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Canny UK investors have their eyes on US mansions at knock down prices

Shrewd investors from the UK and around the world are showing increasing interest in prestigious properties in South Florida in the United States at knock down prices – and the wise money is that these investments will return very attractive dividends over the next two to five years.

What are often referred to as "distressed" properties are anything but.

Luxury apartments and houses that before the sub prime dilemma raised its head  were valued at millions of dollars are now being bought for as little as half price – and with the  prospect of a projected 25 per cent annual appreciation.

According to Mr Bob Deason, Director of Crown Property Estates, now is being seen as an ideal time to be investing.

"We have seen, and are for now continuing to see, the bust," he said. "But over the next two to five years the trend will turn; there is a growing investment perception that now is the time to take advantage of what the future will hold."

Deason was a guest speaker on "Evaluating current property investment opportunities" at the Invest in Property Show held at Old Billingsgate in London recently, and Crown Property Estates, who have registered a UK company and established offices in Windsor, were one of the top exhibitors at the show.

Deason's views were reinforced in a survey recently carried out by Dr Marcus T. Allen Ph D, Professor of Real Estate at Florida Atlantic University College of Business in Fort Lauderdale.

In his report titled "Housing Price Trends and Investment Opportunities in South Florida's Residential Real Estate Market", Dr Allen states that the present "bust period" in housing prices could be readily explained by the standard supply and demand model in which reductions in demand and the high existing inventory resulted in lower equilibrium prices.

But he adds significantly: "As developers halt their additions to inventory, and mortgage markets and speculator activities diminish, there may be favourable investment opportunities for investors."

Allen says that those investors likely to benefit are the ones who recognise the next turning point in the South Florida real estate market, "particularly in the coastal condominium market where the boom-bust cycle may have been more extreme than in other housing sub-markets".

The combination of "seller desperation" and a return to market fundamentals, he adds, suggests that there may be favourable risk-adjusted returns available to "bulk sales" investors.

With proper due diligence investors may be able to identify completed and near-completed projects that can be purchased at attractive prices, he concludes.

Crown Property Estates' Deason also believes that while the fundamental factors in place during the boom remain largely unchanged for now, lenders have greatly tightened lending standards in the face of the sub-prime mortgage market "melt-down".

"The wave of speculators has also greatly dissipated," he adds. "So this is an ideal time for prudent buyers to seriously look at the market. There are excellent opportunities to be had, and with the pound maintaining its strength British investors could do a lot worse than take a close look at the South Florida market."

Crown Property Estates' key areas of interest are in the popular post code locations of Naples, Fort Lauderdale, Boca Raton and Palm Beach. 

Deason says that many property developers in South Florida are offering significant price discounts as well as incentives to buyers, such as several months of prepaid associated fees and rental guarantees.

He adds: "In at least one case a new Mercedes has been offered to each buyer. The desperation of many developers in this market segment is clearly apparent."

And that is where the current opportunities lie, he says, with the prospect of a 25 per cent a year return.

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