Foreign buyers return to real estate

Canadian investor Arthur Wong is buying condos in Las Vegas and Phoenix like a shopper at Costco: in bulk, with slashed prices.

The president of Optimus U.S. Real Estate Fund has bought 60 condos at heavy discounts from developers in financial trouble. Mr. Wong paid about $62,500 each for 18 Las Vegas condos that once were priced at about $250,000 apiece.

"This could be a once-in-a-generation opportunity for real estate investment," said Mr. Wong, whose Calgary, Alberta-based fund has already invested $5 million cash and will spend millions more in the U.S. Southwest over the next several months.

Though foreign real estate investment in the first six months of 2009 was lower than last year's level, real estate agents from New York to Las Vegas say purchases have increased rapidly in recent months.

Foreign investors have long been attracted to U.S. residential real estate, drawn by the market's stability compared with other countries. But the dollar's descent in the past six months has made homes even cheaper for foreigners, and prices are showing signs of stability.

International investors bought 154,000 homes and condos in the 12-month period ending in May, down nearly 10 percent from 170,000 for the same period a year earlier, the National Association of Realtors reports.

But since June, the dollar has tumbled by 9 percent to 11 percent against currencies such as the Japanese yen, the European euro and the Canadian dollar. The Brazilian real has gained 17 percent against the dollar in the past six months.

Buyers from Brazil, Canada, France and the Netherlands, for example, have paid mostly cash for second homes ranging from $6 million to $15.5 million in condo buildings, including at 40 East 66th Street, a stone's throw from Central Park.

Foreign investors love floor-level prices and the limp dollar but also are confident in a long-term recovery of the U.S. economy and the housing market's resurgence. Some want vacation homes, while others are looking for rental income.

Foreign investors often pay cash, or offer down payments of 40 percent or more, because financing is difficult to get. Nearly half paid cash in the 12-month period ending in May, the Realtors group reports.

Florida leads the country in the amount of international buyers, accounting for nearly a quarter of foreign purchases.