Is it the End for Florida-the Sunshine state?

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Ginetta Vedrickas

 

The Sunshine State may be a favourite for us sun starved Brits, but many tour operators are reporting a downturn in holidays prompting price slashes. Some estate agents too are finding that sales are down so will Florida continue to attract the British market or is the love affair over?

 

Irish born Garrett Kenny moved to Orlando, Florida in 1996 where he runs Coldwell Banker Team Realty's Davenport branch. He too has found that sales, particularly of new build, have recently fallen: "Hurricanes have been a factor and have scared people away but it's really prices that are the chief reason. British buyers just can't afford to pay $350,000 for a property which they may use for just three or four weeks a year."

 

Kenny estimates that, on average, prices in his area have risen by around $100,000 over the last eighteen months with properties at the top end rising more steeply He cites his own house as a typical example: "I bought it in February 2005 for $845,000 and it's now on the market for $1.3 Million."  Kenny says that canny investment, mainly from British and Irish buyers, have caused new build sales to falter: "When developers are trying to sell the final properties within their developments they are competing with buyers who bought eighteen months ago. A builder may price their final homes at $390,000 but an investor who bought at the start of the project can sell on for $370,000 and still make a tidy profit."

 

Supply is also affecting the market: Coldwell Banker currently has around 250 properties for sale listed on their books, whilst listings usually hover at around one hundred. New build sales may have fallen but this is pushing British interest into other areas and Kenny recently sold twenty- four warehouse units for $260,000 with five-year leaseback terms mainly to Irish and British investors who are attracted to the potential of the long-term commercial market. "People are still moving to Florida and they need goods and services, hence the demand for commercial units."

 

British visitor figures may be down but Florida, and in particular Orlando, is still one of the most visited destinations in the world. In 1996, 48 million visitors flocked to the southern state but last year the figures rose to 82 million. Buyers looking for rental opportunities are commonly advised to buy no more than twenty minutes from the main parks in 'vacation zones' but anyone who isn't reliant on holiday rentals will pay less by buying in a 'residential zone' further out where they can still let the property on a long term basis. Coldwell Banker are selling villas in Lake Wales, thirty minutes south of Disney, where four bedroom detached houses cost $305,000. "You still get a lovely house and long term rentals are strong as so many people are moving here," Kenny advises.

 

The company recently branched out into fractional ownership to entice a sluggish British market, which seems currently unable, or unprepared, or to pay top prices. The first fractional ownership scheme to launch in 'the Sunshine State', buyers will have full legal title to 25% or 50% of the property and its rental income, at a fraction of the purchase cost. $65,000 buys a quarter share of a two-bedroom condominium at Orlando's Secret Lake, a development of eighty on Highway 192, just four miles from Disney and within easy commuting distance of major Orlando attractions. "Not only are the buying costs reduced in proportion to the level of ownership, but maintenance costs are also obviously shared accordingly. With four owners each promoting the property to friends and family, the rental occupancy is likely to be high. And to ensure that the scheme is hassle -free, we provide all buyers with a free management service for the first year," adds Kenny.

 

Buyer Dennis Wiseman from Nottingham has organised his own fractional ownership scheme by buying a new four bedroomed villa in Kissimmee with his brother and sister in law: "Neither of us could afford to buy a house on our own so we've decided to buy together which seemed to be the best solution. The dollar's pretty weak at the moment so we decided to go for it." The Wisemans paid �210,000 for their property and intend using it for as much of the year as possible: "Between us we've got five children ranging from two years up to fifteen in age and they all love the theme parks. Florida has always been our favourite place for holidays, we used to go there even before the children were born, and I'm sure we'll carry on enjoying it long after they've left home."

 

Dennis and wife Clare enjoy other aspects of central Orlando such as the great shopping, golf and the climate and they intend letting the property in the near future: "If we like it then I'm sure that others will too. Orlando gets tons of visitors from all over the world so we'll definitely rent it out but will start by renting to friends, family and colleagues and see how we get on." The couple believe that the house will prove to be a good investment: "We know that prices have gone up an awful lot in the last couple of years and probably won't rise as quickly in the near future. As more people move to Florida than leave, I'm sure that house prices won't fall. We're in this for the long term so minor fluctuations shouldn't affect us too much."

 

US Condo Exchange's Max Dalziel sells only condominiums, apartments or townhouses on developments which share communal facilities. He hasn't noticed a major downturn in sales and feels that, in comparison with stand-alone villas, condos offer value: "This way you're sharing the cost of the concierge, the pool etcetera so it works out a lot cheaper."  However, Dalziel describes the current situation as 'a stand off' as buyers seem unwilling to pay sellers' asking prices: "British buyers are now very sophisticated and are heavy internet users. They've done their research and know the market. Sellers are currently unwilling to reduce and buyers are unwilling to pay high prices. Like any market there are peaks and troughs but this is still one of the best -loved destinations in the world."