GALVESTON, TX - A large part of the island's multifamily housing stock is changing hands as investors find the post-Hurricane Ike market to be buyer friendly. Interest by investors in the island's apartment and condominium scene has translated to hundreds of units, most damaged by Hurricane Ike storm surge, undergoing renovations and repairs.
Bargain prices on some properties are driving the trend, said Zvi Levin, president of Davie, Fla.-based Lavish Holding Corp. "We are finding opportunity perhaps when the lender is selling, or if someone needs to get out of debt," Levin said. "To come in and buy them at retail values doesn't make sense. If there's an opportunity for a fast transaction, that's what we're looking for." Lavish Holding Corp. is the contractor repairing Ashton Place, 6904 Lasker Drive, and Villa Marina, 210 The Strand downtown.
In total, the two properties contain 357 units. Lavish Holding Corp. is representing a Kansas City-based group of investors who have purchased several island apartment complexes, so far investing about $7 million and seeking more, Levin said. "We're trying to locate new investments," Levin said.
The Kansas City investor group bought Ashton Place from a bank that had foreclosed on the property. The city in October condemned Ashton Place, where squatters were living illegally after the storm. Even before the storm, the complex was in need of renovations, some observers said. "We are going to bring Ashton Place back nice," Levin said.
Omri Shafran, a principal in Houstate Investments Inc., was bullish on the island even before the storm and is more so now, he said. Before the storm, and during a real estate boom that sparked debate and new city rules on high-rise construction, Houstate already was investing millions here, including rejuvenating old apartment complexes.
As property prices fall, now is the time to strike, Shafran said. Hurricane Ike, which made landfall Sept. 13 and swamped thousands of island buildings, left a huge demand for apartment units and little supply as properties closed for renovations and repairs. "There's a huge demand for apartments on the island," Shafran said.
Houstate Investments owns seven multifamily complexes on the island, including the 54-unit Carriage House, 615 Holiday Drive, and the 31-unit Colonial Square complex, 325 Church St.
In all, Houstate is behind the repair and renovation of more than 200 apartment units on the island. Shafran's group is investing tens of millions of dollars in the island, he said.
Following the investors are contractors. Blue Bay Construction, with more than 100 employees, has opened an office at 402 Postoffice St. in the island's downtown. The island is teeming with out-of-town contractors hoping to capitalize on the rebuilding boom as homeowners and businesses gut and repair storm-damaged properties.
To stand apart and show long-term commitment to the island, Blue Bay Construction CEO Monte Lowery is vowing to hire workers locally. The company is handling most of the jobs for Houstate. "I think there's always been interest in Galveston by investors who can see the long-term potential," Lowery said. "Galveston is going to come back big; all we're trying to do is facilitate it as soon as possible." Guy Porat, a principal with Houston-based SHI Investments, also has an investment in the Carriage House and is searching for more island properties.
SHI Investments portfolio mostly consists of multifamily investment complexes and commercial investment properties. "We definitely believe in the island — before and after Ike," Porat said. "We definitely think the market is there and that the island not only will come back but be much better." Outside investor interest is an important part of the city's recovery, said island Realtor Cheryl Price, who is leasing some of Houstate's properties. "New people coming in with new ideas — that's what it's all about," Price said.
Source: GalvNews.com