PAIN and gain
Susie Watkins Polakova
Waking up from the American dream has been painful for much of the United States in terms of real estate, but there have been brighter spots of late. Perhaps it is, as one broker says, that after four years of recession and foreclosures, Americans are ready to move on with their lives, even if the prospects are not necessarily any brighter.
There are signs of an increase in energy in Atlanta, where some buy-to-rent operations are predicting returns of 12 to 17 per cent.
Promises can indeed turn to dust, but as the president and founder of Atlanta Fine Homes, David Boehmig, says: 'For a few months now, the number of homes closing and the values are both showing slight increases on a broad basis. I believe that the reason for this recovery is threefold; the interest rates are really low, prices will probably never be better, and people are, in general, ready to move on with their lives.'
The city itself is also proving a magnet for Asian interest, underpinned by the fact that it is the home of Coca-Cola. The company is pouring US$4 billion into the mainland, and the investment traffic is travelling both ways, with several big Asian companies coming into the region, bringing with them personnel who need somewhere to live.
With a little change from US$20 million, they could buy this stately mansion (pictured) with more bathrooms than bedrooms, gated and golden and ideal for entertaining, say the agents, not least because it has seven kitchens.
In Miami, the president of a firm, that is part of leading luxury home specialists Christies International Real Estate, reports that it has sold at least one home valued at US$1 million or above, every 24 hours, for the past 130 days.
The CEO of Christies, Neil Palmer, says luxury prime residential real estate in the US has always been attractive to international buyers, because it satisfies a number of fundamental investment criteria, primarily being, as he says: 'Location, location and location.
'These underlying fundamentals have recently combined with exceptionally favourable buying conditions.'
'Our market [in Florida] is edging close to normalcy,' says Michael Saunders, of Michael Saunders & Company in Sarasota, Florida. 'Ours was among the first to feel the downturn, the first to take the corrective measure of lowering prices, and now is among the first to enjoy a sustained recovery.'
Another area benefiting from a big increase in interest from Asian buyers is Boston - a city known as America's college town. According to the president of brokers Otis & Ahearn, Kevin Ahearn, there has been a steady increase in Asian buyers for the past two to three years. 'Typically, they are attracted to new construction, full service developments and some of the demand is tied to educational needs. The Asian buyers represent 20 to 25 per cent of all our international buyers.'
There has been a slight drop in sales in New York, according to associate broker at Prudential Douglas Elliman, Noni Connor. 'There was an increase in volume of more than 15 per cent [year-on-year and from the last quarter] and an increase in the price per square foot. Properties are also selling faster, so while those numbers are a bit mixed things are essentially stable.'
She says the company has seen a marked increase in interest from mainland buyers, lured by the weak dollar and perhaps, she thinks, by the perception that London and Hong Kong are overpriced.
Nantucket, a playground for New Yorkers in Massachusetts, is also not a runaway recovery, although brokers say it is well off the falls in 2009. 'Typically, the island real estate market revives faster than other areas and we are seeing that again,' says Edward Sanford, of Great Point Properties in Nantucket.
'Numbers rebounded significantly last year and are holding firm for the first six months of 2011.' The same firm concedes that it sold 31 acres on Nantucket Harbour for just US$8 million after taking it on from a firm who marketed it for four years at US$17.5 million.