If recent reports are correct, the foreign buyer has been making a dent in the excess inventories of major condo markets such as New York and Miami.

But Washington, D.C.? With the area posting its strongest condo sales volume in two years and supply sinking to near “product shortage” levels in the District, Arlington, Va., and Alexandria, Va., according to Alexandria, Va.-based research firm Delta Associates, condo sellers in the nation’s capital hardly seem in need of a foreign bailout. “They [foreign buyers] haven’t been much influence,” says Chris Ballard, founder of McWilliams Ballard, an Alexandria, Va.-based real estate sales firm. “Except for in New York and Florida, you really haven’t seen it.”

That hasn’t stopped Ballard from attempting to cultivate buyers from overseas. He has partnered with a brokerage firm focused on Asia to market a number of its D.C.-area properties (and a couple in the New York area) in the Far East. “We think that the dynamic in mainland China of flight capital to and through Hong Kong is enormous,” Ballard says. “We’ve been working a group to try to identify what product suits that market the best and how to bring it over there. This has kind of been the Rosetta stone. Everybody wants to do this.”

Even if the strategy succeeds, the Washington, D.C., area will probably never become South Florida and New York—where foreign buyers have long been prevalent. In fact, those foreign buyers, motivated by a number of factors (not the least of which is that they smell blood in the water) are coming back.

A Life Raft
Peter Zalewski, a principal at Condo Vultures, a Bal Harbour, Fla.-based consultancy focused on the South Florida real estate market, says that nine out of 18 bulk deals and about three-quarters of 2,100 individual units bought in Miami have been purchased by foreign nationals.

“Downtown Miami would be stuck where it was a year ago, but we’ve been able to move in the past year,” he says. “That’s been primarily because of foreign nationals.”

Many of the foreign buyers simply have the cash on hand to make a purchase. “The foreign buyers are definitely some of the stronger buyers out there right now just because of their cash position,” says Andres Lemos, principal of Miami-based multifamily marketing and investment firm Miami Waterview Properties, who sees buyers coming from Canada, Great Britain, and South America. “Even if you want to finance, you’re looking at about a 50 percent downpayment, which still gives them an upper hand.”

Zalewski says buyers have primarily come from South America and Europe. In New York, a similar phenomenon is occurring. Property Wire reported that, in Manhattan, Indians now “account for close to 20 percent of all real estate sales in Manhattan and 30 percent of all inquiries made.”

Peter T. Bazeli, senior vice president with The Weitzman Group, a real estate advisory group in New York isn't surprised at the increased Indian interest in Manhattan, given the country's growing economy, but says foreign buyers have not replaced domestic purchasers in the Big Apple. "There's still foreign activity and foreign interest in residential units in Manhattan," he says. "They're flying to quality and heading to the best units. They're still active, but it's not to the same level and won't be until the global economy improves."

The motivation is simple. The prices may be better in the United States. Property Wire reports that prices in Manhattan are actually cheaper, in some cases, than those in Mumbai. Zalewski buyers from South America are telling him the same thing. “I’ve had fund managers tell me it’s cheaper to buy in Miami than Bogota,” he says.

And, these buyers think that even with the economic instability in the States over the past two years, investments will ultimately be a lot safer than in South America. What's more, with a weak dollar, the motivation grows even stronger.

“Historically speaking, in South and Central America you have political instability,” Lemos says. “At the end of the day, South Americans see the United States as the stable compared to their countries.”