FORBES RANKS ORLANDO The #1 Market for Real Estate Investment in 2019
Properties set within integrated resort environments in Orlando, the world’s most famous theme park destination, are selling fast as investors capitalize on the benefits of professionally managed vacation home rentals. With on-site family amenities such as waterparks, restaurant and shopping, homeowners and guests benefit equally from their immediate environment, as well as being in reach of Florida’s prime entertainment district.
Professional and highly experienced resort management companies also drive visitor numbers through vacation operators, thereby maximizing occupancy rates, boosting bookings throughout the seasons and raising income levels for homeowners. Investors are coming from across the globe to own a slice of the United States’ number one family destination.
DYNAMIC LOCAL ECONOMY
With 75 million visitors in 2018, Orlando in Florida became the first US destination to surpass 70 million annual visitors, thanks to its world-class entertainment, hospitality, sporting and conferencing facilities. Tourism is integral to Orlando’s economy. New investment in 2019 brings Star Wars: Galaxy’s Edge to Disney’s Hollywood Studios, Sesame Street at SeaWorld and the Lego World Movie debuting at LEGOLAND Florida Resort, attracting both new and returning visitors. Orlando was the top US city for job growth from 2014 to 2018 (Department of Labor), the fourth fastest-growing city of 2018 (Forbes) and the third best big city to find a new job in 2019 (WalletHub).
VISIT FLORIDA: 1 in 5 international visitors to the US comes to Florida
CONTINUED INVESTMENT INTO ORLANDO
While already enjoying excellent local, regional and international connectivity, Orlando is also benefiting from $15 billion in infrastructure improvements. This includes the Interstate Highway ‘I-4’, the expansions of both Orlando International Airport and Orlando Sanford International Airport, as well as commuter train, SunRail’s new southern routes to include new stations. Orlando is therefore firmly ranked in the Top 10 ‘American City of the Future’ by Foreign Direct Investment (fDi) Magazine, 2017.
As the theme park capital of the world, Orlando is a thriving tourism destination attracting visitors and investors from across the globe. With significant healthcare, education and technology sectors,
the broad-based, prospering local economy underpins a diverse and expanding community of 2.71 million residents. They live, work and retire in the Sun-Belt while also enjoying the area’s global connectivity, excellent local infrastructure and continued investment. All these factors build a
compelling rationale for investing in the local residential real estate market.
DIVERSE VISITOR PROFILE
With a 108% rise in overseas visitors (and 21% growth in Canadian tourists) to Florida between 2008 and 2018, Orlando is set to profit from ever-increasing levels of demand for visitor accommodations. Canada (3.5 million), followed by the UK (1.5 million) comprised the largest single source markets for visitors in 2017. However, accounting for 39% of all overseas tourists, Latin America as a region dominates the visitor profile, with Brazil, Argentina and Colombia leading the way. China is currently the 10th largest tourist source market for Florida, with 308,000 visitors in 2017.
FLORIDA 1ST FOR FOREIGN INVESTORS
Florida is the top destination for investing in residential property among foreign buyers and investors, accounting for US$22.9 billion in investment in 2018, according to the National Association of Realtors. In dollar terms this means 19% of Florida property sales were to foreign buyers, compared to 8% nationally, demonstrating the Sun Belt’s strong international appeal. The Orlando area follows Miami as the first choice for buyers. While Canadians comprise the single largest investor market (22%) and the UK is the third largest buyer source (5%), as a region, Latin American and Caribbean buyers dominate the market (36% of all purchases). Buyers from China have also increased their market share from 1% of all buyers in 2009 to 5% of the market in 2018. The median price paid by foreign buyers for Florida properties was US$286,500 in 2018, up from US$259,400 in 2017, with 67% paying with cash only.
Homeowners in Orlando can capitalize on rental demand from the region’s rising number of affluent, long-stay visitors and expanding year-round business tourism sector. Orlando offers unrivalled global connectivity, in particular to key source markets in Latin America, North America and Europe. Properties within professionally managed resort environments, surrounded by high levels of on-site amenities and excellent services, also benefit from greater demand, price premiums and higher rates of occupancy.
SIGNIFICANT INCOME POTENTIAL
The opportunities for homeowners to let their properties to Orlando visitors and generate revenue from their investments are ever more exciting. Investors seeking the best returns are turning to properties located in highly-amenitized resort environments with branded, well-known professional management companies. Respected and trusted operators with decades of experience in the US market, drive guest numbers via larger scale tour and vacation companies, ensuring strong demand for integrated resort homes. Florida attracts more visitors who fall within the ‘affluent family’ and ‘affluent mature’ categories than the US as a whole, and seek high quality vacation experiences. In a professionally managed resort environment, they gain all the comfort and space of home, with the advantage of leisure amenities and hospitality services on their doorstep. In-resort features such as water sports, restaurants, spas, golf, waterparks and children’s activities benefit visitors seeking not only to experience Orlando’s theme parks, but also to enjoy a longer stay in the resorts themselves. Those offering conferencing and business tourism facilities also boost occupancy in quieter leisure seasons. For homeowners renting their properties, this means greater occupancy levels, a premium over other accommodation options and higher income levels.
As one of America’s foremost destinations, Orlando boasts a highly competitive hospitality sector. Differentiating the guest experience from the rest is therefore the key to driving demand. At The Grove Resort, we ensure a stay that is personalized to the guest with flexible and uniquely spacious suites, entertainment and activities that are tailored to their individual requirements, and full staff and services to accommodate guests’ needs.
Professional management solutions are therefore essential to optimizing guests’ experiences in both the leisure and group travel markets. In return, this enables homeowners to capitalize on their investment.
ORLANDO HAS BENEFITED FROM SIGNIFICANT HOUSE PRICE GROWTH IN THE LAST FIVE YEARS. LOCATIONS AROUND THE MOST VISITED THEME PARKS ATTRACT THE HIGHEST PRICE PREMIUMS AND GREATEST INVESTMENT ACTIVITY.
More than 36,000 homes were sold across the Orlando area in 2018, and with prices up by 82% in the last seven years alone, there are plenty of opportunities attracting investors. In the first two months of 2019 alone, more than US$1.7 billion worth of homes has sold across Orlando. Owing to its popularity among local residents, vacation home buyers and investors seeking to let their properties, Orange County, home to Walt Disney World, recorded the highest proportion of sales (35%) and also generates a premium. Properties set within integrated resort environments in Orlando are selling fast as investors capitalize on the benefits of professionally managed vacation home rentals.
EXPERIENCE KISSIMMEE: Total value of homes sold in January and February 2019 in Orange County, Orlando, home to Walt Disney World. $719.8m
Homes also sell faster in Orange County, taking an average of 60 days to sell in February 2019, compared to 65 and 69 in neighboring Lake and Osceola counties respectively.
ORLANDO IN CONTEXT
Florida is the first choice of all the US states for overseas property investors. With the housing market gathering momentum at both national and regional level, investors are seizing the opportunity to capitalize on rising values as well as income returns in hotspots such as Orlando. In contrast to other major US cities, Orlando is also a price accessible location to invest and live in, making it attractive for investors, vacation home buyers and retirees.
Orlando house price growth has been outstripping the national average, recording 7% annual growth in the third quarter (Q3) of 2018, compared to 5% across the US as a whole in the same period. Orlando prices are also much more accessible than other major US cities. In Q3 2018, Orlando’s median house price was recorded at US$266,000, while the San Francisco Metropolitan Statistical Area (MSA) was 3.7 times more expensive and Miami MSA was 33% pricier. Living in Orlando is also more cost-effective than other major cities. While life in New York is on average 2.3 times more expensive than the national average, in Orlando, grocery, housing and transportation costs are typically 4% below.
SOLID HOUSE PRICE GROWTH ACROSS THE US, COUPLED WITH ITS REPUTATION AS A SAFE, STABLE AND TRUSTED DESTINATION SUPPORT INVESTOR CONFIDENCE IN THE MARKET.
THE US IN GLOBAL CONTEXT
In the last five years, the US has recorded 33% house price growth, substantially above the performance of many European markets that continue to be in downturn. While not as fast-paced as some emerging markets, the perception of the US as safe and secure, with trusted legal and banking sectors are factors which attract overseas property buyers.
While in 2019, some countries have actively sought, or are currently discussing ways to restrict overseas property investors, second home buyers or wealthy individuals, often via punitive tax systems, the US has few barriers to residential investment.