Vanessa Hale
Director, Research
Shifts in the global economy are influencing prime property buyers, presenting once-in-a-lifetime opportunities for some and challenges for others. We explore the impact of exchange rates on the cross-border movements of important buyer groups and examine how currency-strong buyers may benefit from exchange rates that are positioned in their favour.
HNWIs are becoming increasingly global in their investmentoutlook. Extensive fluctuations in global exchange rates—the US dollar hit a10-year high in mid-2015 after climbing from an all-time low just four yearsearlier—have presented exceptional opportunities, as well as challenges, forbuyers seeking to acquire prime propertyoutside their resident country.
Gateway US markets such as Phoenix and Miami, where overseasbuyers were a steadying post-financial crisis force, have seen the number ofinternational buyers trending down as the rising dollar made US luxury homesmore expensive. Overseas buyers now comprise 35 percent of luxury sales inMiami, a nine percent decrease from 2014. “This reflects the financialuncertainties of countries whose residents have historically been activepurchasers of South Florida real estate,” says Ron Shuffield of EWM RealtyInternational. “Despite the downward trend, affluent foreign buyers continue topurchase property in Miami as a currency hedge and a safe store of wealth.”
Although many of our 100 surveyed markets reported decreases inbuyers from oil and commodity-dependent countries including Russia and Canada,there has been limited drop off in Chinese buyer interest. Wealth has grownfivefold in China since the beginning of the century and Chinese nationals nowmake up eight percent of the global UHNWI population. After years of widelyreported capital outflows, the country’s slowing economy has yet to havesignificant impact on the global luxury real estate market, with most brokersreporting an increase in Chinese buyers and only a few observing a slight drop off.Amid this headline grabbing national turmoil, Chinese buyers are stillpurchasing prime property at top prices across the globe. 2015’s highest priceresidential sales in several important markets (Sydney, Hong Kong, Seattle, andthe New York Adirondacks, among others) were sold to Chinese nationals orrecent émigrés. And wealthy Chinese nationals aren’t just buying realestate—they are also purchasing art at the top end of the market. A $170million Modigliani painting, sold at Christie’s in November 2015, went to aChinese art patron.
These findings were originallyproduced in the Christie’s International Real EstateLuxury Defined 2016 report, to which Strutt & Parkercontribute UK data.