House not home: Foreigners buy up American real estate

Earlier this year, real estate marketer Melissa Rubin took some South American clients to a party to promote a new condo that developers hoped to sell before a shovel hit the ground.

Even by Miami standards, the party was exotic. There were tigers, chimps, human flamethrowers, jumbo TVs, and the usual red-carpet food and drink. There was also a bikini-clad woman covered in chocolate. "If we take them to a party, it helps them get excited about the project," says Ms. Rubin of Platinum Properties International.

Indeed, developers are going all-out to charm their clients, and more and more those clients include the world's wealthy elite from such countries as Argentina, Mexico, Australia, and Germany. These foreign buyers, in fact, are one of the important reasons the housing bubble continues to grow in hot markets like Miami, New York, and Las Vegas. In many cases, they're taking advantage of the strong euro or trying to get their money into a dollar-denominated hiding place.

The result: In Miami, for one, some condo buildings have as much as two-thirds of their units owned by foreigners. Call it America for Sale.

"No question, foreigners are part of the bubble," says Stephen Wayner, first vice president at Bayview Financial Exchange Services LLC in Miami.

Although there are no numbers indicating how much foreigners are pouring into the United States to buy condos, there are some eye-opening anecdotal signs:

• In Las Vegas, wealthy foreign buyers - mostly from Mexico - have snapped up 12 percent of the condos at Icon, twin 48-story towers that are now almost sold out even though they won't start construction until next month.

• New York City real estate brokers estimate that up to 33 percent of new condos sold in the city are going to non-Americans, especially Europeans, who one broker describes as "very aggressive."

• Asian buyers are jumping in, too. Real estate agents are flying to Shanghai, Beijing, Bangkok, and Kuala Lumpur to talk up the property market. Recently, a large group of Korean finance, construction, insurance, and engineering executives conducted a "study tour" of southeast Florida real estate. They plan to return next April.

Part of the allure of American real estate is the cost. While some of the prices may seem high to Americans, to Europeans and others the real estate feels like a bargain, particularly when figured in euros or pounds sterling.

Miami has long had a history of attracting Latin American investment. The weather reminds Central and South Americans of home, and they've visited Miami's shops for years, lugging home everything from appliances to designer sneakers. In addition, Spanish may be the first language of south Florida instead of English. And the South American elite have long viewed the city as a safe place to stockpile dollar-denominated assets, whether it be in cash or real estate.

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