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N MIAMI CONDO NEWS — All About Condo Living in the Magic City — Edited by Heinz Dinter, PhD |
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As the euro rises, so do investments in Florida real estate January 28, 2004 • How high will the euro rise? There’s talk by analysts about €1 soon buying $1.40. Just a week ago, it momentarily tapped $1.30. As reported in the Miami Herald (www.MiamiHerald.com), European Union residents bought several condominiums in the $2 million range on Fischer Island in Miami in recent months. Director of Sales Phyllis Winick attributes these purchases to the strong euro. At a $1.20 exchange rate, the $2 million investment would have cost the buyer €1.63 million; at $1.40 per euro, the investment is €1.43 million, a significant benefit for the euro-labeled pocketbook. Andreas Bode, Vice President for Business Development of Dresdner Private Banking (Andreas.Bode@dresdner-bank.lu) talked about “The strong Euro/USD and its impact on residential real estate investment demand from Europe in Florida — the prospective of Dresdner Bank Luxembourg S.A.” The presentation was organized by the German American Business Chamber of Florida, Inc., Southeast Chapter (www.gabcfl.org) and sponsored by the Dresdner Bank Luxembourg S.A. (www.dresdner-bank.lu; www.dresdner-florida.de) at the Mosaic Restaurant in downtown Miami on January 28. What are the advantages of Euro Union (EU) residents investing in Florida? Very important is the weather. And then there are the financial considerations — and they are presently astoundingly significant. Here’s a head-turning statistic: Two hundred thousand Europeans own residential property in Florida of which 100,000 are Germans. The total investment by Germans in U.S. real estate exceeds $3 billion. The recent 30% U.S. dollar depreciation versus the euro makes investments by EU citizens very attractive. Dresdner Bank is utilizing the favorable exchange rate and the low interest rate environment to actively pursue lucrative real estate investments and private residential vacation homes in Florida, considered a very attractive venue by the German bankers. Handouts offered to the attendees included a report by Dr. Reinhard Krafft, Managing Director of Dresdner Private Banking, who underlines the bank’s commitment: “That is why from our private experience and a professional point of view we believe that there are not many areas worldwide today as attractive for real estate investments as Florida.” Without a U.S. social security number and a U.S. credit history, the EU buyer offers none of the critical prerequisites for a mortgage loan consideration by a U.S. lender. However, through utilization of European banking offers, Dresdner Bank can provide U.S. financing solutions at much lower rates and without all the normal additional closing costs — and with 100% financing. The purchase of real estate in the U.S. with dollars exposes the European to potential currency risks. This risk is avoided with a dollar-based loan. In contrast to conventional real estate financing, this does not involve a mortgage. Dresdner Private Banking offers the dollar loan using the purchaser’s euro-based securities deposit account or fixed-term deposits as security. Euro yields are currently higher than U.S. dollar interest rates even for short maturities. In other words, the investor can make a profit in the form of interest income of between 0.5 and 4%. In short: Taking out a loan in U.S. dollars will preserve the investor’s assets while at the same time generating income. Dresdner Bank Luxembourg offers this interest rate forecast: We expect the Fed, the American Central Bank, to keep the reference interest rate at 1% until summer 2004. The exchange rate is forecast at 1.25-1.35 USD/Euro on a 6-months basis (by June 2004). Depending on the situation in Iraq and Afghanistan and due to the U.S. presidential election in the fall of 2004 an overshooting to 1.35-1.40 USD/Euro could not be excluded (as happened in 1990 and 1992). A newsletter published by Dresdner Bank keeps clients and prospects up-to-date. To be placed on the email list, contact Mr. Bode at Andreas.Bode@dresdner-bank.lu. The newsletter is presently available only in German. Dresdner Bank Luxembourg is organizing a “Florida Real Estate Investor Trip” from May 9-16 to the west coast of Florida to introduce Europeans to the real estate investment opportunities on Florida’s west coast. Though Florida’s west coast is eyed as the retirement heaven by Germans, Florida’s Gold Coast, stretching from Palm Beach to Miami should attract significant attention. Miami — The Magic City — should be first in line for offering profitable real estate investments and cater to the discriminate European lifestyle.
Dresdner Bank Luxembourg S.A. was founded in 1967 as the Compagnie Luxembourgeoise de Banque S.A. As the first German financial institution to set up business in Luxembourg and the first foreign subsidiary of any German bank after World War II, the bank has decades of experience in catering to the needs of private and corporate customers from around the world. Since the merger of Allianz AG and Dresdner Bank AG in July 2001 and the bank’s subsequent incorporation into the Allianz Group, Dresdner Bank Luxembourg S.A. can offer its customers an even wider range of innovative products and has expanded its global business. The bank offers its customers and business partners extensive services in deposit-banking, Euro-lending and -issuing business, as well as money-market, foreign-exchange, securities and precious-metals business. Following the restructuring of the Dresdner Bank Group, the bank was divided into the Corporate & Markets, Private Banking and Fund Services divisions in 2002. I remember the days, some forty years ago, living in Germany with dollars in my pocket (as a member of the U.S. Air Force), I and my colleagues lived “like kings” because each dollar was worth 4.20 Deutsche Marks. Now it is our long-ago hosts’ turn. The Germans and their EU brethren can today enjoy the power of the euro investing in America. That’s also good news for us making a living on the western side of the big pond. We can make our euro-bearing friends happy closing deals. That also makes us happy.
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