I discovered a few years ago standing at the bar of a brasserie in central Paris, that if I stood at the bar my beer would cost me €3, if I was sitting in the window it would be €4 and if I was sitting on the terrace it would be €5. It seemed bizarre that the same product could cost different amounts depending on where the buyer was placed.
Well it's a similar story in the global property market of London. A domestic buyer paying Sterling for a property, could in essence be paying more or less than an international buyer who is converting their local currency into Sterling to purchase a property. The weakness of the pound in recent months has made UK property (in particular London) very attractive for investors looking to enhance their return with a currency strategy.
Our spring edition of the Buyer's Eye talked about Singaporean and Australian buyers in particular paying over 10% less for London property over the past 5 years due to the strength of their respective currencies against the Pound. This was further reinforced by the latest research report from Hamptons International this week.
The on going noise about a triple dip recession and uncertainty regarding the UK's credit rating has undermined the Pound in 2013, resulting in a record low rate against the US Dollar in March. Not great if you've got a long weekend planned in New York soon, but interesting news if you're looking to buy UK property from a US Dollar source. The savvy buyer will also take time to look at forward currency contracts or limit orders to ensure that they benefit from the favourable rate for as long as possible and hedge the risk of a strengthening Pound.
For overseas clients, we treat your currency strategy as a key part of the buying process therefore we work closely with foreign exchange brokers to ensure clients get the best and most appropriate advice. Take a look at who we work with here.
On a social and charitable note, I am lucky enough to be involved with a new project called Pathways to Property: a Reading Real Estate Foundation initiative, supported by the Sutton Trust and British Land. The project is aimed at increasing diversity and awareness across the entire property industry, focusing in particular at the grassroots level by developing a summer school for 16-17 year olds looking for that next step. The vision is long-term but it's widely recognised that the industry needs to embrace change and that it will be better for it. I'll be regularly mentioning developments through our blog and social media feeds, so watch this space.