in 2012, according to the MoneyTree Report.  Florida was ranked no. 20 in 2012, down from a rank of no. 18 in 2011 - and having been in the top 10 venture capital states in past years - after venture investment dollars tumbled 35% for Florida in the past year.  

That's the news from this report.  (Click on the image of a Blue Florida to read the report online.)  Of course, the entire country faced a similar situation.  The United States as a whole saw a drop of 10% in venture capital investment dollars in 2012.  

Where does Florida go from here?  And what part of Florida fared best in 2012 Venture Capital? 

The bigger news here:  this is the first time that venture capital investment has dropped in the United States in three years.  What is happening to Florida is happening to the country as a whole.  Already, many pundits are warning for no one to listen to any voices crying out that the "sky in falling," as various reasons for the dip in venture capital investment is explained.  Some are pointing to Facebook's limp debut in the stock market last year; others are pointing to things like the ongoing budget fights in Congress.  

Meanwhile, within the State of Florida, it is interesting to note that Central Florida appears to have been the focus of much of the venture capital interest last year, a region that includes the Orlando / Lake Nona metroplex. 

Which states are most popular with venture capitalists, based upon 2012 numbers?  California is a strong number one ($15 billion in 2012); followed by Massachusetts; New York; Washington State; and Texas.  

Today's RealtyTrac Foreclosure Market Report explains one of the big reasons why international investment dollars are flooding into our local economy via all the foreign interest in buy real estate here.  Florida, according to RealtyTrac, led the entire country last year in the number of foreclosures began during the past twelve months.

The rating tallies any mortgage that received anything from a Notice of Default to final repossession and sale of the property.  According to RealtyTrac's analysis:

• 1 out of every 32 homes in Florida had foreclosure issues last year. 
• Florida foreclosures in 2012 were 50% higher than the number of foreclosures in 2011.  

From the RealtyTrac release, the chart shown below demonstrates that only one state, New Jersey, had more foreclosure activity in the country than Florida did in 2012.  According to Daren Bloomquist, vice president of RealtyTrac:

“2012 was the year of the judicial foreclosure, with foreclosure activity increasing from 2011 in 20 of the 26 states that primarily use the judicial process, and a judicial state — Florida — posting the nation’s highest state foreclosure rate for the first time since the housing crisis began,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile foreclosure activity continued to decline in 19 of the 24 states that use the more streamlined non-judicial foreclosure process, but there could be a backlog of delayed foreclosures building up in some of those states as well as the result of recent state legislation and court rulings that raise the bar for lenders to foreclose. 

“That could mean that although we are comfortably past the peak of the foreclosure problem nationally, 2013 is likely to be book-ended by two discrete jumps in foreclosure activity,” Blomquist added. “We expect to see continued increases in judicial foreclosure states near the beginning of the year as lenders finish catching up with the backlogs in those states, and another set of increases in some non-judicial states near the end of the year as lenders adjust to the new laws and process some deferred foreclosures in those states.”

Read the RealtyTrac January 2013 Foreclosure Market Report here.  From its release:

Florida, according to the article, is the current hot spot for these foreign buyers:  Canadians, Chinese, and other foreign investors are surfing Florida realty web sites to find condos and homes and town-homes to purchase.  And they are buying these homes sight unseen (except for photos, maybe a video tour). 

Looking to other media sources, it appears that foreign media coverage is concurring with AOL on this new trend in foreign investment.  A cursory review of international media coverage of foreign investment in Florida real estate found the following: 

• The Toronto Star reporting on Canadians facing off with Chinese investors in purchasing Florida real estate.  Both foreign real estate investment group, those in Canada and those in China, are finding Florida (particularly South Florida) a market where they can find great deals on properties in a place they consider to be safe as a long term investment location.   
• The Winnepeg Free Press writes on Canadians buying property in Florida, giving details on how Canadians who are foreign investors in Florida real estate need to be aware of things like property taxes here, how a power of attorney works, as Canadians are finding the "depressed" Florida real estate market a tempting place to buy a home far away from the cold Canadian winters.
• Great Britain's The Independent puts Florida right alongside Spain, various Caribbean islands, Italy, and France as popular places for Brits to put their real estate investment funds these days. Miami is cited as being a particularly "strong" market for foreign real estate investors.  The British article discusses "dirt cheap" properties being available now in Florida due to recent economic conditions.
• Finally, here in Miami, the Miami Herald reported earlier this month on foreign real estate investors coming to Florida and particularly South Florida to buy up local residential real estate. Using individual stories, including an English couple who own a London hotel who have discovered the opportunities here for real estate investment, local coverage is dovetailing with coverage around the globe.

In 2013, we should expect and welcome foreign investors of all shapes and sizes and nationalities here in South Florida where our current real estate market beacons them to buy here and invest their money into our economy - both now and in the future.

Image:  Bayfront Park in Miami, Florida, with condo towers lining the horizon.  Public domain image courtesy of Wikimedia Commons.

Lack of New Construction Means Tenants Have Leverage in Negotiations

Last week, the Sun Sentinel reported on the state of the South Florida commercial real estate market, concluding that Miami area commercial properties will find a continuing recovery in 2013 but without expectations of any sudden upswings.  In an article written by Paul Owers entitled"Commercial real estate market 'bouncing along bottom'," the gist of those experts queried for their opinions seems to be that it's a tenants market right now in South Florida, due in no small part to the lack of new construction of office buildings, warehouses, retail spaces, and the like over the past few years.  For businesses looking to lease office or retail or warehouse space, there are deals to be made right now in South Florida. 

CMBS Loans Delinquency Rates Falling for South Florida

Meanwhile, for the first time in several years, the delinquency for commercial mortgage-backed securities ("CMBS") loans secured by South Florida commercial properties is under $1 billion dollars ($957 million) and December 2012 saw the delinquency rate at a low 8.2% (compared to the prior year's 9.4%).  

According to a South Florida Business Journal report, this translates into South Florida commercial mortgage-backed securities loan delinquencies going in the right direction (down) while the United States as a whole has seen the CMBS delinquency rate stay about the same (9.7% in December 2012, 9.6% in December 2011). 

Experts report that CMBS loans in the Miami area are performing well these days because the South Florida real estate market is finding favor with investors and things are happening here.  

Major New Commercial Projects Planned for Miami and South Florida

The expansion and re-do of the Miami Beach Convention Center should be finalized and moving forward in 2013; the Convention Center's master plan should be ready to roll by May 2013 according to city planners.  This will involve not only the convention center meeting spaces but a convention hotel site as well as the expected commercial properties to compliment these new facilities.  It's a major overhaul of the Center which some estimate will take up to $1 billion to complete.  

While this isn't the only new, big commercial project being planned for Miami, it is a big deal in considering the future of Florida's real estate market given this overhaul is happening now and the last time the Convention Center had any work done was in the late 1980s.  

Perhaps the biggest news in South Florida's future is the international investment and trade influx to our area.  As discussed in prior posts, Port Miami is currently being expanded to accommodate the huge sea vessels that will soon be able to move through the renovated Panama Canal.  This will not only increase Miami's stature as an international trade center,but it will bring with it the need for extended commercial real estate planning and projects to meet the needs of this increased sea trade traffic.

Miami - Dade County Is First US Foreign Trade Zone Operating Under Alternative Process

Additionally, the Commerce Department of Commerce not only allows Miami-Dade County to operate as a  Foreign Trade Zone (Miami is FTZ No. 281) but Miami-Dade is the first FTZ in the country that has been approved to operate under the federal government's new "Alternative Site Framework" which is designed to "streamline" things.

This is very important to the future of South Florida's commercial real estate industry because a foreign trade zone is created in order to help foreign commerce by allowing the FTZ to be exempt from the usual requirements of U.S Customs. How?  FTZs are not considered U.S. Customs territory insofar as the payment of duty, and any company that does business in an FTZ can reduce or even erase the usual custom duty payment.  

Here is the map of the Miami Dade FTZ, which extends north from SW 8th to the Broward County Line:

1. International Investor Survey by Official Voice of Foreign Real Estate Industry in U.S. 

Why should we bother with AFIRE's survey?  Well, for one thing AFIRE, to quote from its web site, is:

the official voice of the foreign real estate industry in the United States and the pre-eminent global real estate organization, the Association of Foreign Investors in Real Estate (AFIRE) represents the interests of nearly 200 investing organizations from 21 different countries. AFIRE is a not-for-profit association of international real estate investors with headquarters in Washington, DC. The organization was founded in 1988 with strong support from Dutch pension funds and German investment firms now constitute the largest nationality of investors. While inbound investment into the US remains our members’ common bond, their portfolios have become increasingly global in scope. 

Representing the “who’s who” in the global real estate investment industry, AFIRE membership is exclusive to principals and senior executives. AFIRE provides a platform for top investors to communicate through global meetings in the US, Europe, and key cities around the world. From legislation and tax regulations to informative publications and resources, AFIRE covers the hottest topics to ensure that the foreign investor is as informed as the domestic investor.

2.  AFIRE Survey Finds Most International Investors Believe U.S. is Hot Spot for Internatonal Investment

Here in January 2013, the good news for U.S. real estate markets is that this year, for the first time (and AFIRE has been doing this for 11 years now), the AFIRE survey finds 4 out of 5 of the top investment cities, according to international investors, were located in the United States.  For foreign investors, apparently, the United States looks to offer lots of real estate bargains in the coming year.  

In fact, 81% of those surveyed reported that they are looking to buy or expand their American real estate holdings in 2013.  That's huge, but the bigger question for those here in the United States, is where are these foreign investors planning on spending their money?  

According to the AFIRE survey, the top five cities garnering international interest are New York City, London, San Francisco, Washington D.C., and Houston.  

That's right: four of the top five cities on their Target List are in the United States.  (One does wonder why Miami isn't here, right?) 

The United States was also found to be number one in "Countries Providing the Most Stable and Secure Real Estate Investments," and "Countries Providing the Best Opportunity for Capital Appreciation."  

What Kinds of Real Estate Investment are International Investors Most Interested in Finding?

As for what kinds of investment these foreign investors are considering in 2013, the AFIRE survey found the following as the five most popular foreign real estate investments:

1. Multi-family
2. Industrial
3. Retail
4. Office
5. Hotel. 

Work stopping at Miami's ports could be catastrophic to our local economy and officials are also pointing to the national strike as being a danger to national security.  This is a very big deal.  

The latest on this potential strike comes from Florida Governor Rick Scott and FMCS Mediators who provide the following optimistic news that negotiations are proceeding and that the strike negotiations between the International Longshoremen's Association and the shipping companies have been continued into January 2013, where hopefully there will be a resolution without harm to our local economy.  Here, our news release(s) of the week:

Governor Scott Hopeful Agreement is Quickly Reached to Remove Threat of Port Shut Down

(December 28, 2012) -- Today, Gov. Scott made the following statement on the extension of the International Longshoremen’s Association and the United States Maritime Alliance negotiations.

Gov. Scott said, “The 30-day extension in the negotiations between the International Longshoremen’s Association and the United States Maritime Alliance is certainly good news for Florida. Cargo-related activity at Florida seaports supports more than 550,000 direct and indirect jobs, and contributes approximately $66 billion to our economy. We are hopeful these two organizations will quickly reach a final agreement to permanently remove the threat of a port shut down that would devastate families all across our state. We are asking the President to pursue any means possible – including invoking the Taft-Hartley Act – to avoid a work stoppage in the weeks ahead. A shut down of Florida ports is simply not an option.”

Statement by FMCS Director George H. Cohen on the East Coast Ports Labor Negotiations 

Release Date: 12/28/2012

FMCS Director George H. Cohen issued the following statement today on the the United States Maritime Alliance and International Longshoremen's Association labor negotiations: 

WASHINGTON, D.C. — “I am extremely pleased to announce that the parties have reached the agreements set forth below as a result of a mediation session conducted by myself and my colleague Scot Beckenbaugh, Deputy Director for Mediation Services, on Thursday, December 27, 2012: 

“The container royalty payment issue has been agreed upon in principle by the parties, subject to achieving an overall collective bargaining agreement. The parties have further agreed to an additional extension of 30 days (i.e., until midnight, January 28, 2013) during which time the parties shall negotiate all remaining outstanding Master Agreement issues, including those relating to New York and New Jersey. The negotiation schedule shall be set by the FMCS after consultation with the parties.” 

“Given that negotiations will be continuing and consistent with the Agency’s commitment of confidentiality to the parties, FMCS shall not disclose the substance of the container royalty payment agreement. What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement. While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming 30-day extension period.” 

“On behalf of our Agency, I want to thank the parties, especially ILA President Harold Daggett and USMX Chairman & CEO James Capo, for their ongoing adherence to the collective bargaining process, which has enabled them to avoid the imminent deadline for a work stoppage that could have economically disruptive nationwide implications.”

The Panama Canal Expansion

What is happening in Panama?  Construction began in 2007 to expand the canal so it could serve the newer, bigger ships that move along modern sea routes.  Called the "Third Set of Locks Project," this will DOUBLE the Panama Canal's ability to move ships to and from the Pacific and Atlantic oceans, and it will offer a new traffic lane for today's monster ships -- vessels of a size not envisoned when the Panama Canal was initially designed. This new lane of traffic is a third set of locks, hence the project's name.  

It is projected that this expansion of the Panama Canal will build much more trade traffic to ports along the Eastern coastline of the United States.  In fact, ports from Baltimore on south have been preparing for the impact of the Panama Canal's Third Set of Locks Project for several years now.  

Port Miami Prepares for Over-Panamax and Post-Panamax Ships 

Many ships, including all U.S. aircraft carriers, most supertankers that carry oil, and most container ships, are too big to fit through the Panama Canal as it was originally built.  In shipping circles, these big vessels are called "Over-Panamax" or "Post-Panamax" and they cannot take advantage of the convenience that the Canal offers in traveling from one ocean to the other, or for trade between Asia and Europe and the Americas and the West African Coast.  

These Over-Panamax ships have been around and unable to use the Panama Canal since the mid-1960s, when these big ships and tankers first started being introduced to the seas. 

Now, the Port of Miami is in the process of deepening the port by 50 feet and doing other things to accommodate these Post-Panamax vessels.  

Right now, the Panama Canal project is behind schedule: it's expected to be completed in 2015. This may be good news for Miami, however, since it gives Port Miami more time to get ready for the dance: the only ports prepared to host the Post-Panamax ships at this point are Norfolk, Virginia, and Baltimore, Maryland: Miami can use the time to get its deep water port finished.

Fingers crossed, Port Miami will be ready for Post-Panamax vessels when the Panama Canal Expansion debuts -- and assuming so, Miami is hopeful that given Miami's location as well as its reputation as an international trade mecca will make Port Miami the first stop and preferred U.S. destination for many of those huge trade vessels coming through the Panama Canal in the future.  

Brazil is Florida's No. 1 Trade Partner

However, truth is that today, Brazil remains Florida's number one trade partner according to the Florida Chamber of Commerce - and that's not expected to lessen in the near future.  In fact, the Florida Chamber has just debuted a web site dedicated specifically to the growing trade partnership between the State of Florida and the country of Brazil: you can visit it here.

Brazil's Florida trade market was valued at around $14 million in 2010 according to the Chamber, and the Chamber is working hard to increase those numbers in the upcoming years.  So, how steady and strong is the Brazilian economy?  According to experts, things are very (VERY) good for Brazil.

Brazil's Economy - Some Highly Respected Experts View Brazil's Future is Bright

In an analysis done for CNN by Paulo Sotero this week, the noted scholar and expert on all things Brazilian opined that Brazil's president Dilma Rouseff will see 2013 to be the year when Rouseff proves her worth.  

Brazilian President Rousseff has made a public commitment to boost Brazil's GDP to 4% in 2013. According to the CNN editorial, experts believe that Brazil's investment ratio to GDP (now at 19%) will have to get to somewhere between 23% and 25% for the president to meet that goal, and it's doable: Mexico, Columbia, and other Latin American countries are seeing ratios somewhere between 23 - 25 percent these days.  There are concerns that President Rouseff must work to build trust between her government and the private business sector and there are concerns that she will not be able to solidify a bond between her office and Brazilian investors.

However, the CNN piece points out that Rouseff has a reputation of being "no nonsense" and able to act quickly in making decisions and implementing them: her record on dealing with corruption has garnered her much respect.  It's predicted that she will see a growing investment relationship between Brazil and the United States as important for her country (and for which, Florida of course would reap a benefit). 

Meanwhile, even though Brazil didn't grow as fast as predicted, S&P (Standard & Poors) remains "cautiously positive" on Brazil's sovereign credit rating as reported by S&P yesterday.  The agency's managing director is reporting that S&P isn't concerned about Brazil's slower than expected growth and they expect good things in 2013. 

This morning, the president of Brazil's central bank, economist Alexandre Tombini, spoke to a Brazilian congressional hearing and as reported by Reuters, Tombini forecasts that Brazil's economy will grow faster in 2013 with domestic demand as its major force in Brazil's bright economic future.

Bloomberg is reporting that Brazil's Finance Minister predicted last week that interest rate cuts by the country's central bank will stimulate Brazil’s economy, and the weaker Brazilian currency (the real) will boost competition. 

Last month, Reuters took a poll of noted economists and discovered a consensus that Brazil's economy in the 3d quarter of 2012 was expected to have grown at its fastest rate in over 2 years, due in part to lowered taxes.  

Even though the actual numbers didn't show such a growth spurt, in an article for NASDAQ, Goldman Sachs is still predicting that Brazil should boom with growth of 4% or higher in the year 2013 (quoting Jim O'Neill, chair of Goldman Sachs Asset Management).  Economist O'Neill views Brazil as one of the world's big emerging markets, in fact, along with Russia, India, and China ("BRIC"). 

Others Aren't So Sure About Brazil

Still, despite all this optimism, there are those that do not view 2013-2014 as being golden years for Brazil. Forbes, for example, has an article written by contributor Kenneth Rapoza that doesn't see Brazil's economy as more than perhaps "dismal."

Right now, people in Florida (like the Chamber of Commerce) are believing in Brazil as are investment advisors like Goldman Sachs: there are always negatives in every scenario, but for Florida - particularly its commercial real estate market - pushing for the positives brings a needed energy to our beaten economic climate.

Let's hope that the positive forecasts for Brazil prove to be true: because what is good for Brazil may well bring Florida a brighter economic future, as well.  

But we're not the only country that is offering this type of incentive.  Nope, the United States is only one of several nations that are promoting a type of residency visa to foreigners who will buy real estate in their country.  

According to a recent article originally published in The Atlantic Cities, and now popping up on several sites (such as Quartz), "Buy a House, Get a Visa: Coming Soon Everywhere?" more and more countries are putting together these sorts of packages.  From the article, we learn of EB-5 type visas (residency visas for real estate buyers) in:

• Spain
• Ireland and
• Portugal.

 From their research, these countries appear to be offering residency visas as part of larger campaigns to get their national economies out of crisis situations.  Spain, for example, has approximately $200,000,000,000 euros in bad mortgages (today's currency exchange rate is 1 Euro = 1.30 U.S. Dollars, so you do the math).  

Which means Spain is offering residency to those who buy a home in Spain for a price that exceeds the mean home price of 160,000 Euros.  Similarly, Portugal offers residency to foreign buyers of Portugese property valued at 400,000 Euros or higher and Ireland, the same but the minimum is 500,000 Euros.   

That's just Europe.

From The Address magazine, we've got another list of countries (other than the United States) that are offering residency for real estate:

• Malaysia
• United Arab Emirates
• St. Kitts and Nevis
• Bahamas
• Seychelles
• Mauritius.

In these countries, buying real estate automatically brings with it residency status.  For example, you buy land in Malaysia, and Malaysian residency is like a freebie:  you have to do nothing more: no forms, nothing.  

However, the country may have some laws in place on what real estate purchases apply here.  In Malaysia, for example, to get the automatic residency all foreigners must spend the legal minimum on the purchase price of the property, currently set at 124,500 Euros.  Foreigners are not allowed to purchase real estate at any price lower than this minimum amount.  

Which means all these economies are competing with Florida, right?

Perhaps in some way, these residency for real estate (buy a house, get a visa) campaigns are all competing with each other for the same investors.  However, Florida need not worry too much about buyers opting for land in the United Arab Emirates over a Miami offering, for example, because some places are more appreciated than others in the international investor community. 

Numbers aren't clear on which "buy a house, get a visa" campaign is the most successful, world-wide.  However, Florida is beloved by many and should be ranking high in the global competition.

Consider, after all, how Florida ranks within the United States.  According to Inman News, within the United States, Florida is overwhelmingly the most popular location for foreign investment, the following list in order of popularity in 2011: 

• Lakeland-Winter Haven, Florida
• Cape Coral-Fort Myers, Florida
• Orlando-Kissimmee-Sanford, Florida
• North Point-Bradenton-Sarasota, Florida
• Miami-Fort Lauderdale-Pompano Beach, Florida
• Phoenix-Mesa-Glendale, Arizona
• New York County, N.Y. (Manhattan)
• Honolulu, Hawaii.
• Tampa-St. Petersburg-Clearwater, Florida
• Las Vegas-Paradise, Nevada

And, according to the National Association of Realtors, foreign investors were putting their money in the following investments: