Strong dollar good for real estate

Don't fret about the gaining strength of the U.S. dollar.

So says John Jung, senior managing director of capital markets for BB&T Capital Markets. Jung recently spoke to members of the Real Estate Investment Society in Fort Myers.

Real estate executives in Florida fret that a stronger U.S. dollar might depress demand from foreign investors who might not be able to afford to buy as much with their weakening currencies. Anecdotally, some real estate brokers in Southwest Florida have reported slower transactions from Canadian customers, for example.

But Jung says forecasts of a rising dollar might attract capital if foreigners think their investment will appreciate from the currency gain. “One way of buying the dollar is investing in Southwest Florida real estate,” says Jung. “What we're seeing is the tremendous flow of capital from the rest of the world.”

In particular, investors from unstable countries such as Venezuela and Turkey are parking capital in safer markets such as Florida real estate. “That's one reason why the money is coming here,” Jung says.

The chief reason the dollar is gaining strength is the forecast that the Federal Reserve will start raising short-term interest rates later this year. Jung forecasts the Fed will raise interest rates twice this year to counter any threat of inflation, which he calls the “monster under the bed.”