Singapore dollar buyers of London property will have seen a 17.8 percent growth in their investment, taking into account the aggregate effect of prime property price changes and currency fluctuations in the 12 months ending Q1 2014.
Over the five years since Q1 2009 the appreciation works out at a staggering 51.7 percent.
In contrast buyers using British pounds to buy Singapore property have seen a 10 percent decline in their investment during the 12 months ending Q1 2014..
In its Currency Matters 2014 report, Knight Frank reported the impact of currency movements on luxury residential property markets around the world.
Due to the strengthening British pound over the last 12 months – there are few non-sterling buyers for whom prices in central London have appreciated at a slower rate than for local buyers. Only buyers from Iceland have an advantage compared to British buyers, with prices rising by only 6.6 percent over the 12 month period.
The currency advantage for Asian buyers looking to purchase in prime central London now has diminished compared to 2009 when the weakness of the pound gave them a significant advantage, the report noted.
According to Knight Frank, the good news for those Indonesian, Australian and Chinese buyers who bought in prime London a year ago is that their asset has appreciated rapidly, by 37.8 percent, 32.5 percent and 18 percent respectively. But for that same cohort of buyers looking to buy in 2014 the strengthening pound has made a London investment comparatively more expensive.
Highlighting currency trends to watch, Knight Frank said if the Chinese Yen is devalued, Chinese buyers are unlikely to be as active in the international property markets as they have been. Also, If sterling strengthens further some foreign owners may take the opportunity for profit taking.
If the U.S. Dollar rises as expected, demand for prime residential property in those markets favoured by U.S. buyers, such as the Caribbean, Italy, Ireland, the .U.K and France, may increase.
If the Euro weakens, foreign buyers who retreated from many second home markets post 2008 may start to return.
Knight Frank added that the Yen is increasingly viewed as a ‘safe haven’ currency, having fallen only 0.3 percent in the first half of 2014 against the pound.
Tokyo may increasingly appear on the radar of international investors, it predicted.
Read the full Knight Frank Currency Matters report here.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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