As Brazil's Currency Sneezes, Will Miami's Property Market Catch a Cold?

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(MIAMI, FL) -- At a recent international buyers event sponsored by the Miami Beach Chamber of Commerce and the Miami Association of Realtors, it was confirmed that foreign real estate buyers play a significant role in driving Miami's fast recovering real estate marketplace.

So much so that several new condo towers and mega-resorts, like Genting Group's proposed $3 billion dollar Resorts World Miami project, have pinned their future success to Miami's strong international real estate investor market.

In the last two years the greater Miami real estate marketplace has been the direct beneficiary of Brazil's 'Real' (Brazil's currency) strength against the U.S. dollar, thus allowing thousands of Brazilian property investors to effectively get an additional 30% to 40% price discount on their Miami condo and home purchases. This exchange rate differential has been a key driver for Miami's real estate market recovery over the last 3 years.

But things may be changing soon due to global economic forces.

This week, the Brazilian Real has been opening sharply weaker against the U.S. dollar as the American currency turned scarce in the face of global debt and growth worries.

Over the last two months the Brazilian Real has lost over 20% of its value against the U.S. dollar, despite a growing local Brazilian economy.

Key Miami / Brazil Foreign Property Buyer Stats:

• 1 in 3 foreign real estate investments made in entire U.S. in 2011 occurs in Florida ($82 billion all U.S. / $30 billion in Florida).
• 1 in 3 of foreign real estate investments in Florida occur in Miami.
• Brazilian buyers represent 8% of property purchases in July 2011.
• 85% of all Brazilian buyers pay cash.
• Brazil Real continues to weaken sharply on U.S. dollar liquidity worries.
• Central bank to hold swap auction to freshen liquidity.
• Real opens at BRL1.92/dlr but could reach BRL2.00/dlr.

According to the Miami Association of Realtors, over 65% of all Miami home and condo sales are from foreign buyers, who have historically taken advantage of their own currency's value against a weak dollar. Thousands of Miami condos and homes have been purchased in cash as a result in 2011, with Brazil becoming a bigger market force than ever before.

If several foreign currency exchange rates continue to weaken against the U.S. dollar, it could have a direct cooling effect on South Florida's impressive market rebound over the last 18 months.

See related news stories on WORLD PROPERTY CHANNEL:

• Foreign Buyers Now Driving $82 Billion in U.S. Real Estate Sales, a 24% Annual Surge with Florida as Leading Investment Gateway
• Miami's New $3.1 Billion Mixed-Use Mega Project Unveiled, Largest Real Estate Development in North America Since 2004

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